The Caspian Sea region continues to be a pivotal energy hub, contributing significantly to global oil and natural gas markets. Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan account for a substantial share of hydrocarbon reserves, with petroleum production from offshore Caspian fields constituting 1% of global oil supply and natural gas output exceeding 4 trillion cubic feet (Tcf) annually. The region holds an estimated 46 billion barrels of proven oil reserves and 610 Tcf of natural gas reserves as of 2025.
Azerbaijan’s Oil and Gas Dominance
Azerbaijan dominates offshore production, with 96% of its crude oil and 100% of its natural gas output sourced from the Caspian Sea. Its flagship project, the Azeri-Chirag-Guneshli (ACG) field, produced an average of 375,000 barrels per day (b/d) in 2023. The $6 billion Azeri Central East (ACE) platform, which commenced operations in 2024, is expected to stabilize declining output. The country’s natural gas reserves stand at 60 Tcf, with the Shah Deniz field accounting for over 50% of production. Azerbaijan’s crude oil exports remain stable at approximately 620,000 b/d, with 83% of shipments transported via the Baku-Tbilisi-Ceyhan (BTC) pipeline to Türkiye.
Kazakhstan’s Expanding Energy Sector
Kazakhstan, the second-largest producer in the Caspian region, reported an oil production level of 1.9 million b/d in 2024, with offshore production contributing 15%. Its key petroleum assets include the Tengiz, Kashagan, and Karachaganak fields, collectively producing over 1.1 million b/d. The Caspian Pipeline Consortium (CPC) pipeline remains Kazakhstan’s primary crude export route, carrying 80% of shipments, despite ongoing efforts to diversify transport corridors via the BTC pipeline and alternative seaborne routes. Kazakhstan’s natural gas reserves total 85 Tcf, with production reaching 1.0 Tcf in 2023. However, 35% of gross output is reinjected to enhance crude oil recovery. Seasonal power outages and infrastructure constraints continue to challenge Kazakhstan’s energy sector growth.
Turkmenistan’s Natural Gas Leadership
Turkmenistan holds the world’s fifth-largest natural gas reserves at 400 Tcf, with annual production exceeding 3.0 Tcf. The Galkynysh Gas Field, one of the world’s largest, has an estimated 953.5 Tcf in reserves and produces 3.2 billion cubic feet per day (Bcf/d). China remains the top consumer of Turkmen natural gas, importing 1.2 Tcf via the Central Asia-China pipeline in 2022. The country aims to boost exports through the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and the proposed Trans-Caspian Pipeline (TCP) linking Turkmenistan to European markets via Azerbaijan. However, high methane emissions from its fields may hinder its ability to meet European Union environmental standards for gas imports.
Uzbekistan’s Declining Natural Gas Output
Uzbekistan, with 65 Tcf of natural gas reserves, produced 1.5 Tcf in 2023 but faces a steady production decline from its 2008 peak of 2.4 Tcf. The country increasingly relies on imports from Russia and Turkmenistan to meet domestic demand. Uzbekistan’s Kandym Gas Processing Complex, a joint venture with Russia’s Lukoil, has a processing capacity exceeding 280 Bcf annually. Despite gas shortages, Uzbekistan continues to export electricity, albeit at reduced levels, with exports declining from 8.1 billion kilowatt-hours (kWh) in 2013 to 2.0 billion kWh in 2023 due to aging infrastructure and supply constraints.
Kazakhstan’s Coal and Uranium Sectors
Kazakhstan remains the Caspian region’s dominant coal producer, ranking as the world’s eighth-largest in 2023. It produced 130 million short tons of coal, consuming 92 million short tons domestically. The country’s reliance on coal for electricity generation continues, with coal-fired plants accounting for 61.7% of its total power output. Meanwhile, Kazakhstan’s uranium industry is a critical player in global nuclear fuel markets, supplying 43% of mined uranium worldwide in 2022. Although the country decommissioned its only nuclear power plant in 1999, plans for a new facility are under consideration.
Electricity Generation Across the Region
Electricity generation across the Caspian region varies widely. Azerbaijan generated 29.1 terawatt-hours (TWh) in 2023, with fossil fuels accounting for 93% of output. Kazakhstan led the region in power production, generating 114.2 TWh, primarily from coal and natural gas. Turkmenistan generated 33.8 TWh, entirely from natural gas-fired plants, while Uzbekistan produced 76.3 TWh, with 86% sourced from fossil fuels. Renewable energy development remains limited, but Azerbaijan has outlined plans to add 8.0 gigawatts (GW) of carbon-free capacity by 2030, including solar, wind, hydrogen, and green ammonia projects.
Shifting Energy Trade Dynamics
Energy trade dynamics continue to shift as regional producers seek new export markets. Azerbaijan’s natural gas exports to Europe increased by 4% in 2023, supported by the Trans-Anatolian Pipeline (TANAP) and the Trans-Adriatic Pipeline (TAP). Kazakhstan expanded crude exports via BTC, increasing shipments by 54% year-over-year. Turkmenistan’s planned Line D of the Central Asia Gas Pipeline could further solidify its role as a major supplier to China, targeting 2.3 Tcf in annual exports by 2028. However, geopolitical risks, infrastructure vulnerabilities, and environmental concerns remain key factors influencing the long-term stability of energy supply chains in the Caspian region. /// nCa, 14 February 2025 (cross-post from Environment + Energy Leader, Photo Credit: AI Generated Image)