After declaring independence in , the presidents of both countries asserted that the right to develop petroleum resources belongs to the state and formed fully state-owned oil and natural gas companies. In Turkmenistan, President Niyazov formed Turkmengaz and Turkmenneft for natural gas and oil, respectively, while President Karimov of Uzbekistan formed Uzbekneftegaz to manage both resources. Uzbekistan focused on meeting self-sufficiency in energy by producing from existing fields and increasing the use of hydropower. Turkmenistan's government launched a ten-year development plan in to become a 'second Kuwait' but restricted the ability of foreign companies to invest in the sector, except for joint venture JV contracts with some companies.
Heavy restrictions resulted in limited development of Turkmenistan's energy resources, particularly in offshore fields. Dragon Oil, an independent company headquartered in the United Arab Emirates, operates the Caspian offshore Cheleken contract area. Iran is the only coastal Caspian country that was not a part of the Soviet Union. The country began to open up the oil and natural gas sector to foreign investment in the mids, although international sanctions have limited international involvement. The president of Iran chairs the Supreme Energy Council, which was established in July to oversee the energy sector.
The state-owned National Iranian Oil Company NIOC , under the supervision of the Ministry of Petroleum, is responsible for all upstream oil projects, encompassing both production and export infrastructure. Although endowed with considerable energy resources, the Caspian region faces several challenges to oil and natural gas extraction, including transportation, and finding sufficient investment for major projects. Caspian oil and natural gas fields are located relatively far from export markets, requiring expensive infrastructure to move oil to ports where it can go to world markets.
Exports of oil and natural gas tend to rely on old Soviet pipeline networks. This dependence did not matter when all of the littoral countries were part of the Soviet Union and these pipelines served Soviet needs. Once independent, countries could use their geographic position as a bargaining chip in determining export routes for Caspian resources.
For example, Kazakhstan agreed to a deal with China in to construct a Chinese-financed Kazakhstan-China oil pipeline, the first pipeline directly importing oil from Central Asia to China.click
Black Sea region stands at energy crossroads
The difficulty in transporting Caspian energy resources means that major projects, such as Kazakhstan's Kashagan field, require large amounts of foreign investment. The Caspian Sea's periodically freezing waters increase the costs of offshore projects. Companies must use canals from the Black Sea to move drilling and maintenance equipment to production areas near the Caspian Sea. In addition, shifting legal and regulatory frameworks create uncertainty for foreign companies investing in natural resources. For example, the lack of agreed-upon maritime borders between Turkmenistan, Azerbaijan, and Iran has hampered geologic exploration in the southern Caspian basin.
EIA estimates 48 billion barrels of oil and trillion cubic feet of natural gas in proved and probable reserves in the Caspian basins. Almost 75 percent of oil and 67 percent of natural gas reserves are located within miles of the coast. Territorial disputes and limited exploration in offshore areas make it difficult to determine the total amount of hydrocarbon resources. Using field-level data, EIA estimates 48 billion barrels of oil and trillion cubic feet of natural gas in proved and probable reserves in the wider Caspian basins area, both from onshore and offshore fields.
Because the reserve figures include both proved and probable reserves, the figures are closer to a high-end estimate. Most of these reserves are offshore or near the Caspian Sea coast, particularly near the northern coast. EIA estimates 41 percent of total Caspian crude oil and lease condensate In general, the bulk of offshore oil reserves is in the northern part of the Caspian Sea, while the biggest quantity of offshore natural gas reserves is in the southern part of the Caspian Sea. An additional 35 percent of oil The remaining 12 billion bbl of oil and 56 Tcf of natural gas are scattered farther onshore in the large Caspian Sea basins, mostly in Azerbaijan, Kazakhstan, and Turkmenistan.
As a result of the lack of clear Caspian Sea delineation, several countries dispute ownership over certain offshore resources. The Caspian Sea may contain additional hydrocarbons in unexplored or underdeveloped areas. The U. Geological Survey USGS assessed the Caspian basins region using published geologic information on commercial oil and natural gas field data to estimate undiscovered resources for priority basins around the world. These additional resources are not considered commercial reserves at this time because it is unclear how economically feasible it would be to extract them.
