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Can the Caspian Sea Be Our Savior?
The Caspian sea is an untouched region of
potentially big oil resources. The newness
of this region could decrease or alleviation
problems that would result from a cutoff
of 25% of oil imported to the U.S. thereby
giving the U.S. a respite in its oil imports
while it tries to create a less oil dependent
nation.
Problems with the Caspian Sea area:• Geopolitics • Pipelines • Oil dependence from other countries • The lack of desire on the part of Americans
to look for alternative means
The players include: • The Five Caspian Sea Neighbors • The United States • China • Turkey
• Other Regional Neighbors like Pakistan, Afghanistan, and India
• The Oil Companies
Oil Dependence from other countries
• It’s not just the United States who is seeking more and more oil to meet its needs
• Other countries, especially Asian countries, are going to have additional oil needs in the coming decades
• China and India with their large populations and energy hungers, are going to exceed the U.S. demands for oil in the coming years
What the Caspian Sea Oil Provides ?
• Benefits via the Caspian sea:
• Provides a safety net while other energy alternatives are being researched and developed
• The U.S. would be less dependent on the Middle East and the fragile political structures that control that region’s oil
• Problems: – There are only estimates as to
the reserves; no one really knows how much oil exists
– Political instability exists in the region
– Pipeline security is questionable
– Pipelines to get the oil out have become a political issue
– China and the United States have their own agendas as to who should get the oil and where the pipelines should go
• The Soviet Union controlled most of the region and only had to share a border with Iran.
• Now four of the current countries surrounding the Sea were once part of the Soviet Union
• Countries like Turkmenistan and Azerbaijan are heavily dependent upon Russia
• Russia has the hegomony towards the Caspian Sea and pipeline deals.
Why are pipelines such a big deal?
• In landlocked central Asia
there is no point in pumping
oil and gas that reach to the
market. All the pipelines in
the area run over Russian soil
and, until now, the Kremlin
show agressive behaviours
toward limiting the access to
pipelines and charging heavy
tariffs.
• The Caspian Sea is filled with possibilities but two big problems stand in its way to becoming the savior to US dependence on Middle East oil
• Pipelines need to be built – Politics affect everything in
the region and at this time it hedge off an obstacle a productive solution to the pipeline problem
Turkmenistan Kazakhstan Azarbaijan Russia Iran
Natural Gas Production/bcm 34 35.61 23 546.8 116.3
Natural Gas Consumption /bcm 20 33.68 10.12 367.5 119
Natural Gas Exports 14 17.66 5.564 207.7 4.246
Natural Gas Imports /bcm 0 3.72 0 28.4 7.048
Natural Gas Proved Reserves /tcm 7.504 2.407 849.5 47.57 29.61
50
150
250
350
450
550
650
750
850
World Energy Outlook 2009
Legal Issues • The Status of the
Caspian Sea: Is it a Lake or a Sea ?
• If it is a sea then the three mile limit of the territorial waters applies and granting of access permits to foreign vessels
• Boundary disputes are an issue between many of the countries in the region
What can be done in order to cope with these problems?
• Regional discussions and treaties are the best means of solving the boundary disputes
• Contracts between oil companies and the countries need to address issues of infrastructure, pipeline security and pipeline transportation
• The United States needs to eliminate the barriers it has imposed on U.S. oil companies in order to prevent investment in Iranian oil.
The world's fourth largest reserves of natural gas within a singular national boundary (after Russia, Iran and Qatar) – The World FactBook 1 Jan 2009 est.
The country's total gas resource is 265 tcf or %4 - International Energy Outlook 2010.
The World Energy Outlook 2010 also projected that Turkmenistan will likely supply 2.4% of the worlds natural gas production in 2007-2030.
Turkmenistan is not only a gas producer ;the fourth largest producer of oil ‘197.700 bbl/day’, in the former Soviet Union after Russia, Kazakhstan and Azerbaijan (The World FactBook est. 2009)
In terms of natural gas, the region in 2010 consumed an
estimated 638.6bn cubic metres (bcm), with demand of 728.8bcm
targeted for 2014, representing 14.1% growth.
Production of an estimated 788.4bcm in 2010 should reach
936.4bcm in 2014, which implies net exports rising from an
estimated 149.8bcm in 2010 to 207.5bcm by the end of the
period.
The World Energy Outlook 2010
The largest natural gas fields are in the Amu Darya basin, with
perhaps half of the country's natural gas reserves located in the
giant Dauletabad Donmez field.
Current gas production in Turkmenistan is primarily from
onshore and mature fields in eastern Turkmenistan
(developed in the Soviet period)
Turkmenistan’s policy around Energy Security
• gas export diversification
• ensure fair level of gas export prices
• looking for foreign investment
• weakening Moscow’s leverage & decreasing Gazprom’s profits - Monopoly
• reliable, long-term security of supply
• continuous economic growth
• viable & economically feasible routes; to find a seat in hard- currency or global markets
The pipeline was built in 1997 and it cost US$190 million.
from Korpeje field north of Okarem in western Turkmenistan to Kordkuy in Iran
The capacity of pipeline is 8 billion cubic meter (bcm) per year
Iran financed 90% of construction costs, which was later paid back by gas deliveries.
