Oil Market in The Azerbaijan Republic Essay Example | Topics and Well Written Essays - 2000 words

Oil Market in The Azerbaijan republic - Essay ExampleIt also contains the worlds largest deposits of inwrought gas (Energy Information Administration 2008).The breakup of the former Soviet Union has attracted much of the worlds interests in the huge crude and gas reserves of the Caspian sea region. The newly free-living countries have signed many contracts worth megs of dollars to develop the regions inunct and gas fields. The Caspian Sea has the potential to blend in one of the major oil and gas outturn areas in the world similar in its faculty to the North Sea and the Gulf of Mexico (Energy Information Administration 2008).During World War II, Azerbaijans oil production poorly(p) at about 500,000 barrels per day (cask/d). Oil extracted from Azerbaijan constituted 71.4% of overall oil output of former Soviet Union. Following the war, the former Soviet Union directed resources elsewhere causing Azerbaijans oil production to drop dramatically. In 1991, Azerbaijan gained it s independence from the former Soviet Union and oil production was at a minimum low of 180,000 bbl/d (Energy Information Administration 2008).The qualification of Azerbaijan to develop its oil and immanent gas resources was dependent on the availability of sources of capital and technology. Since then, Azerbaijan officials have been trying to attract outside(prenominal) investments into their oil and gas industry. Azerbaijans has 1.2 billion barrels of proven oil reserves in addition to enormous viable reserves in the Caspian Sea. These oil reserves in addition to successful governmental policies have attracted foreign international investment to Azerbaijan. Since 1996, over $3.4 billion has been invested in the oil sector with expectations to reach $2 billion in 2006. Ever since, Azerbaijans oil industry experienced a boom reaching almost 800,000 bbl/d in 2007. Much growth is still anticipated during the 21st century. It is expected that by 2010, Azerbaijans oil production woul d exceed 1.5 million bbl/d (www.stat.gov.az, 2006).New fields in the Caspian Sea were actual through joint ventures (JVs) and production sharing agreements (PSAs). JVs were later converted to PSAs in 2000, due to their restrictions on the ability to export their oil (Energy Information Administration 2008).The Caspian Sea has 30 billion tons of oil, 18-20 trillion blockishal meters of gas, which comprises 15 percent of the world carbon-hydrogen resources. The oil deposit that belongs to Azerbaijan 3-5 billion tons of oil, 5 trillion cubic meters of gas the oil production in Azerbaijan is expected to increase rapidly (SOCAR, 2008).. Azerbaijan carries most of its oil products from the Caspian Sea to the European market through the following four major pipelines Baku-Tbilisi-Ceyhan (BTC), Baku-Novorossiysk, Baku-Supsa, and Caspian Pipeline Consortium (CPC) as shown in figure 1 (Energy Information Administration, 2008).Figure 1 Four Major Pipelines of AzerbaijanThe Caspian Sea is al so sizeable with natural gas. The largest natural gas field in Azerbaijan is Shah Deniz. Azerbaijan is planning to supply natural gas to turkey and European countries through the development of South Caucasus Pipeline (SCP) (SOCAR, 2008). The former Soviet Union lacked of environmental rampart has caused heavy environmental damages to Azerbaijan and the Caspian Sea. Mismanagement of the oil industry has generated much pollution and alteration of the natural environment of Caspian Sea region. Furthermore, oil and