The Mystery of the Caspian Oil Boom Part One

By Rasizade, Alec | Contemporary Review, September 2004 | Go to article overview
Save to active project

The Mystery of the Caspian Oil Boom Part One


Rasizade, Alec, Contemporary Review


IT is hard to think of an industry that has a hype machine as phenomenal as the potential Caspian energy industry. Ever since the disintegration of the USSR in 1991, the Caspian Basin has been touted as one of the world's largest new energy sources. This was partly because the region had been off-limits to the West for so long that its potential was genuinely unknown. In addition, the political instability in the Persian Gulf had underscored the need to find dependable energy resources outside the Middle East. As a result, the premise of an 'enormous' Caspian energy wealth was invented as a justification for geopolitical manoeuvres by Western powers to fill the strategic void left in the region after the Russian withdrawal.

But it is now becoming increasingly clear that the hydrocarbon deposits in the Caspian Basin are much lower than has been believed in the West, that the Caspian's energy promise has been deliberately exaggerated and that production from the area will never make a major contribution to the world's energy security. Whatever the final size of reserves, it is now obvious that much of the talk of Caspian oil was a spectacular bluff. When the late Azeri president Heydar Aliev painted a majestic picture of the Caspian energy potential at the 2001 World Economic Forum in Davos (Switzerland), his Armenian counterpart, Robert Kocharian, famously retorted: 'Is there any water in the Caspian, or is it only oil?'

As the Canadian researcher Robert Cutler once observed, the Caspian oil rush was akin to a high-stakes game of cards. It was complicated further by the fact that the cards were being played within another strategic game of chess, with other rules, played by the great powers at a large geopolitical chessboard. With a relative consolidation of the chessboard into patterns, at least temporarily, the Caspian oil game is now more or less settled. Although the bluffing survives from the old days of the card game, strategy as opposed to tactics has become the conditioning environment in the region, as in a chess game.

Instead of the politically bloated appraisal of 200 billion barrels in ostensible Caspian oil deposits (compared with Saudi Arabia's 262 billion) valued at 4 trillion US dollars, exuberantly cultivated for the past decade by the Department of State to justify its own strategy there, we are talking today of only 18 billion to 30 billion barrels, according to another US government agency, the Energy Information Administration (EIA). Estimates by the International Energy Agency (IEA) in Paris range from 17 to 32 billion barrels. As for natural gas, there is an agreement that proven reserves are about 6.5 trillion cubic metres, with Turkmenistan holding the largest deposits outside Russia.

Five major projects are currently underway in the Caspian Basin--four of which account for some 70 per cent of total reserves. These are the offshore Azeri-Chirag-Gunashli oil fields block and the Shah Deniz offshore gas field in Azerbaijan, Tengiz and Karachaganak onshore, and Kashagan offshore fields in Kazakstan. While other prospects exist, particularly in Kazakstan, they are not likely to make any major impact on regional production in the future. The famous old onshore oil fields around Baku, which in the early twentieth century produced half of the entire world oil production, are now exhausted, and new deposits have not been found.

All post-Soviet geological explorations have as yet failed to find sufficiently large new deposits, except for the Kashagan oil field in Kazakstan's sector of the sea discovered by the Italian state energy concern ENI. After drilling of many dry wells, the area that had been pushed by the US Department of State as an alternative to the Persian Gulf was dismissed latterly as a product of Washington propaganda.

Caspian Oil and Global Energy Needs

The industrial world is now looking for oil beyond the Middle East. The resources found in new areas will be critical to ensuring global energy stability.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

The Mystery of the Caspian Oil Boom Part One
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?