The USGS estimates a mean of about 20 billion barrels of crude oil and trillion cubic feet of natural gas in technically recoverable, conventional undiscovered resources. USGS estimates around 65 percent of the undiscovered oil and 81 percent of the natural gas to be in the South Caspian Basin, reflecting the more limited exploration and geologic assessment of the southeastern part of the Caspian Sea near Iran and Turkmenistan because of territorial disputes. The arctic-like north of the Caspian Sea is also relatively unexplored, and USGS estimates significant amounts of undiscovered resources there as well.
The Caspian basins area produced an average of 2. EIA estimates that the Caspian basin produced an average of 2. Around 35 percent of that came from offshore fields in the Caspian Sea, with the rest produced in onshore fields in the Caspian basins. Over half of all Caspian basin oil production comes from onshore fields located less than miles from the Caspian Sea coast. Over the past decade, Kazakhstan's onshore oil fields, particularly the Tengiz field, were the biggest contributor the region's production.
As Azerbaijan developed the Azeri-Chirag-Guneshli ACG field group between and , the country's offshore production began accounting for an increasing part of total Caspian production. Other significant sources of Caspian oil include onshore fields in Turkmenistan near the coast and production from Russia's North Caucasus region. While most current Caspian oil comes from onshore fields, the biggest prospects for future growth in Caspian oil production will be from offshore fields, which are still relatively undeveloped.
Caspian production accounts for virtually all oil production in some of the region's countries, including Azerbaijan and Turkmenistan, yet only a very small portion for the region's two largest producers, Russia and Iran. In total, production that can reasonably be classified as "Caspian oil" accounts for roughly 17 percent of the total production of the region's countries.
The table below compares Caspian production to total production for the six countries covered by this report. Most of Azerbaijan's oil production comes from the large offshore field complex called ACG after its three principal fields: Gunashli Deep discovered in , Chirag , and Azeri Oil from ACG transfers to the onshore Sangachal terminal south of Baku via two separate pipelines, and to the onshore Kyanizadag terminal east of Baku. ACG produces mostly Azeri Light, a medium-light and sweet crude that is valued for its high middle-distillate yield. In , Azerbaijan's oil production struggled to meet production targets because of poor performance from AGC.
Currently, there is no significant Iranian production in the Caspian. Iran claims million bbl of oil reserves from a field discovered in named Sardar Jangal. The Iranian Oil Ministry plans to establish a refinery on the Caspian coast and supply it with crude oil derived from the Sardar Jangal oilfield, although any development in this area is likely years away. The largest source of oil production in Kazakhstan is the giant Tengiz oil field, discovered in off the northeastern shore of the Caspian Sea. In , however, LUKOil announced that Tengiz production fell short of this production because of adverse weather, and mechanical and transportation problems.
The greatest potential for oil production growth in Kazakhstan comes from the giant Kashagan field, the biggest oil discovery in the last 35 years. Discovered in , it is the largest oil field outside the Middle East, with reserves estimates in excess of 13 billion barrels of oil along with significant natural gas deposits. Development of the Kashagan has experienced significant delays and cost overruns.
In , the consortium delayed the estimated time for first oil production to , five years later than original schedule. Challenges to production include the field's great depth 15, feet below sea bed , high sulfur H 2 S , high pressure, and cold temperatures that make it unsuitable for typical fixed or floating platform designs. Kashagan requires offshore facilities installed on artificial islands to protect against pack ice movements. The start of commercial production currently is estimated to be in the third quarter of Russian production in the Caspian basin traditionally came from onshore fields in the North Caucasus region, particularly from Krasnodar, Stavropol, and Chechnya.
Korchagin has become one of the most profitable upstream projects in the Caspian after Russia reduced export duties on its output. Crude output goes to the Makhachkala port in Dagestan to be shipped to the Black Sea port of Novorossiysk via pipeline. Transneft announced plans to expand the Baku-Tikhoretsk pipeline to accommodate increased Russian output from the Caspian to Novorossiysk.
