By: Seyyed Vahid Ahmady Vahid Ahmady
Energy Markets Analyst, Islamic Republic of Iran
EMAIL: ahmady_va@yahoo.com
April 2003
Abstract:
Some questions appointed me of finding convincing
answers to them:
Existence of messy ideas about Caspian energy expected
role for now and the future bear in mind the questions
of:
1-which idea is more realistic? Caspian sea an area
with huge crude oil reserves that, if well explored,
can play an important role in the oil market, or it is
a normal oil region and not comparable, at all, with
regions such as Persian Gulf or Middle East.
2- who are the potential consumers for Caspian
energy reserves other than domestic ones?
3-For I.R of IRAN as an important neighbor of Caspian
which possesses a considerable oil reservoir in it’s
southern territory and an unknown energy reservoir in
the Caspian, what solution could be the best to pace,
whether eyeing at common Caspian oil reservoirs
exploration exactly the same as what it is now for
Persian Gulf and the Southern territory, or must give
priority to the South or the solution is something
else?
According to above, I review current and foreseeable
estimates of Caspian energies in this article, its
Potential markets, expected role can Iran play for
exploring these resources or transiting them. Although
the region has oil and gas reserves but the emphasize
in this article will be on oil.
Key words:
I.R.IRAN, Caspian, energy, OPEC, Outlook
Introduction:
Day after days, variant news, issue by news agencies,
energy companies and so on, regard Caspian energy
imperatives, which bears in mind the questions of:
which data is true and reliable? Is the Caspian oil a
treat in the erosion of OPEC’s market share? What are
Iran’s duties regarding Caspian energies?
Really it is not clear whether Iran should rely on
Caspian oil&gas transit revenues or should try to
expand it’s own markets and just import the Caspian
oil and gas to meet it’s northern provinces energy
needs and release and free some sources of southern
fields for export. This article focus to find answers
to the above questions.
Caspian oil reservoirs:
Potential Oil reservoirs:
Variant estimates:
Variant estimates regard region energy resources have
been issued by different sources. You can find
estimates of 25-30, 33, 35, 70, 100, 200 and even estimate
of 250 bn barrels, but whether 25 is true or 250?
Although, on the one hand, among some sources of
estimate (For an instance: Express, a French journal)
you can find estimation of 243-250 billion barrels of
oil reserves (close to the 269 billion barrels of
proven oil reserves already discovered in Saudi
Arabia) but, a working estimate never stands around
these numbers, for example, Some US companies use a
working estimate of 65 billion barrels. In a glance on
working estimates, what becomes clear is that, a
working estimate never exceeds from 100 billion
barrels. It is, where, most internal estimates of oil
industry analysts put the figure at 40 to 75 bn
barrels, comparable to North Sea reserves or, at best,
Iraq’s potential reserves. Accordingly, Recently the
Wood Mackenzie consultancy of Scotland estimated
reserves of the five Caspian states-and only the
Caspian parts for Iran and Russia-at 39.4bn barrels of
oil.
As a consequence, it can be said that, whatever the
most likely estimate, there appears to be a consensus
emerging that, though the area is "unlikely to become
another Middle East" or "major competitor for the
Persian Gulf," it may play "a role as a marginal
supplier" in "arresting a jump in the price of oil" in
a high price environment and diversifying supply, much
as the North Sea does today.
Proven Oil reserves:
Caspian region oil production emanates from proven
(economically recoverable) reserves of 15-34 billion
bbls, based upon BP Amoco, EIA, and Wall Street
Journal estimates. Based on the U.S. government, the
region has proven reserves of 10 bn (according to U.S
energy department), in other U.S source of research
roughly 16 billion (bn) barrels of oil and in the
other 15-40 billion barrels.
However, all of these numbers are speculative-until a
geological structure has been drilled and significant
risk remains that it may not contain oil. Preliminary
drilling offshore in the South Caspian has already
yielded some disappointing results, so it is important
to keep in mind that Central Asia and the Caucasus at
this point have been demonstrated to contain no more
than two to five percent of the world's proven oil
reserves, and it is impossible to make the case that
the Caspian region is an area of global strategic
importance on the scale of the Persian Gulf, where,
this important point is muddied in most researches on
the Caspian, With a handful of exceptions, these
researches tend to cite reserve figures too high, that
I can merely range them from optimistic to
unrealistic.
