Caspian Oil in a Global Context

This paper provides a brief overview of the political economy of Caspian oil. It begins by situating the Caspian region's oil sectors in the larger global market, before proceeding to examine the ways in which the Azerbaijani, Turkmen, and Kazakh oil sectors have been organised and governed since 1991. The paper then considers the likely consequences of recent policy shifts in Kazakhstan, the region's most important oil producer. A further section considers the questions of transport infrastructure and export routes, which remain particularly complex problems for Central Asia's landlocked producers. This is followed by a brief conclusion. The paper's central argument is that it is by no means certain that the Caspian region's hydrocarbon potential will be developed in a timely, economically efficient way. While the impact of geology, geography, and international price movements can hardly be ignored, policy-makers can do much to raise or lower the long-term elasticity of the supply by the Commonwealth of Independent States. Unfortunately, policy in the region seems, on present trends, likely to lower it.