The Caspian Region, being rather affluent in terms of the hydrocarbon resources, is one of the major centers in the system of the energy fuel extraction that is integrated into the world oil and gas markets. Additionally, the region of the Caspian Sea is also a very important component in the process of formation of the energy transportation infrastructure in the Eurasian continent.
To date, there are three priority areas of the oil and gas supplies to world markets:
- the European with the main consumers being the EU countries;
- the East Asian with China as a major consumer;
- the Middle East that connects the traditional production regions with the marine oil transportation routes.
In the medium term, the European route will remain the busiest for the Caspian energy resources transportation. All the Caspian Five expressed their interest in redirecting of the additional volumes of the hydrocarbons through the pipelines (present and future) that transport the raw materials towards the EU.
Although the East Asian destination has been gaining its significance recently, whether the
volumes of the hydrocarbons extracted from the eastern Caspian coast (and the proximate areas) are going to increase will depend largely on the success of the mega-projects of Kashagan and Galkinish.
Progress in the negotiations on the Iranian nuclear issue conducted within the P5+1 Group, which comprises six international mediators and Iran, makes it possible for the Caspian countries are not only to restore the previous volumes of oil swap operations but even to increase them significantly.
While speaking about the three main corridors of the Caspian hydrocarbons supply, one should also take into account the existence of the sub-corridors that compete with each other for the access to the raw materials deposits and for the markets.
The European direction has the most extensive network of such sub-corridors. The following routes are worth special mentioning: Pro-Russian pipelines; Pro-European pipelines; and the Trans-Caspian routes.
It is important to note that the most intense competition is between Pro-European and ProRussian routes. As for the economic feasibility, both Pro-Russian and Pro-European pipelines are on equal footing. However, from the strategic standpoint, Pro-Russian arguments are clearly losing to its rivals. It is particularly apparent when analyzing the progress made in terms of the implementation of the South Energy Corridor project.
All in all, it is important to remember that one of the major features of the energy corridors passing through the Caspian Region is their dependence on the geopolitical situation.
Significant changes in the Caspian Energy Corridors configuration may only occur if the coastal states begin full-scale development of the largest oil and gas fields on the Caspian shelf.