Caspian Sea 2011

2010

4.2. Non-living resource extraction Over the last 20 years, the Caspian Sea has be- come a focus of global attention. A worldwide decline in oil and gas reserves together with a rise in energy prices has heightened interest in an area where there is still growth potential in oil and gas exploration. At present, the Caspian Sea region is a significant, though not major suppli- er, of crude oil to the world market. For example, the Azeri-Chirag-Guneshli oilfield in Azerbaijan is listed as one of the world’s 10 largest oilfields in terms of production, having reached a peak in 2007 (WEO 2008). In 2005, oil production in the Caspian region reached approximately 1.9m b/d (EIA 2006), a fig- ure similar to that of Brazil, South America’s sec- ond largest oil producer. The 2009 BP Statistical Review of World Energy estimated the Caspian’s share (in this case the Caspian share includes Azerbaijan, Kazakhstan and Turkmenistan) of the world total of proven oil and gas reserves in 2008 at 3.8% and 5.9% respectively. In terms of total world production, the Caspian accounts for 3.29% of oil production and 3.6% of gas production (BP 2009). The main focus of the oil and gas industry continues to be in the areas of Azerbaijan, Ka- zakhstan and Turkmenistan. Azerbaijan has been widely recognized as an oil-producing country with the oldest field – the Balahani-Sabunchi-Ramani site – having started operations in 1871. It is only recently, with the development of the offshore Shah Deniz field from 1999 onwards, that the country became a major gas as well as oil exporter in modern times. The country’s oil and gas sector continues its development; recent results from exploration for oil at the Shah Deniz field south of Baku and the Azeri-Chirag-Guneshli (ACG) field east of the capital are said to be positive. Gas production is growing, with the offshore Shah Deniz field pro- viding up to 20 billion cubic meters (bcm) per year for export (WEO 2008).

Oil production

Thousand barrels per day

1,800

1,600

1,400

Kazakhstan

1,200

1,000

800

600

400

Azerbaijan

200

Turkmenistan

0

1998

2000

2002

2004 2006

2008

Source: BP, Statistical Reviewof World Energy, 2009.

clude mud volcanoes, frequent difficult weather conditions, high-pressure reservoirs, minimal pore pressure ranges, drill-hole instability prob- lems, unstable sediments and shallow-depth drilling hazards. According to industry sources, international environmental standards are be- ing followed where possible: as a result, the eco- logical degradation forecasted by some has not reached a significant level (CEP 2007a). Since 1994, Kazakhstan has seen a large-scale increase in oil and gas output. The country has three main oilfields with growth potential - Ten- giz, Karachaganak and Kashagan. Capacity expan- sion at the Tengiz and Karachaganak fields, the combined reserves being more than 3 billion bar- rels, has added about 500,000 b/d at peak capac- ity. When the Kashagan field becomes on stream,

Geological conditions in the oil and gas fields are complex, posing many challenges. These in-

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