Academic journal article The Journal of Central Asian Studies

Caspia Genesis of Energy Politics

Academic journal article The Journal of Central Asian Studies

Caspia Genesis of Energy Politics

Article excerpt

Caspian Energy Resources

During the Soviet era energy resources of the Caspian Sea Region were known but were not fully explored nor exploited. At that time resources of Siberia, Ural, Volga regions in Russia and resources in Azerbaijan were considered to be more significant than those in Central Asia. Moreover, inadequate investment capital, lack of modern technology, deteriorating infrastructure facilities were major causes for insufficient development of energy sector of the Soviet Union as a whole including that of the Caspian region. Hence credit has to be given to Kazakhstan, Turkmenistan and Azerbaijan to have taken greater initiatives in bringing the Caspian region in the forefront of the global energy market.

The Caspian Sea Region is richly endowed with hydrocarbon resources. The US Energy Administration reported in July 2001 that the Caspian Region possessed about 34 billion barrels of proven oil reserves and 235 billion barrels of possible oil reserves. Estimates of proven oil reserves, however, have changed over the years as explorations are still in progress. For instance, in 2006 the British Petroleum experts estimated that oil reserves could be about 47.1 billion barrels. Proven oil estimates have been estimated to be about one-fourth of that of the Middle East and much larger than 22 billion barrels of estimated reserves of the USA. Apart from oil, the Caspian Region also has substantial quantity of natural gas reserves estimated at about 243248 billion cubic feet as compared to about 300 billion cubic feet of natural gas in North America.

Two Central Asian States, namely, Kazakhstan and Turkmenistan share the inland Caspian Sea along with Russia, Azerbaijan and Iran. The main oil and gas fields of Kazakhstan are Tengiz, Karachagansk, Kurmangazy, Kashgan etc. The Kasgan oil field is said to be 5th largest in the world. After gaining independence Kazakhstan and Turkmenistan have made intensive efforts to undertake exploration activities to determine their energy resources. In November 2006 Turkmenistan reported that one of the fields in its region has natural gas reserves are larger than that in Russia's Shtokman gas field in the North Sea, which has created great news in the world energy market.

After the Soviet break-up, the Central Asian countries were in dire need of hard currency resources for their economic survival and oil and gas were commodities that could find easy market abroad. Equally important is the fact that several international oil companies including Chevron, Exxon, British Petroleum etc. were keen to enter the Central Asian energy sector. They were attracted to Central Asia partly because of the hype initially created by energy experts about huge reserves in the region. Some experts opined that Turkmenistan would be the 'Kuwait of the 21st Century'. While initial hype was rather exaggerated, sober estimates made subsequently did confirm that Central Asian States did possess large energy reserves, which were an additional source for meeting the energy needs of the Western countries. Kazakhstan has been able to attract more foreign investment than Turkmenistan since it is endowed with more oil resources than the latter. This is mainly because Kazakhstan has pursued policies more actively than Turkmenistan to make progress in its economic reforms.

Legal Status of Caspian

In the aftermath of the Soviet break-up, the Caspian Sea region has witnessed conflicting situations due to various factors. Firstly, while there were only two countries namely the Soviet Union and Iran sharing the Caspian Sea in the past, now there are five countries-Russia, Azerbaijan, Kazakhstan, Turkmenistan and Iran - independent and sovereign, which are sharing the Sea. This has added a new dimension to the situation. Secondly, energy resources are unevenly distributed among the littoral states. By 2005, the combined share of Russia and Iran in the Caspian region was estimated to be less than 20 percent while the other three states namely, Azerbaijan, Kazakhstan and Turkmenistan have about 80 percent of energy resources of the Caspian Sea. …

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