The Caspian Sea region is one of the oldest oil-producing areas in the world and is quickly growing as a natural gas production hub.

The Caspian Sea region is one of the oldest oil-producing areas in the world and is an increasingly important source of global energy production. The area has significant oil and natural gas reserves from both offshore deposits in the Caspian Sea itself and onshore fields in the Caspian basin. Traditionally an oil-producing area, the Caspian area's importance as a natural gas producer is growing quickly.

This report analyzes oil and natural gas in the Caspian region, focusing primarily on the littoral (coastal) countries of the Caspian Sea (Russia, Azerbaijan, Kazakhstan, Turkmenistan, and Iran). A discussion ofUzbekistanis also included. While not a Caspian coastal state, a considerable amount of Uzbekistan's territory, along with its energy resources, lies in the geological Caspian basins.

Aside from Azerbaijan's oil production, the Caspian Sea largely was untapped until the collapse of the Soviet Union. With several newly independent countries gaining access to valuable hydrocarbon deposits, the different countries have taken diverging approaches to developing the energy resources of the area. At the same time, the lack of regional cooperation between the countries' governments and few export options for Caspian hydrocarbon resources have slowed the development of Caspian oil and natural gas resources.

The combination of foreign investment and rising energy prices allowed the coastal countries to shift from diverting oil extraction for local use to supplying both regional and world oil markets. The ability of countries to export greater volumes of Caspian crude oil and natural gas will depend on how quickly domestic energy demand rises in those countries, how quickly they can build additional export infrastructure to global markets, and whether expensive projects to develop Caspian resources can attract sufficient investment.

Image credit: EIA