CASPIAN OIL: CURRENT INTRA MOVEMENTS:
Caspian Sea region oil has several markets now and a
wider planned variety of Potential markets for
tomorrow. Tomorrow’s potential markets will be
discussed in the coming parts of the paper.
But for Now, nearly all Caspian crude oil goes west,
largely via pipeline to /or through Russia to European
markets; and a lesser amount by tanker through the
Bosporus straits to Western European markets. The
Caspian region produced an estimated 1.4-1.5 million
barrels per day (bbls/day) including natural gas
liquids in 2001, or 1.9% of total world output.
BARRIERS AND BOTTLENECKS, HESITATING INVESTORS OF
INVESTING IN THE CASPIAN PROJECTS:
It is said “If well managed (and this is a big if),
profits from oil and gas exports could stimulate
economic growth and a rise in living standards in the
energy-producing states, meanwhile will help these
countries move away from the Russian sphere of
influence”, but it should not be neglected that, from
the developers side, some disadvantages weak the
energy companies rushing to the area, among them high
costs of developments and uncertainties regard
investment rate of returns lie in the core.
The main obstacles for tapping the Caspian
hydrocarbons are as follows:
• High costs of exploitation and transportation:
Caspian oil will be expensive and technologically
difficult to explore and develop. Production Costs in
the Caspian Sea are more than three times of those in
the Persian Gulf. With the exception of the super
giant Tengiz field, that Chevron hopes to be able to
produce at around $2/bbl at peak production, most
Caspian fields are expected to cost closer to $5/bbl
and in some cases maybe more. The Caspian Sea oil is
also burdened with additional costs for the
construction of new infrastructure, high-cost imports
of human and technological resources and the cost of
building long export pipelines on the one hand and On
the other hand, there are evidences that the Saudis
subsidize sales of their oil to European markets where
prices of Saudi crude in Europe are found to be 72
cents lower than in Asia. Where as one barrel of Saudi
crude oil costs approximately $3,for the producer,
reaching oil markets, North Sea oil final cost is
10-12 and the Caspian gathers at $10-14.
• Geographical status: There is no easy way to export
crude oil from the Caspian basin. The major
energy-producing countries are landlocked and thus
must rely on the cooperation of neighboring countries
to ship their crude to market. Many of the potential
pipeline routes pass through highly unstable and
conflict-prone regions so the risk of not being able
to transport Caspian Oil to market is perceived to be
the most significant business challenge for oil
investment in the region.
• Political issues: Political issues within the region
could impose barriers to oil traffic, including
internal instability within oil-producing countries; administrative disorganization, mismanagement, corruption and etc. Meanwhile poor communications infrastructure, unstable government structures,
political conflicts, imperfect payment systems and
inadequate energy policies are a double burden.
• Capital: According to Cambridge Energy Research
Associates, $70-$100 billion of funds is needed to
develop and transport the region’s oil reserves.
Although, in theory, the major international capital
markets could provide assistance, many multinational
companies may seek higher returns on capital
investments elsewhere, and may be further inhibited by
the political and economic risks associated with crude
exploitation and export.
• Legal issues: Existence of disputes over territorial
claims, as well as lack of protection for private
property rights, are also roadblocks to oil production
and distribution in that they create uncertainty about
ownership of investments and oil resources. In
addition to the unresolved issue of Caspian Sea
boundaries, there are outstanding questions concerning
the legal status of the Bosporus Straits that cloud
access to the most viable route for Caspian Sea crude
to reach the destination markets.
IF IT IS SO, THEN WHAT ARE THE MAIN INCENTIVES,
EAGERED AND ATTRACTED THE U.S AND THE WESTERN
COMPANIES TO INVEST IN THE CASPIAN BASIN?
Energy world is a coveted world; those who covet are
the western nations, more specifically North America
and its allies in Western Europe. In this context, The
West seeks the following strategic objectives and
interests in the Caspian region:
• Crude oil of the region is considered to be of good
quality.
• Since the needs of the producing countries are
relatively low and are expected to remain low, the
biggest part of the Caspian oil is scheduled for
export.
• The fact that the countries of the region lack the
capital and the technology to proceed independently to
the expansion of these oilfields, provides western
companies with considerable investment opportunities.
Foreign companies role in the Persian Gulf is severely
limited by government monopolies, and political
issues, such as the UN sanctions on Iraq and a fully
competitive market which narrows energy companies
profit margins and bargaining opportunities.
• Introducing new routes ensure the environmental
safety of the Bosporus Strait.
