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Oil in the Caspian Region
Source: Dept. of Energy, Energy Information
Administration.
The Caspian Sea region has become a central focal point for untapped
oil and natural gas resources from the southern portion of the former
Soviet Union. Beginning in May 2005, oil from the southern sections of the
Caspian Sea began pumping through a new pipeline (built by a BP-led
consortium) to the Turkish seaport of Ceyhan. The 8-year effort of Western
capital, technology, and diplomacy had aimed to decrease reliance on
Middle Eastern oil. Although oil reserve growth in the Caspian region has
not met levels that had been expected in the 1990s, European countries are
paying special attention to the natural gas resources that could lie
beneath the Sea as a way to diversify their sources of gas imports.
The nations in the Caspian region—notably Azerbaijan, Kazakhstan,
and Turkmenistan, and to a lesser degree Russia, Iran, and
Uzbekistan—are believed to be sitting on what amounts to 10% of the
earth's potential oil reserves. Proven reserves total approximately 17
billion–49 billion barrels of oil, with a possible additional
100–300 billion barrels not yet proven. Thanks to the Soviet Union's
collapse, the world has gained the opportunity to share in one of the
planet's greatest supplies of natural resources.
In 2006, Caspian oil production totaled about 2.3 million billion
barrels a day (bbl/d), comparable to annual production from South
America's second largest oil producer, Brazil. During 2007, the U.S.
Energy Information Administration expected over 200,000 bbl/d of annual
production growth, comprised mostly of growth from Azerbaijan. By 2010,
EIA expects the countries of the Caspian Sea Region to produce between 2.9
and 3.8 million bbl/d, which would exceed annual production from South
America's largest oil producer, Venezuela.
Sizeable oil production growth has come primarily from the north
Caspian states of Kazakhstan and Azerbaijan. Development of the region's
oil resources has been led by three major projects: Tengiz and
Karachaganak (in Kazakhstan), and Azerbaijan's Azeri, Chirag, and
deepwater Gunashl (ACG) field. Combined, these three projects produced an
average of 693,000 bbl/d from Jan.-Sep. 2006, roughly 30% of the regional
total. Development of these decade-old key projects gave rise to an influx
of new investment and infrastructure development that constitutes the
"second Caspian oil rush," the first having occurred in the late 1800s.
Following these discoveries, major new finds were announced in Azerbaijan
at Shah Deniz in 1999.
By comparison, other countries in the Caspian Sea region have not made
substantial progress towards developing their hydrocarbon resources since
independence. Proven oil reserves in Turkmenistan and Uzbekistan are
considerably smaller than those in their neighboring states, and the
political regimes in Ashgabat and Tashkent have received less favorable
consideration by foreign investors. As a result, although multinational
oil companies have initiated numerous large-scale projects in Azerbaijan
and Kazakhstan, Turkmenistan and Uzbekistan have received only
smaller-scale deals.
The Russian oil company, LUKoil, began exploration of the north Caspian
in 1995 and is working to produce natural gas by 2008. Lukoil announced in
early 2006 that it had found a large oil prospect at the V. Filanovskogo
offshore field. The company plans to bring six fields in the Russian
section of the Caspian Sea online with production starting at the Y.
Korchagina field in 2008. Lukoil expects its six fields, which contain
roughly 6.5 million barrels of hydrocarbons, to reach maximum output
140,000 b/d by 2016.
As increasing exploration and development in the Caspian Region leads
to more production, the countries in the region will have large new
quantities of oil and natural gas available for export. Earning hard
currency from these resources is essential to regional development plans,
as well as to recouping the huge investments made by multi-national oil
companies. However, for these purposes, the infrastructure left after the
collapse of the Soviet Union is inadequate. Numerous new pipelines and
pipeline expansions in each direction have been proposed, and some have
been constructed.
Four main pipelines, the BTC, the Baku-Novorossiysk, the Baku-Supsa,
and the Caspian Pipeline Consortium (CPC) line carry or will carry the
majority of the region’s oil and gas resources to the West to major
markets in Turkey, Europe, and the Mediterranean. The Baku-Supsa,
Baku-Novorossiysk and Baku-Batumi rail routes also transport oil and gas,
but these may be phased out as the larger pipelines are expanded even
further.
Information Please® Database, © 2007 Pearson
Education, Inc. All rights reserved.
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