Production forecasts and export of oil and gas in the Caspian region

By D.Rozanov

According to forecasts for 2016, oil production in Kazakhstan is expected to reach 74-75 million tons, despite the fact that in 2013 the country produced 81.8 million tons. Certain difficulties experienced Azerbaijan, where in recent years, oil production hovers around 42-43 million tons of oil. In 2013 the country extracted 43.1 million tons, and in 2015 production was 41.6 million tons. More stable is the situation with gas production in Turkmenistan, but even here there are difficulties that can slow down the pace of development of deposits.

 

For the reduction of production volumes in Azerbaijan, Kazakhstan and Turkmenistan hide the fundamental problems that have their roots in the early 90-ies of the last century. After the collapse of the Soviet Union countries in the region are faced with economic problems, the solution of which is directly linked to the increase in oil and gas production. In addition, much attention was paid to the construction of new infrastructure necessary for the export of hydrocarbon resources to foreign markets. With the increase in production of hydrocarbon resources and their further access to the world market of the Caspian countries in the region hopes on increasing energy security, solution of socio-economic issues and the strengthening of government institutions. In achieving these goals, they were supported by Western countries and oil companies, who actively participated in the promotion of new hydrocarbon production and export projects.

 

The presence of significant amounts of oil and gas reserves in the Caspian fields, which became known as "the second Kuwait", led to the emergence of numerous production forecasts, which were based on the overall potential of hydrocarbon resources in the region. The majority presented potential production volume estimates were overstated. All doubts about the presence of the fantastic reserves of hydrocarbon resources in the Caspian Sea, and the more the rate of production, not taken into account. Moreover, the Caspian countries, without waiting for a final decision on the international legal status of the Caspian Sea, in a hurry to establish control over their "sectors", attracting to this task overseas oil and gas assets. In general, exaggerated data on deposits and reserves of new projects of export pipelines used by the Caspian countries to attract further attention of Western countries and oil companies. As a result of hydrocarbon resources factor corrected the policy of the Caspian countries, affected the choice of routes of oil supply and at the same time turned Caspian region into a tangle of conflicting interests of extra-regional countries. The main struggle for the choice of the future oil and gas transportation routes developed between Russia and Western countries, which had a strong pressure on the countries of the region.

 

The politicization of the problems of hydrocarbon reserves and exports allowed the Caspian states to attract investments of foreign oil and gas companies. The result of this has been a manifold increase in hydrocarbon production and sale of export pipelines projects. Obtained at the expense of the resources possible to stabilize the situation in the socio-economic sphere and strengthen public institutions. At the same time, additional quantities of Caspian hydrocarbons did not have a noticeable impact on the world oil and gas market. There was no strong demand for additional quantities of oil and gas, which are expected to produce the Caspian countries. In addition, due to the absence of the necessary infrastructure and political instability in the countries through whose territory the export had to be carried out.

 

Attempts Caspian region countries to increase supplies of hydrocarbon resources in the external market is not always consistent with the interests of Western countries and oil companies, which had a great influence on the pace of development of deposits in the Caspian Sea and the implementation of pipeline infrastructure in the region. Pursued by the US Government and the EU energy policy in the Caspian pursued geopolitical objectives associated with the transformation of the former Soviet Union, the reorientation of the Caspian states on Western interests. In addressing these challenges hydrocarbon resources and their transportation routes have a key role.

 

In addition, the EU, and to a lesser extent the United States has not experienced an acute need for Caspian hydrocarbons. Diversification of supply for the region of oil and gas has performed an instrument of pressure on Russia and the reorientation of the policy of the Caspian states, which pushed for the creation of new export routes. In general, this problem was solved. On the West Coast of the Caspian Sea have initiated the implementation of the Baku-Tbilisi-Ceyhan oil pipeline and Baku-Erzurum gas pipeline. Reorientation of oil and gas from Azerbaijan to the West direction viewed the United States and the EU as a key task.

 

US encouraged a reorientation of the export of Turkmen gas to the Russian direction of China, without hindering the strengthening of energy cooperation between Astana and Ashgabat to Beijing. In turn, China has implemented pipeline projects to provide him with direct supply of oil and gas from the Caspian states. Lay a gas pipeline from Turkmenistan, China broke the old Russian monopoly on natural gas exports, and strengthened its position in this country and in the Caspian region as a whole. Beijing has taken a key position, speaking as one of the main sources of investment, service provider, and, most importantly, the buyer of Caspian hydrocarbons. In addition to the formation of a new infrastructure of China solved the problem of the geopolitical consolidation in the Caspian region and Central Asia. Beijing is trying to limit the influence of the western countries and Russia, which means integration projects set the task to maintain its role in the Caspian region and Central Asia. Accordingly, this explains the negative attitude of China to the Eurasian Economic Union, which allowed Russia to prevent the weakening of relations with Kazakhstan and Kyrgyzstan.

 

The issues of further expansion of energy cooperation with the Caspian countries, Beijing is considering in the light of its current economic development and the implementation of long-term interests in the Eurasian space. In turn, the Chinese direction remains a priority for Turkmenistan and Kazakhstan, which continue to pay more attention to the supply of hydrocarbon resources in China, trying to expand the geography of exports.

 

Beijing has formed a new pipeline infrastructure in the region, which is subordinated to its long-term interests. The gas pipeline from Turkmenistan to China secured the supply of natural gas resources located on the east coast of the Caspian Sea in the Chinese direction. Capacity of the pipeline has reached 65 billion cubic meters. m, which in the medium term, reduced the likelihood of participation of the Caspian states of alternative projects - pipelines, going in a westerly direction. At the same time becoming increasingly evident commodity dependence of the Caspian countries to the needs of the Chinese economy in recent years. So, in 2016 the implementation of the fourth branch of the gas pipeline has been suspended. Change plans to increase the capacity of the pipeline indicates the adjustment of China's energy policy in respect of hydrocarbon resources of the Caspian region.

 

Implementation of China's energy strategy in the Caspian countries is characterized by increased presence in the promising fields. Beijing is trying to conclude agreements on cooperation in the design, development and co-owned fields, thereby implementing the policy of diversifying sources of hydrocarbon resources. In addition, in Beijing are closely watching the political dialogue of the Caspian and Central Asian countries and the West, which in turn, through the pipeline projects is not only intended to bring Caspian countries from the influence of Russia, but also to limit the Chinese factor.

 

The hydrocarbon resources of the Caspian region will continue to remain the focus of China. Beijing has focused its geopolitical forces on the eastern shore of the Caspian Sea and in the longer term tasks aimed at deepening relations with Kazakhstan and Turkmenistan in the sphere of supplies of hydrocarbon raw materials. In addition, the Central Asian countries are considered by Beijing as a strategic rear in energy security, create new markets, obtaining safe and reliable access to hydrocarbon resources.

 

 

 

 

30.11.2016

 

 

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