• Caspian energy sources are attractive to Turkey. They
are close and they offer an opportunity to Turkey to
offset part of its energy needs bill through transit
revenues it could charge on oil and gas shipments
across its territory, meanwhile inherent Caspian crude
chemistry is environmentally attractive to
Mediterranean and Turkish refineries. It will displace
supplies of less environmentally friendly crudes from
the Middle East and West Africa, on a fully
competitive basis.
• Investing on Caspian energy will diversify the
western energy sources of supply and keep energy
prices at low levels.
Undoubtly, the Caspian oil provides the best
opportunity for the U.S and the West to reduce their
dependence on Middle East crude oil. The U.S. now
imports 23.7 percent of its oil from Saudi Arabia and
Iraq, but virtually none from the Caspian region.
• One reason for rush could be for eyeing and pursuing,
step-by-step, of the growth of Islamic movements in
the region.
• To isolate I.R.Iran by reducing her energy revenues
and mitigating her important role in the region. This
interest could be best served by preventing any
Iranian role in Caspian energy.
• Their presence in the region, enhances political and
non-energy commercial opportunities for the West;
despite above mentioned facts, it should not be
neglected that, the Caspian oil is not a unique
opportunity for oil companies, so, countries of the
Caspian region will have to ensure that the terms they
offer are attractive enough to secure the future
interest of oil companies; but the only opportunity
for the Caspian republics.
OIL DEMAND OUTLOOK:
World oil demand’s outlook:
Oil is expected to remain the dominant energy fuel
till 2020, as it was for decades. According to
IEO2002, world oil supply in 2020 is projected to
exceed the 2000 level by 41 million barrels per day.
Petroleum demand is projected to grow at an annual
average rate of 1.5 percent through 2020, led by
growth in the transportation sector, which is expected
to account for more than 70 percent of petroleum
demand in 2020.
The share of crude of the world energy pie will not
increase because countries in many parts of the world
are expected to switch from oil to natural gas and
other fuels, particularly for electricity generation.
The geographical composition of energy demand is bound
to change substantially by the year 2025. Two-thirds
of the overall energy growth will occur in newly
industrializing economies. Most of the growth will
occur in the developing countries of Asia, where half
the world’s population resides. Energy growth in Asia
is expected to reach an average of 4.3% per year,
whereas the members of the OECD will produce a
slowdown to 1.3%.
Caspian Energy Reservoirs Act No Important Role For
Now, But Can It Play A Significant role For Tomorrow?
On the basis of present information, the Caspian crude
oil is not a significant factor at present chessboard,
where in an optimistic case its total reserves are
less than five percent of the world total. Although
Caspian Failure Costs are high; with giant field
potential finding and Development Costs are low, and
it is that may drive development forward. The only
country, which can clearly produce a substantial
amount of oil, is Kazakhstan; Azerbaijan has promising
areas, but no proven oil. Given a reasonable degree of
long-term stability, Caspian transportation costs are
likely to halve in the coming decade. Equally
technology improvement should have a dramatic impact
on reducing Caspian development drilling and well
completion costs. With the development of common
infrastructure there will be further cost savings. By
2010 the built up cost per barrel for Caspian crude
should fall to around $8/barrel. No need to say that,
Three factors are generally given credit for the
impressive resiliency of non-OPEC production:
development of new exploration and production
technologies, efforts by the oil industry to reduce
costs, and efforts by producer governments to promote
exploration and development by encouraging foreign
investors with attractive fiscal terms. So any
estimate for Caspian tomorrow’s role, hardly depends
on above three factors and the factor of oil price
where it is said, as long as the oil price maintains a
sustainable level of around $15/bl or more, the
Caspian will be profitable. So the Caspian region will
enjoy from high rates of exploration, if and only if,
above preconditions for Caspian crude oil enhancement
fulfill completely.
Outlook For The Caspian Oil Capabilities:
EIA estimates that Caspian Sea region’s oil production
will more than double by 2010 - to about 3.9 million
bbls/day, according to this source total oil
production of the region, in 2001, was about 1.45
million bbls/day. According to the International
Energy Agency (IEA) forecast, oil exports from the
Caspian Basin could reach 1.5 mb/d by early of the 3rd
millennium; Given the difficulties and cost of
developing Caspian oil as well as the continuing
delays in resolving the issue of transit routes- under
optimistic circumstances- the region could export
close to 2.3 mb/d by 2010, and thus meet about 7
percent of accelerated growth in the world oil market
during this timeframe. According to some sources of
estimate it is said “even if the region reached its
maximum oil production potential, by the year 2010,
exports would account for slightly less than 3 percent
of global oil consumption”.
