Countries in the Caspian region, particularly
Azerbaijan,
Kazakhstan and
Turkmenistan, have high-value natural-resource-based economies, where the oil and gas compose more than 10 percent of their
GDP and 40 percent of their exports. All the Caspian region economies are highly dependent on this type of
mineral wealth. The
world energy markets were influenced by Azerbaijan and Kazakhstan, as they became strategically crucial in this sphere, thus attracting the largest share of
foreign direct investment (FDI). All of the countries are rich in solar energy and harnessing potential, with the highest rainfall much less than the mountains of central Europe in the mountains of the west, which are also rich in
hydroelectricity sources.
Iran has high fossil fuel energy potential. It has reserves of 137.5 billion
barrels of
crude oil, the fourth largest in the world, producing around four million barrels a day. Iran has an estimated 988.4 trillion cubic feet of
natural gas, around 16 percent of world reserves, thus key to current paradigms in global energy security. Russia's extensive mineral and energy resources are the largest such reserves in the world, making it the second leading
producer of oil and
natural gas globally. Caspian
littoral states join efforts to develop infrastructure, tourism and trade in the region. The first
Caspian Economic Forum was convened on August 12, 2019, in Turkmenistan and brought together representatives of Kazakhstan, Russia, Azerbaijan, Iran and that state. It hosted several meetings of their ministers of economy and transport. The Caspian countries develop robust cooperation in the tech and digital field as part of the Caspian Digital Hub. The project helps expand data transmission capabilities in Kazakhstan as well as data transit capabilities between Asia and Europe. The project generated interest from investors from all over the world, including the UK.
Oil and gas field (
Turkmenistan) The Caspian Sea region presently is a significant, but not major, supplier of
crude oil to world markets, based upon estimates by
BP Amoco and the U.S.
Energy Information Administration,
U.S. Department of Energy. The region output about 1.4–1.5 million
barrels per day plus natural
gas liquids in 2001, 1.9% of total world output. More than a dozen countries output more than this top figure. Caspian region production has been higher, but waned during and after the collapse of the
Soviet Union.
Kazakhstan accounts for 55% and
Azerbaijan for about 20% of the states'
oil output. The world's first offshore wells and machine-drilled wells were made in Bibi-Heybat Bay, near
Baku, Azerbaijan. In 1873, exploration and development of oil began in some of the largest fields known to exist in the world at that time on the
Absheron Peninsula near the villages of
Balakhanli,
Sabunchi, Ramana, and Bibi Heybat. Total recoverable reserves were more than 500 million tons. By 1900, Baku had more than 3,000 oil wells, 2,000 of which were producing at industrial levels. By the end of the 19th century, Baku became known as the "black gold capital", and many skilled workers and specialists flocked to the city. By the beginning of the 20th century, Baku was the center of the international oil industry. In 1920, when the
Bolsheviks captured Azerbaijan, all private property, including oil wells and factories, was confiscated. Rapidly the republic's oil industry came under the control of the
Soviet Union. By 1941, Azerbaijan was producing a record 23.5 million tons of oil per year – its Baku region output was nearly 72 percent of the Soviet Union's oil.
Transport Baku has the main moorings of all large vessels, such as oil tankers, in
Azerbaijan. It is the largest port of the Caspian Sea. The port (and tankers) have access to the oceans along the Caspian Sea–Volga–
Don Canal, and the Don–
Sea of Azov. A northern alternate is the
Volga–Baltic (a sea which has a connection to the
North Sea of the Atlantic, as the
White Sea does via the
White Sea-Baltic canal). Baku Sea Trade Port and Caspian Shipping Company CJSC, have a big role in the sea transportation of Azerbaijan. The Caspian Sea Shipping Company CJSC has two fleets plus shipyards. Its transport fleet has 51 vessels: 20 tankers, 13 ferries, 15 universal dry cargo vessels, 2 Ro-Ro vessels, as well as 1 technical vessel and 1 floating workshop. Its specialized fleet has 210 vessels: 20 cranes, 25 towing and supplying vehicles, 26 passenger, two pipe-laying, six fire-fighting, seven engineering-geological, two diving and 88 auxiliary vessels. The Caspian Sea Shipping Company of Azerbaijan, which acts as a liaison in the Transport Corridor Europe-Caucasus-Asia (TRACECA), simultaneously with the transportation of cargo and passengers in the Trans-Caspian direction, also performs work to fully ensure the processes of oil and gas production at sea. In the 19th century, the sharp increase in oil production in
Baku gave a huge impetus to the development of shipping in the Caspian Sea, and as a result, there was a need to create fundamentally new floating facilities for the transportation of oil and oil products.
Political issues Many of the islands along the Azerbaijani coast retain great geopolitical and economic importance for demarcation-line oil fields relying on their national status.
Bulla Island,
Pirallahı Island, and
Nargin, which is still used as a former
Soviet base and is the largest island in the
Baku bay, hold oil reserves. The collapse of the Soviet Union allowed the market opening of the region. This led to intense investment and development by international oil companies. In 1998,
Dick Cheney commented that "I can't think of a time when we've had a region emerge as suddenly to become as strategically significant as the Caspian." A key problem to further local development is arriving at precise, agreed demarcation lines among the five
littoral states. The current disputes along Azerbaijan's maritime borders with Turkmenistan and Iran could impinge future development. Much controversy currently exists over the proposed
Trans-Caspian oil and gas pipelines. These projects would allow Western markets easier access to Kazakh oil and, potentially, Uzbek and Turkmen gas as well. Russia officially opposes the project on environmental grounds. However, analysts note that the pipelines would bypass Russia completely, thereby denying the country valuable transit fees, as well as destroying its current
monopoly on westward-bound
hydrocarbon exports from the region.
Leaked U.S. diplomatic cables revealed that
BP covered up a gas leak and
blowout incident in September 2008 at an operating gas field in the Azeri-Chirag-Guneshi area of the Azerbaijan Caspian Sea. ==Territorial status==