Caspian Sea Region

Essay by oniniyaUniversity, Master'sA+, April 2004

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The Caspian Sea region, including the Sea and the states surrounding it, is important to world energy markets because of its potential to become a major oil and natural gas exporter over the next decade. However, this potential has been complicated by several factors, including a lack of adequate export infrastructure, disagreement over new export routes, and border disputes between the littoral states.


The Caspian Sea has become a landmark for the former Soviet South's untapped oil and natural gas potential. Herein, the Caspian Sea Region is defined to include the Sea's littoral states of Azerbaijan, Kazakhstan, and Turkmenistan, as well as parts of Russia and Iran and also Uzbekistan --which although not a littoral state, is the region's largest natural gas producer. The oil and gas potential of these states is sizeable. Proven oil and natural gas reserves have been estimated at up to 3% and 4% of the world total, respectively, and analysts expect that by 2010 regional oil production will meet or exceed 2002 capacity in Venezuela, South America's largest oil producer.

At the moment, however, the countries of the Caspian Sea region are relatively minor world oil and gas producers, struggling with difficult economic and political transitions. Following the break-up of the Soviet Union, the countries' economies languished as regional trade collapsed. And while, the region has enjoyed overall economic growth since the latter half of the 1990s, gross domestic product (GDP), remains below 1992 levels in Azerbaijan, Kazakhstan, and Turkmenistan (when measured in constant 1995 USA dollars). Uzbekistan, however, has shown some growth. Moreover, in the region's two biggest oil producers, Azerbaijan and Kazakhstan, 49% and 26% of the populations, respectively, were estimated to be living below the poverty line in 2001. Improving these conditions depends, in large part, on the successful...