In 2002 a second pipeline was opened between the two countries with the goal of expanding Turkmenistan’s exports to 20 bcm/y.
120-mile Korpeje-Kordkuy pipeline
Potential alternative routes of evacuation of new Turkmen gas
• Trans-Caspian gas pipeline
• Trans-Afghani gas pipeline
• “Caspian” gas pipeline via Kazakhstan and Russia
• Various options of gas supply to/via Iran
• Turkmenistan-China gas pipeline
Construction began in the summer of 2008
The 1,818 km, $30 billion pipeline is intended to export 30 bcm of gas from Turkmenistan through Uzbekistan and (10 bcm of gas from, planned in 2nd stage) Kazakhstan into Xinjiang, China.
Strengthens not only Ashgabat, but also Beijing Vs Moscow
China lending $3 billion to Turkmenistan to develop the South Yoloten field in 2009
China Development Bank to fund construction part of Uzbekistan.
The Russia did not have to compete against another supplier until now!!
The first stage of the pipeline was completed in 2009.
The second stage, adding second pipe and increasing capacity up to 40 billion cubic meter of natural gas per year, is projected to be completed in 2011.
The East–West pipeline is a
planned natural gas pipeline
would deliver gas volumes for
export to Europe
the pipeline’s capacity will be 30
billion cubic meters (bcm) of gas
per year
boost (~ enhance) the European Union-backed Nabucco and other pipeline
projects within the EU-planned Southern Corridor.
This pipeline will mainly be supplied from the Dauletabad - South Yolotan field
This PPL is used for also for electricity productions(!)
Pipeline BattlesTAPI Vs. IPI
The Iran-Pakistan-India (IPI), or Peace, pipeline is in the negotiation stage.
The proposed project would lie 1,700 km for a cost of $7.4 billion.
High construction costs, disagreements over gas transit fees and U.S. opposition
locked the implementation!!
WHY???
The U.S. prefers the Turkmenistan-Afghanistan-Pakistan-India (TAPI), or Trans-
Afghan pipeline and provide a similar $7.6 billion, 1,680 km route.
• a rival proposal to pipe Iranian gas to Pakistan and India , thus exclude Iran
• diminish Russian influence in Central Asia
• India obliged to support American foreign policy goals (The 2006 U.S.-India nuclear agreement )
• In 2007, Richard Boucher, U.S. assistant secretary of state, said: "One of our goals is to stabilize Afghanistan," and to link South and Central Asia "so that energy can flow to the south."
• At present, insecurity in Afghanistan is a major concern
Afghanistan is a strategic piece of real estate “energy bridge” in the geopolitical struggle for power and dominance in the region!!
Natural Gas Pipeline Framework Agreement between the Government & a Government Agreement on Measures to implement the gas pipeline project signed in Ashgabat Dec. 11, 2010
• Turkmenistan will transport about 33 billion cubic meters of natural gas. • The whole project would cost 4 billion U.S. dollars.
Trans-Caspian Pipeline
It would run under the Caspian Sea from Türkmenbaşy to the Sangachal Terminal
where it would connect with the existing the South Caucasus Pipeline (SCP) from Baku to Erzurum in Turkey
which in turn would be connected to the Nabucco pipeline to Austria
thus taking natural gas from Turkmenistan to Central Europe
Nabucco and trans-Caspian – are interlinked
The projected capacity of the pipeline is 30 billion cubic meters (bcm) of natural gas a year
The route would bypass both Russia and Iran
• U.S. opposition to IPI is revealed the Russian antagonism toward Nabucco.
• the EU and United States redoubled efforts to secure energy deals with Turkmenistan
• under-sea pipeline from Turkmenistan could link up with the Europe’s ‘great pipe hope’ Nabucco, to aid its own diversification from Russian energy dependency.
• According to the Russian Natural Resources Ministry, any gas or oil pipelines across the floor of the Caspian Sea would be environmentally unacceptable
• Russian Deputy Prime Minister Igor Sechin: ‘depressed regional demand, over-supply, as well as asserting the EU-backed Nabucco simply has no future’
• Same market with South Stream
project financing
limited technical capabilities in development of gas fields
lack of adequate gas infrastructure; rely on existing pipelines
lack of accountability; authoritarian regime particularly one able to rely on resource rents, has its risks, both economically and politically
pipelines pose significant risks to the environment and local communities; the South Caucasus and Baku-Tbilisi-Ceyhan (BTC) pipelines reveal the challenges
plans could unravel if Turkmenistan’s gas reserves prove less than expected; Turkmenistan would have to double its exports over the next 15 years to meet its natural gas commitments based on these pipeline plans