According to some other source of estimate, Caspian
energy export capabilities by 2015 can be seen through
two scenarios:
1- high production scenario: 4 to 5 mb/d export
capacity. If Baku-cyhan route completes on time, exist
and planned pipelines can transfer 3.5 million barrels
per day of oil.
2- low production scenario: 2.5- 3 mb/d export
capacity. Exist and planned pipelines can transfer 3
million barrels per day of oil.
Recently, Wood Mackenzie estimated the region’s
production 4 million barrels per day by 2014. This
projection depends on optimistic assessments of the
quantity of reserves that lie in the shallow waters of
the Kazak offshore sector.
According to IEO2002 Production from the Caspian Basin
is expected to exceed 6.5 million barrels per day by
2020. Although it seems an optimistic forecast (just
compare it with footnote 2), even if we accept it, the
share is about %5 of total oil production in the
world, as before lesser than its counterpart (North
sea) production share in the world (despite a moderate
decline in North Sea production after a peak in the
middle of the current decade).
THE REST OF THE WORLD OIL OUTLOOK:
OPEC oil production is expected to reach 57.5-60
million barrels per day in 2020, nearly double the
30.9 million barrels per day produced in 2000,
assuming sufficient capital to expand production
capacity. In view of the existence of three-fourths
of the world's energy reserves in OPEC member
countries, they will increase their share of oil
production in the near future to meet global oil
demand.
Non-OPEC oil production is expected to increase from
45.7 to 61.1 million barrels per day between 2000 and
2020. North Sea production is expected to peak in the
middle of the current decade, reaching 7.5 million
barrels per day. Production from Norway, Western
Europe’s largest producer, is expected to peak at
about 3.4 million barrels per day in 2004 and then
gradually decline to about 3.0 million barrels per day
by the end of the forecast period with the maturing of
some of its larger and older fields. Oil producers in
the Pacific Rim are expected to increase their
production volumes significantly as a result of
enhanced exploration and extraction technologies. Oil
producers in Central and South America have
significant potential for increasing output over the
next decade. By 2010, projected production in Brazil
reaches nearly 2 million barrels per day and in the
offshore regions of West Africa exceeds 2 million
barrels per day. By 2010, oil production in Mexico is
expected to increase by 30 percent above current
levels.
Hence other parts of the world except the west can
play an important role of covering world energy needs.
Future role of the Caspian energy head to head of the
Middle East (in general) and OPEC (in particular):
will Caspian be a treat in the erosion of OPEC’s
market share?
Production rise are expected for both OPEC and
non-OPEC producers; however, only about one-third of
the total increase is expected to come from non-OPEC
areas. New exploration and production technologies,
extensive cost-reduction programs by industry, and
attractive fiscal terms to producers by governments
all contribute to the outlook for continued growth in
non-OPEC oil production. According to IEO (2002) about
two-thirds of the increase in petroleum demand over
the next two decades will be met by an increase in
production by members of OPEC rather than by non-OPEC
suppliers. OPEC production in 2020 is projected to be
more than 26 million barrels per day higher than it
was in 2000. Production costs in Persian Gulf OPEC
members are less than $2 per barrel, and the capital
investment required to raise production capacity by 1
barrel per day is less than $5,500. For OPEC producers
outside the Persian Gulf, the cost to expand
production capacity by 1 barrel per day is
considerably greater, exceeding $12,000 in some member
nations. By 2020, OPEC exports to industrialized
countries are estimated to be about 6.2 million
barrels per day higher than their 2000 level, and more
than half the increase is expected to come from the
Persian Gulf region. OPEC petroleum exports to
developing countries are expected to increase by more
than 17.0 million barrels per day over the forecast
period, with more than half of the increase going to
the developing countries of Asia. China, alone, is
likely to import about 7.2 million barrels per day
from the OPEC by 2020, virtually all of which is
expected to come from Persian Gulf producers.
North America’s petroleum imports from the Persian
Gulf are expected to almost double over the forecast
period. West African producers are also expected to
increase their export volumes to North America.
With a moderate decline in North Sea production,
Western Europe is expected to import increasing
amounts from Persian Gulf producers and from OPEC
member nations in both northern and western Africa.
