To: "Health Freedom, Codex Issues
Subject: What Energy Resources Lie in the Caspian Sea Basin?
From: John Hammell
Date: Tue, 02 Oct 2001 08:26:49 -0400
Sieg Heil Dubya:

What Energy Resources Lie in the Caspian Sea Basin?

Mon Oct 1 17:20:52 2001

What Energy Resources Lie in the Caspian Sea Basin?

Proven oil reserves estimates vary between 15 to 40 billion barrels, representing 1.5% to 4% of the world's proven oil reserves. Estimates of proven gas reserves range from 6.7 to 9.2 trillion cubic meters, with perhaps 8 trillion cubic meters of additional reserves, according to the International Energy Agency. This represents approximately 6-7% of the world gas reserves.

Estimates of potentially recoverable oil reserves range far higher with the US Department of Energy indicating a possible total of 200 billion barrels--close to the 269 billion barrels of proven oil reserves already discovered in Saudi Arabia. Many experts dispute this claim: the International Institute of Strategic Studies sparked a controversy last spring deriding the US Government estimates.

Although largely skeptical about the US Energy Department figure, experts differ as to the amount of recoverable energy reserves. Estimates range from 25-35 billion barrels according to some industry forecasts to possible reserves of 70 billion according to a report by Wood Mackenzie consultants. Some US companies use a working estimate of 65 billion barrels.

Whatever the most likely estimate, there appears to be a consensus emerging that, though the area is "unlikely to become another Middle East" or "major competitor for the Persian Gulf," it could play a "significant role as a marginal supplier" in "arresting a jump in the price of oil" in a high price environment and diversifying supply, "much as the North Sea (does) today."

In terms of distribution, the overwhelming bulk of the oil lies in Azerbaijan and Kazakhstan and, to a far lesser extent, Uzbekistan.

Kazahhstan has over half of the possible oil resources and, according to some analysts, has the best potential for new discoveries.

At the beginning of the twentieth century, Azerbaijan accounted for almost one half of the world's crude oil production, but lost its leading position even within the Soviet Union as investment turned to other promising sites. Its oil production lags behind Kazakhstan, but investment has risen strongly in past years.

On the gas side, Turkmenistan has the world's fourth largest reserves, but Kazakhstan and Uzbekistan also have appreciable amounts. According to Oil and Gas, Turkmenistan had "a significant track record as a proven exporter" before the breakup of the Soviet Union, but has been recently stymied by Russian competition and control over export links. Its longer term prospects will depend on development of export markets such as Turkey, Iran and the Far East.

Kazakhstan is actually a net importer of gas and any increased production is likely to be used to meet domestic demand. Without the development of other routes, potential gas exports would currently have to traverse Russia and would likely encounter the same resistance plaguing Turkmen exports.

Uzbekistan is the largest gas producer in Central Asia since the falloff in Turkmen production, but most is for domestic consumption. Other than modest exports to its neighbors, its landlocked position means its gas would have to go through more countries than its Turkmen and Kazakhstan competitors.

Estimates vary as to how fast the area's energy resources can be developed.

The International Energy Agency (IEA) expects oil production from Kazakhstan, Turkmenistan, Azerbaijan and Uzbekistan to reach 1.6 million barrels per day by 2000 and 3.5 million barrels per day by 2010 in a "high case" scenario and 1.4 million in 2000 and 2.8 million in 2010 in a low case scenario.

US Government estimates believe the production could reach as high as 4.5 million b/d by 2010 if political barriers are removed.

The Center for Strategic and International Studies expects Kazakhstan, Azerbaijan and Turkmenistan to reach 3.5 million b/d sometime around 2010.

The Oxford Institute for Energy Studies cautions that the production take-off is likely to be slow, although they believe it could reach 3.5 million barrels per day by 2010.

By way of comparison, North Sea oil production ended 1997 at 6.1 million barrels per day; Venezuelan oil production stood at 3.5 million barrels per day in early 1998. Some analysts contend that in terms of diversifying world oil supplies and providing for extra energy security, the "payoff" would be much higher if "greater efforts" were made elsewhere—such Mexico and Russian Siberia—to tap available resources.

IEA forecasts gas production from Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan reaching 112 billion cubic meters (bcm) by 2000 and 201 bcm by 2010 under a "high case" scenario and 102 bcm by 2000 and 164 bcm by 2010 under a "low case" scenario. Caspian gas exporters face stiff competition from a host of other suppliers in the European gas market while the difficulties of building pipelines eastward through Afghanistan is not be minimized. Gas prices are also linked to oil in most markets adding an additional constraint if oil prices remain flat.