Aside from oil revenues, development of the northern Caspian gives the Russian enterprises the opportunity to develop new technologies that could eventually be employed in the Arctic. The Korchagin field was the first field in the world to use an ice-class floating storage offloading vessel to protect against the harsh conditions of the northern Caspian Sea.
The oil passes through 36 miles of underwater pipelines to floating oil tanks. Most of Turkmenistan's oil reserves are located offshore or in the Garashyzlyk area west of the country. Turkmenistan's government has been developing the offshore Cheleken project since the mids, which it has opened up to some foreign investment, including UAE's Dragon Oil.
Proved and probable reserves in the contract area are around 3 million bbl of oil and 3 Tcf of natural gas. Dragon Oil exported Uzbekistan is not a significant oil producer. Most of the country's known oil reserves are located in the southeast, notably the Kokdumalak field. However, Uzbekistan has few oil prospects within its area of the Caspian basin.
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The significant and dispersed nature of Caspian natural gas reserves suggests that future growth in Caspian hydrocarbon production will mainly come from natural gas. While Azerbaijan and Kazakhstan contain the majority of oil resources in the Caspian basins, there are significant natural gas resources in all the region's countries.
The biggest discovered natural gas fields are onshore in Turkmenistan, Kazakhstan, and Uzbekistan, as well as offshore Azerbaijan. Russia and Iran also have sizable natural gas deposits. Most of Azerbaijan's and Kazakhstan's natural gas production comes from the Middle and North Caspian basins, with Azerbaijan's production mostly occurring offshore. In contrast to Azerbaijan, Kazakhstan's current production comes from onshore fields. Around a quarter of Kazakhstan's gas production also comes from the eastern part of the country, away from the Caspian basin.
Although Turkmenistan is a major natural gas producer, only 12 percent of its production comes from the Caspian area from onshore fields near the coast. The majority of the country's production comes from fields in the southeast, and generally flows to either to China or South Asia. Russia and Iran and to a much lesser extent Uzbekistan are major natural gas producers but have virtually no production in the Caspian area.
Historically an oil producer, Azerbaijan is emerging as an important regional natural gas producer. Natural gas production comes mostly from the Shah Deniz field, discovered in Some natural gas production is associated gas from the ACG field group. In total, about 75 percent of natural production comes from offshore fields.
Shah Deniz is the largest gas field in the Caspian Sea, located about 40 miles southeast of the ACG complex, in water depths between and 2, feet. According to BP the project's technical operator , Shah Deniz contains potential estimated reserves of roughly 30 Tcf of natural gas. Azerbaijan's gas export capacity is tempered somewhat by rising domestic gas consumption, particularly in the power sector where Azerbaijan is replacing Soviet-era equipment with new combined-cycle gas turbines CCGTs. Although Russia is one of the world's largest natural gas producers, very little of that production currently comes from the Caspian region.
Gazprom operates a large gas-condensate field and associated processing complex in Astrakhan and produces small amounts of natural gas from a handful of fields in the North Caucasus. Russia's LUKOil considers the northern Caspian region as a key driver of increased oil and natural gas production in the medium term, particularly from the Filanovsky oil and natural gas field. Industry sources suggest the field has 1 Tcf of natural gas and 1. The majority of Kazakhstan's natural gas production comes from the large Tengiz oil field.
The field's operators are currently testing a project to reinject the flared gas into the field to boost oil recovery. Because it is landlocked, Turkmenistan generally focuses on exporting natural gas through pipelines rather than as liquefied natural gas LNG. The country received significant investment for gas field exploration in the s, making it the Soviet Union's then second-largest supplier of gas.
Turkmengaz operates the country's two largest fields, Dauletabad and Malai, which are oriented towards exports and account for the majority of the country's production. The British company Gaffney, Cline, and Associates carried out the first independent audit of Turkmenistan's gas reserves in and Their report suggested that the country contains the world's fourth largest natural gas field, the South Yolotan-Osman, which was renamed Galkynysh in Turkmenistan's national gas company Turkmengaz controls onshore gas production and has limited access to international companies.