Substantial imports from the Caspian Basin are also
expected. Moreover developing nations are expected to
increase their already heavy dependence on Persian
Gulf oil. 80% of the incremental demand will be in
developing states; OPEC will supply 85% of the new
demand.
FORESEEABLE CUSTOMERS OF The CASPIAN OIL
a) South and East Asia:
By the year 2010, world demand for oil is expected to
reach roughly 100 m/bd which Almost half (14 mb/d) of
the projected increase in the global demand for oil in
2010 will come from East Asia (excluding Indonesia and
India). According to some estimates by the year 2010
South Asian countries shall be consuming more than
double the current levels of primary commercial
energy. It becomes self evident that South Asian
countries would experience over-increasing energy
demands and they lack the resources and capital to
meet this demand. According to an estimate, crude oil
imports from the Asia-Pacific region are projected to
increase from 58 percent to 72 percent over the next
seven years, and by 2010, it is estimated that this
region, with China and India in the forefront, will
consume 18 mb/d of Persian Gulf oil, or more than
Europe and the United States combined. Based on an
average consumption increase of 5% per year,
Asian/Pacific demand for oil is expected to reach 33.5
million bpd by 2010. China alone could be consuming
7.2 million bpd by 2010, and 10.7 million bpd by 2020,
while oil production in Asia/Pacific region may
decline from its current level of 6.3 million bpd.
China imported 65.5 million tons of oil during the
first 11 months of 2000 alone, which is a 97 percent
increase compared to the same 11 months in 1999.
According to CIA estimates, the Chinese demand for
oil, while coupled with the expected Indian demand, will likely reach 120 billion barrels/day within the next 30 years. That is almost twice the 60-70 billion barrels per day that is presently consumed
globally. What is clear is that most of these regions
oil needs will be covered by Persian Gulf oil and a
bit by Caspian oil.
b) The West:
Although the structure of gross inland consumption in
the EU shows an increasing share of natural gas, the
degree of Europe’s oil dependence remains considerably
high, and oil with no doubt remain its main fuel in
the EU in the foreseeable future. Oil demand in the
advanced industrial nations of Europe and North
America is projected to grow only 6 mb/d. The North
Sea, supplies are also expected to decline in the
early half of the 21st century, and the western
powers, may look the hydrocarbon resources of the
Caspian region.
Iran and Future Oil markets:
Iran, the second largest OPEC oil producer, holds 100
billion barrels of proven oil reserves, about 10
percent of the world’s total. Iran’s current oil
production capacity is estimated at 3.9 million
barrels a day. Iran needs to produce more oil (and
gas) in order to increase its contribution to the
incremental world demand and to obtain more hard
currency for the financing of its future economic
growth and development, as well as to satisfy growing
domestic demand. In the oil sector, Iran can expand
its production capacities within OPEC's framework to
secure a significant part of the need of the world.
Iran must double its production capacity in the next
two decades to be able to maintain its current 15%
OPEC quota; plans should target a production capacity
of 8 million barrels per day by 2020. In this regard,
over the last three years, 26 billion barrels of crude
oil (and 855.3 billion cubic meters of natural gas)
were added to Iran's energy reserves, while the
authorities project foreign investment of 25 billion
dollar over 2000-2005 for 3rd five year development
plan of the country, which all represent acceptable
exploration activities and plans.
Iran’s duties regarding Caspian basin oil:
Recent explorations show that around two thirds of the
Caspian oil reserves are located in the northern part
of the sea, moreover, Caspian oil in the Iranian
territory side has located in deeper waters, so, for
the time being, it doesn't seem that exploration of
Iranian side Caspian reserves be economical, when the
investment funds are restricted and losing the
opportunities of exploitation of
cheap-inhand-transportable southern common reserves
are irretrievable. This is when, on one hand, Iran for
the Caspian Sea littoral states means, a market able
to absorb 500,000-700000 barrels of oil per day with a
transportation cost of less than one dollar per barrel
through a pipeline network in northern Iran territory,
which makes Iran one of the best and most economical
countries in terms of transfer and consumption of oil
in the Caspian Sea region, on the other hand Caspian
oil and gas absorption form littoral states means
release of southern oil capacities, so it is
recommended in advance, importing oil from the
northern borders for use in Mashad-Tehran_Tabriz, but
should not be neglected that, one part of Kazakhstan's
oil reserves is not suitable for our refineries for
its high sulfur and mercaptan contents and for this
reason we have to install special units in our
refineries in Tehran and Tabriz to make Kazakh oil fit
for refining, In other parts of the Caspian region
such as Nabat Dagh in Turkmenistan or Azerbaijan,
there is oil similar to that of Iran, which can be
mixed with Iranian crude and used in our refineries.
