London, England -- (SBWIRE) -- 05/17/2012 -- Kazakhstan, Turkmenistan and Azerbaijan are looking to boost their economies and reduce their payments to Russia by gaining access to the fossil fuels present in the Caspian Sea, according to a new report by energy intelligence company GlobalData.

The new report* shows that these countries are seeking to free themselves from Russia’s oil and gas pipeline monopoly by gaining access to Iran’s cut of lucrative Caspian Sea resources.

The Caspian Sea region is estimated to hold around 12% of all global oil reserves, containing 75 billion barrels of oil and 6.9 trillion cubic meters (tcm) of proven gas reserves. In 1991, after the collapse of the Soviet Union, the region’s hydrocarbon resources were distributed among the five littoral states, and have remained in dispute ever since.

The original treaties signed by Iran with the Soviet Union prior to its disintegration state that Kazakhstan, Turkmenistan, Azerbaijan and the Russian Federation are to share half of the Caspian resources, while the remaining 50% belongs to Iran. However, Russia, Azerbaijan and Kazakhstan consider the body of water to be a closed sea and therefore wish to share its resources based on the United Nations (UN) convention of the Law of the Seas, which would see Iran getting a share of only 13%. Iran has instead proposed that all states should be allocated a 20% share or agree to hold joint control over the entire resource.

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However, this idea is not popular with countries in the Caspian region, who are seeking to develop their infrastructure to diversify export routes. The region’s existing regional pipeline infrastructure passes through Russia, and oil and natural gas producers are forced to sell their products at below-market prices to Russia, or pay transit fees to Gazprom for transportation. Turkmenistan experienced a huge decline in its gross domestic product (GDP) in 2009, due to payment disputes with Gazprom, as its economy is highly dependent on the oil and gas industry.

Therefore, several pipeline projects have been planned in the region to expand potential export markets. Shareholders of the Caspian Pipeline Consortium (CPC) pipeline, commissioned in 2001 to run from the Tengiz oil field to the Russian Black Sea port of Novorossiysk, plan to expand its capacity to 1.34 MMbpd by 2013. The Nabucco pipeline, expected to become operational in 2014, will connect Turkey to Austria via Romania, Bulgaria and Hungary, with the capacity to carry 31 billion cubic meters (bcm) of natural gas. This will allow Azerbaijan and Turkmenistan to export their natural gas production to consumers in Europe independently of Russia.

Crude oil and natural gas production from the Caspian Sea region has increased from 8,511.7 million barrels of oil equivalent (MMboe) in 2000 to 12,151.7 MMboe in 2011 at an average annual growth rate (AAGR) of 3.2%, and is predicted to increase to 15,426.2 MMboe in 2020 at an AAGR of 2.7%

This report provides analysis on the oil and gas industry in the Caspian Sea region. It gives information about the region’s oil and gas market until 2020, and the key oil and gas projects and key companies in the littoral states of the Caspian Sea region: Azerbaijan, Kazakhstan, Iran, Russia and Turkmenistan. The report also provides the key drivers and challenges for the industry in the current industry environment.

This report is built using data and information sourced from proprietary databases, primary and secondary research and in-house analysis by GlobalData’s team of industry experts.

GlobalData is a leading global business intelligence provider offering advanced analytics to help clients make better, more informed decisions every day. Our research and analysis is based on the expert knowledge of over 700 qualified business analysts and 25,000 interviews conducted with industry insiders every year, enabling us to offer the most relevant, reliable and actionable strategic business intelligence available for a wide range of industries.

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