In , CNPC signed a production-sharing agreement with Turkmen authorities to develop natural gas fields in eastern Turkmenistan, as well as potentially exploring the Galkynysh field. Iran and Uzbekistan are both major natural gas producers but do not have significant production in the Caspian basin. Industry sources suggest around 50 Tcf of gas in Iran's Sardar Jangal offshore field, while Iran's Ministry of Petroleum has claimed much higher numbers of offshore natural gas proved reserves in the Caspian.
Caspian oil and natural gas producers have struggled to move their products to world markets. Some countries cooperate and jointly develop export capacity, while others focus on attracting enough investment to create their own routes. The Caspian's coastal countries, along with Uzbekistan, together have an operating crude oil refining capacity of just over 8 million barrels per day, according to Oil and Gas Journal. Russia and Iran together make up about 85 percent of this capacity.
As of January , the total crude oil refining capacity of the coastal countries was about 9 percent of the world's total crude refining. Russian refineries are scattered throughout the country, whereas much of Iran's refining capacity is located near its main producing fields and major demand centers. Refineries in the Caspian basins tend to service major fields, usually to produce refined products for domestic consumption or small amounts of exports.
Crude oil not refined in the region is usually pumped to wider pipeline networks, where it can go to refining centers in Western Europe and China. This is approximately 12 percent of the total refining capacity of the countries, although all of Azerbaijan's and Turkmenistan's refinery capacity is in this area. Azerbaijan and Turkmenistan both have two operational refineries near the sea, while Russia, Iran, and Kazakhstan each have one. Uzbekistan's three refineries are located in the southeast of the country, far away from the Caspian basin.
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Dagestan Oil operates a small refinery on the Caspian coastal city of Makhachkala, the capital of Russia's Dagestan oblast. Gazprom also operates a condensate splitter in nearby Astrakhan that takes in condensate from the large gas-condensate field north of the city. Atyrau may potentially service the Kashagan field once oil production ramps up, and Kazakhstan's government has considered building additional refineries in the area to service Kashagan.
Turkmenistan's two refineries on the Caspian coast together process most of the country's annual crude output. Finally, while Iran does not produce oil from the Caspian region, NIOC's refinery in Tehran takes in some crude oil from the Caspian Sea under oil swap agreements see section below. Although the Iranian government has considered constructing a refinery in the port city of Neka, construction has been delayed. There are seven operational gas processing plants within miles of the Caspian Sea. Kazakhstan and Azerbaijan have three and two gas processing plants, respectively, to process natural gas from their major Caspian oil and natural gas fields.
Historically, Caspian oil and natural gas producers have lacked sufficient export infrastructure. The coastal countries have developed several approaches for international exports. Some countries cooperate and jointly develop oil export capacity, while others focus on attracting enough investment to create their own routes. Kazakhstan and Azerbaijan have had the most success in developing oil export capacity through the construction of the CPC and BTC pipelines, which have become the main transit routes for Caspian oil.
Traditionally, Caspian oil and natural gas went directly to Russia through the Soviet pipeline system, where some of it could go to Western markets. Investors have refurbished Soviet-era pipelines to take oil from fields that are offshore or near the coast that can be barged across the Caspian Sea.
In , CPC partners began the expansion of the pipeline capacity to 1. The project will be implemented in three phases, with capacity increasing until The expansion is expected to provide additional transportation capacity to accommodate increased production from Tengizchevroil. An ongoing dispute between SOCAR and Transneft concerning transportation tariffs occasionally complicates the pipeline's operation. Since the collapse of the Soviet Union, European countries have begun investing in alternative export routes.
Kazakh oil supplies were loaded into the BTC for re-export for the first time in October Oil supplies are delivered by tanker across the Caspian to Baku. From there the oil is shipped by tanker mainly to European markets. Kazakhstan's other major oil export pipeline, Uzen-Atyrau-Samara , is a northbound link to Russia's Transneft distribution system, which provides Kazakhstan with a connection to world markets via the Black Sea.
