Caspian basin energy potential in the reshaped energy landscape 

Some weeks ago, the US Department of Energy released an updated survey on the oil and gas sector in the Caspian Basin (US Energy Information Administration, Regional Analysis Brief: Caspian Sea, Last Updated: February 6, 2025). This survey represents a useful analytic tool to understand the current and future trends concerning hydrocarbon reserves potential, the vulnerability of the existent routes of exports, as well as the feasibility of new pipeline projects to enhance the strategy of diversification backed by the post-Soviet Caspian producers (Azerbaijan, Kazakhstan, Turkmenistan), as a key element to boost their energy security condition.

The updated estimates about Caspian oil and gas reserves confirm the role of the basin as a reliable supplier for the consumer markets, mainly European and Chinese but potentially expanding to South Asia. Among the three post-Soviet states, Kazakhstan holds the largest proven oil reserves (30 billion barrels), while Turkmenistan has the world’s fifth largest proved natural gas reserves (after Russia, Iran, Qatar and the USA) estimated at 11,3 trillion cubic metres (tcm). However, the concrete impact of oil and gas potential has to be tailored to the production levels and the possibility of developing multiple (and diversified routes of exports.

Concerning the oil sector, we can observe that Azerbaijan’s oil production has decreased from nearly 1 million barrels per day (b/d) in 2010 to 600.000 barrels b/d in 2024. This shift can be explained by a growing attention to the development of the most profitable gas sector. This element is not the only issue for Azerbaijan’s oil sector. Indeed, 83% of exports are delivered through the Baku-Tbilisi-Ceyhan (BTC) pipeline to the European markets, and the remaining volumes to Russia, underlining a condition of vulnerability because of the lack of diversification options.

For instance, in 2023 the BTC pipeline was stopped for six days following the earthquake in Türkiye. Likewise, Kazakhstan, which produces 1,5 million b/d and exports 1,3 million b/d, is dependent on a main single export route (the Caspian Pipeline Consortium, CPC) which carries 80% of Kazakh crude oil exports crossing Russian territory to the port of Novorossiysk in the Black Sea.

However, Astana also exports the remaining oil to China and the EU through the BTC, but these diversification’s options should be further expanded to reduce the reliance on Russian territory transit, mainly after tensions with Moscow after 2022.

In the gas sector, Azerbaijan has heavily increased its production (38,8 billion cubic metres, bcm) in 2023) in order to meet the EU demand, aimed at offsetting the gradual phase-out of Russian gas. In the short term, Azerbaijan should further develop its national reserves (1,7 tcm) to expand the capacity of the Southern Gas Corridor (SGC), mainly the Trans Adriatic Pipeline (from 10 to 20 bcm by 2027 as agreed with the President of the European Commission von der Leyen in 2022), as well as to meet a growing domestic demand which pushed Baku to imports small volumes of gas from neighbouring Russia.

An important growth in production was also experienced by Turkmenistan, with its output reaching 84 bcm in 2023, the highest annual growth since 1992. Nevertheless, at present, export options are constrained by the geographical-geopolitical landscape that forces Turkmenistan to ship the bulk of its exports to China, while Russia has restarted to buy small volumes of Turkmen gas in 2019.

Given its proven reserves as well as the huge estimates of the Galkynysh Gas Field (the world’s second-largest natural gas field based on reserve volume, estimated at 27 tcm), Turkmenistan can be easily identified as a key energy partner to implement different pipeline projects within a necessary strategy of diversification. European markets appear the most promising option, linking the East-West gas pipeline (which crosses Turkmenistan delivering gas production from the eastern field to the Caspian coast) to the SGC.

However, in spite of the Convention on the Legal Status of the Caspian Sea (2018), that allows the laying of undersea pipelines and cables on the seabed, provided that environmental requirements are complied, factors such as the Russian-Iranian opposition and economic feasibility concerns are delaying discussions on the project’s implementation.

Another option for Ashgabat is the completion of the TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline, an eastward export route promising in its nominal capacity (33 bcm per year), but traditionally affected by stability problems (linked to the transit in Afghanistan), delays in the realization of the national segments and lack of strong commitment from the other partners.