There are other types of crude, which have to be
desalted and made mercaptan free in order to be fit
for refining in Iran.
For this purpose the private sector has been allowed
for construction of three oil refineries to refine
Central Asian and Caucasian oil in northern Iran.
Three refineries, with capacities of 100,000 to
120,000 barrels of oil per day will be set up in
Babol, Amirabad and an area north of Golestan
province. These projects or projects for changing
online refineries to cope with the Caspian oil
specifications should be accelerated. It is notable
that National Iranian Oil Company (NIOC) is aware of
the case whereby in an international tender for a new
pipeline from Neka to Tehran, confined pipeline design
capacity to 350000b/d. Such volumes of Caspian crude
would service approximately 50% of their own northern
market needs. The logic behind this strategy is that,
being 100% dependent on Caspian crude, may result in a
probable collusion by sellers to rise their oil price.
2- Iran like any other oil exporting country would not
wish to see it’s markets undermined by Caspian crude,
but because of the strategic and geographical position
that it has, can think to the oil transit fees of
passing oil via her territory. For instance, Chinese
National Petroleum Company (CNPC) is looking into an
oil pipeline route that would run from Kazakhstan to
the border with Turkmenistan and finally be extended
through Iran to the Persian Gulf. A number of major
Western oil companies are also studying the
feasibility of building an oil pipeline from
Kazakhstan via Iran to the Persian Gulf. Because oil
transit dose not come under OPEC quotas framework, then
Iran can think jointly to both of “Caspian crude
transiting revenues” and “expanding it’s own crude
markets in an OPEC oil export framework”.
Thus, this CNPC project and the project for
transporting oil & gas from Kazakhstan & Turkmenistan
(respectively) to the Pakistan should be reviewed
closely to compete with central Asia oil and gas
project (pass through Afghanistan), which supports
severely by U.S if our project is economically feasible.
3-Iran could earn fees for swap transactions or for
providing a transit route. The fees could be $1 per
barrel of oil (or $0.10 per cubic meter of gas) above
the transport costs Iran would have to bear. At the
high end, that could in theory mean $1.5 billion a
year ($1 billion for three million barrels per day
(b/d) and $500 million for 50 billion cubic meters a
year). Kazakhstan has been engaged off-and-on in crude
oil swaps with Iran.
OIL SWAP IS NOT A LONG TERM REMEDY:
In August 19, 1997; USA exempted oil swap trough Iran
from ILSA (Damato) ban. Since Sales of what is called
‘early oil’ are crucial to the profitability of the
Caspian projects, and without them, the developers
would have no revenue until the pipelines are built.
If the projects had no way to sell oil except via a
pipeline, then those controlling the pipeline route
would be in a position to extract high prices. In
particular, Russians could charge such high fees for a
pipeline from the Kazakh oil fields that they, rather
than Kazakhstan, would reap most of the benefits. In
practice, swaps of early oil have been a useful tool
for Kazakh oil development, but the oil swapped has
all come from the Kazakh share rather than from what
belongs to US oil companies.
Then Although cheap energy imports from the Caspian would allow Iran to free up more of its own resources for export and Using
Caspian oil and gas in the large cities of northern
Iran would free up Iranian Oil, allowing more exports
through the Persian Gulf, eliminates internal crude
transportation costs, by not having to bring
equivalent oil from Southern fields meanwhile, Swap
volumes are not material, and have the advantage of
falling outside of OPEC accounting but Iran must be
careful of the USA trick of oil swap and not to rely
on SWAP for long-term. So it is recommended in
advance, establishment of a Fund like that which now
exists for extra oil revenues, just for swap revenues,
to accelerate investing on Iran energy export projects
to the west from Armenia and Turkey routes.
CONCLUDING REMARKS:
It would be unwise to assume that the region will be a
major energy producer in the next one or two decades.
For now, under any scenario, the Caspian could improve
global energy security at the margins and It would be
mistaken to view the Caspian region as a new Persian
Gulf and accordingly to over-emphasise its strategic
value to the industrialized world (even for tomorrow).