Before the completion of the CPC pipeline, Kazakhstan exported almost all of its oil through this system. The oil would be transported through the future Eskene-Kuryk pipeline on the Kazakh Caspian coast to an oil terminal where it would sail to Azerbaijan, and from there on through the BTC pipeline.
Caspian natural gas moves to Western Europe through a combination of Soviet-era and newly constructed pipelines. The Central Asia-Center gas pipeline system CAC , built between and , carries Caspian Sea natural gas north to Russia where it links up with the wider Soviet gas pipeline network. The two branches of CAC, controlled by Gazprom, meet in the southwestern Kazakh city of Beyneu before crossing into Russia at Alexandrov Gay and feeding into the Russian pipeline system. The eastern branch of the pipeline, which has a throughput capacity of 2.
The western branch Bcf originates on the Caspian seacoast of Turkmenistan. Almost all Turkmen and Uzbek gas is delivered via the eastern branch. The western branch is more than 35 years old, and sections of it are in disrepair, causing periodic operational problems. The pipeline began operating in and has the capacity to transport about Bcf of natural gas, according to IHS Global Insight.
Oil in the Caspian Region
As Chinese oil consumption has increased, the country has begun investing in Caspian oil and natural gas production to supplement oil from Russia's East Siberia region. Japan is also interested in Caspian oil and natural gas to feed growing demand, and the Japan Bank for International Cooperation has expressed interest in financing pipeline projects, such as the Caspian Pipeline Consortium, that could bring more oil to world markets. The pipeline is a joint venture between CNPC and KazMunaiGas, which built the pipeline in segments and began commercial production from Phase 3 in The additional capacity will be used to transport some Kashagan oil.
The Turkmenistan-China gas pipeline transports most of the Caspian region's natural gas exports to East Asia. Turkmenistan's eastern natural gas fields, including Galkynysh and the Bagtyyarlyk field group, feed the pipeline, which then enters Uzbekistan and runs to southern Kazakhstan. The pipeline's partners are expanding the pipeline to receive natural gas from Kazakhstan's western fields, such as Tengiz and Kashagan. India and Pakistan have also seen energy demand rise, and for several decades a consortium of countries has planned to construct a pipeline that runs from Turkmenistan to India.
This would allow Turkmenistan to supply the growing South Asian markets and diversify its natural gas exports. The pipeline would have a 1 Tcf capacity. India and Pakistan will each get approximately 42 percent of natural gas pumped through TAPI, with the rest going to Afghanistan.
Iran engages in trades called oil swaps by importing oil from Central Asian countries that is sent to refineries in Tehran and Tabriz. Iran then delivers an equivalent amount of oil to potential buyers in the Persian Gulf, bypassing the challenge of getting Central Asian oil to global markets. Janusz et al Luong and Weinthal Cambridge University Press. Energy Charter Secretariat Read our feedback policy. Project Feedback Read what others are saying about this project. Very useful information. Thanks a lot again We have not loaded the biodiesel data onto the new website.
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This is much easier to navigate and use. We're glad you like it! Thanks for your feedback, we'll look into making those changes. We're glad you like it. EIA has published data for both series' through Production numbers for and will be added once they are finalized. All countries with analyses can be accessed by clicking the "analysis" tab. We typically don't offer pre-baked PDFs if we just have bullet notes what we call Country Analysis Notes If you are looking to PDF other sections of the site the country overview page, for example , you can use any number of free, open source packages to create a PDF.
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Constructive criticism, suggestions, and kudos are welcome. Thanks for helping us to make EIA's products better! Show Feedback. Clear search text. Lake Customary international law governing border lakes - Border states regulate use of water through international agreements. Sizeable oil production growth has come primarily from the north Caspian states of Kazakhstan and Azerbaijan.
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 s. Following these discoveries, major new finds were announced in Azerbaijan at Shah Deniz in 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 and is working to produce natural gas by Lukoil announced in early 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 Lukoil expects its six fields, which contain roughly 6.
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.
Related Oil and Gas Pipelines in the Black-Caspian Seas Region
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