Europe and China in Central Asia IV

Oil and Natural Gas in Central Asia

According to the OPEC Annual Statistical Bulletin at the end of 2001, world proven oil reserves stood at 1,074,850 billion barrels, of which 78.7 per cent, was in OPEC Member Countries. The five litoral Caspaian States account for 14.6 percent of the world’s proven oil reserves and 50 percent of the proven gas reserves in the world. This figures by themselves can give an idea of the strategic importantance of the Central Asia and Caspian to the world oil and natural gas market. As the report “Caspian and Oil Gas” from report by the Energy Information Administration of the USA Government states, “As world oil demand continues to grow over the next decade, the region will gain in importance by diversifying sources of oil and gas beyond such traditional suppliers as the Middle East.”
Although, at the moment, the countries of the Caspian Sea region are relatively minor world oil and gas producers, struggling with difficult economic and political transitions, it is expected a huge increase on the production in the near future. The Internationa Energy Agency estimates that the overall production of the Caspian litoral states (inclusing Uzbequistan) will augment from 1593 thousands barrels per day in 2002 to a maximum high of 4894 in 2010. Concerning the natural gas production, it will almost double from 4.49 Trillion Cubic Feet to 8.7 in 2010.
All these data make the region widelly attractive to the major indusrialized powers and to the Transnational Oil Companies (TNOC), in a complex game involving both states and private actors. Indeed the priate cators are active in the region, whrerein some of the lagest TNOCs have already get it foothold in the region: BP is involved in Azerbeijan (oil and natural gas) and in Kazakhstan (oil), Agip is part of two projects in Kazakhstan and Chevron Texaco is doing business a well in Kazakhstan.
Another important issue is the pipeline politics in Central Asia. Sander Hansen (2003, 3) analyses the question in the light of two interconnecetd problems. On the one hand, the struggle for control over the resources in Central Asia. Here we have a thorny matter because f the uncertain legal status of the Caspian Sea, since there are no international legar borders dividing the Caspian Sea among the litoral States. If until 1989-91 the problem could be solved between the Soviet Union and Iran, after the collapse of USSR, the sovereignity over the Caspian Sea remains a potential source for conflict[2]. In May 2003, Russia, Azerbaijan, and Kazakhstan, in a trilateral agreement, divided the northern 64% of the Caspian Sea into three ueven parts: 27 percent for Kazakhstan, 19 percent for Russia and 18 percent for Azerbaijan. Turkmenistan and Iran refused to sign the agreement. The problem as we can forsee will remain. On the other hand, the issue of pipeline politics councerns the exploitation and export of the resourses: “the countries that possess hydrocarbon deposits do not have the technology and financial capability to start the exploitation without outside help”(Hansen, 2003). Threfore, the Central Asian states are de facto dependent from the TNOCs, which are interested in doing business in the region due to the proven reserves and potential of eploration, but, at the same time, fear the unstable social and political environment. It is also noteworthy to highlight that the export of oil and natural gas from Central Asia is a costly bysuness as the it is a landlocked region. That is why the oil and gas pipelines routes are obeject of attention and intersection of different agents: local authorities, foreign powers (China, European Union, USA, Russia, India) and private actores such as the TNOCs).

[1] Kazakhstan decided in the beginning of 2003 to create a full-fedged navy in the Caspian Sea, following a tendency to increase the militarisation in the area. The government announced that the decision is aiming to protect western investments and fight smuggling activities.

Recapitulando:

Europe and China in Central Asia

Introduction

Energy Supply Security Policy: the New Challenges

The Geopolitics of Central Asia