The prospects for Caspian energy development are
mixed. In addition to the mentioned uncertainties
about the future of the Caspian oil, one certain
subject remains which will consume more or less the
Caspian oil for export and that is: Given reasonable
expectations for economic growth, neighboring
countries such as the Ukraine, Romania, Bulgaria and
Turkey can absorb much of the projected export surplus
of Caspian oil over the next decade. Projected
increases in oil demand from these countries, combined
with exports to supply refineries in Grozny, Russia
and northern Iran could absorb 1 million barrels to
1.5 million barrels of oil a day by 2010. This remains
not sufficient extra resources to export and to ensure
Asian thirsty regions of oil. What could say is that
Caspian oil will never be a global swing producer and
its production will be strategically tied to Southern
Europe and the Black Sea.
Even though the Caspian energy reservoir may not
compare favorably with the Persian Gulf and the
Arabian Peninsula, it has the potential to meet the
alternative energy security requirements of the
western world and it may play "a role as a marginal
supplier" in "arresting a jump in the price of oil" in
a high price environment and diversifying supply,
"much as the North Sea (does) today.
Finally, Iran like other OPEC Gulf producers should not
wish to see it’s Asian markets undermined by Caspian
crude. Therefore for sound commercial reasons Iran
should not plan for long run on SWAP revenues and
should work promptly to finalize Iran energy export
projects to the Europe and the South East Asia. Further
more the other priority for Iran must be prosecution
of Caspian legal regime to find a favorable solution.
Sources:
1- Christopher Bollyn, “The Great Game - The War For
Caspian Oil And Gas”.
2- Julian Lee Senior Energy Analyst, “OIL PRICE TRENDS
& INVESTMENT PROSPECTS IN THE Caspian Sea”, Center for
Global Energy Studies, United Kingdom.
3- Arjun Makhijani, “Securing the Energy Future of the
United States: Oil, Nuclear, and Electricity
Vulnerabilities and a post-September 11, 2001 Roadmap
for Action”, Institute for Energy and Environmental
Research, Takoma Park, Maryland, November 2001.
4- Brenda Shaffer, “A Caspian Alternative to OPEC”,
November 7, 2001,reprinted from the Wall Street
Journal.
5- Bob Tippee, “The future for oil in the Caspian”, 01
Sep 2002.
6- “CASPIAN OIL ON THE EAST- WEST CROSSROAD”, January
2002 Saulius Piksrys, CEE Bankwatch Network.
7- Dr. S. M. Rahman, “Energy Security Imperatives:
Constructing a Paradigm of Regional Cooperation for
Caspian Sea”.
8- Mohammad Ali Movahed (NIOC Legal Adviser), “Iran
and Opportunities to Benefits from Energy Development
Projects in Central Asia and the Caucasus”, Tazehaye
Eqtesad; Economic, Banking & Scientific (Monthly),
July 2000. No. 4.
9- Shebonti Ray Dadwal (Ph.D. Research Officer),
“Caspian Oil: Transporting to the Market”, Institute
for Defense Studies & Analysis, India.
10- Rilwanu Lukman (Secretary General of OPEC), “OPEC:
past, present and future perspectives”.
11- Gholamhossein Hassantash, “Iran’s Role in
Transmitting Oil and Gas to East and South Asia in the
New Decade”, Eghtessad-e-Energe (Energy Economics),
Jan 2000, No.7 & 8.
13- H. Ghanimifard, “Iran’s Oil and Gas Industry
Current Situation, Future Prospects”, Iran Today;
Economic Magazine (Monthly), Apr. - May 1998, No. 20.
14- Samsam Bakhtiari and Fariba Shahbudaghlou, “OPEC
oil supply forecasts challenged”, IEA.
15- Bernard A. Gelb, “Caspian Oil and Gas: Production
& Prospects1”.
16- GENERAL World Energy Outlook: A Middle East
Perspective, Walid Khadduri, MEES, feb2002.
17-International energy outlook 2002.
18- Manouchehr Vaziri, “THE CASPIAN SEA OIL
TRANSPORTATION POTENTIALS THROUGH IRANIAN SEAPORTS”,
Department of Civil Engineering, Sharif University of
Technology, I.R. Iran.
19- Nersi Qorban, “Iran, the Best Oil Market for
Caspian Sea Littoral States”, Eqtesad-e Farda journal,
August 2002, No. 7.
20- Terry Adams, former president of AIOC, “Caspian
Hydrocarbons, the Politicization of Regional
Pipelines, and the Destabilization of the Caucasus”.
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