The Caspian sea region has the potential to export oil and natural gas to European, South Asian and East Asian markets. Caspian region countries are developing several approaches for increasing exports of oil and natural gas due to rising energy prices and growing global demand for these fossil fuels. Some of the Caspian countries are jointly developing oil export capacity whilst others are focusing on attracting enough investment to create their own routes.
Caspian oil and natural gas traditionally went through Russia via Soviet infrastructure and some could get to western markets. Kazakhstan and Azerbaijan have had the most success when it comes to Caspian exports and have constructed several major pipelines. Kazakhstan and Azerbaijan are currently working to develop new export routes such as the Kazakhstan-Caspian Transportation System (KCTS). KCTS is expected to supply 300 000 bpd to global markets and will be gradually increased to 800 000 bpd. The investment will be funded partly by foreign investments and is likely to cost US$ 4 billion. Kazakhstan also partnered with China to build an oil pipeline in 2009 which is currently being upgraded.
A project to build a pipeline to supply South Asia with natural gas is currently being supported by Caspian countries. The pipeline, when complete, will have a capacity of 1 trillion ft3/y. But, recent tensions between Pakistan and India are threatening to stall construction. Caspian oil currently moves through South Asia via Iranian oil swaps. Iran imports oil from Central Asian countries that is sent to refineries in Tehran and Tabriz and then delivers an equivalent amount of oil to potential buyers in the Persian Gulf, bypassing the challenge of getting Central Asian oil to global markets.
A fourth US facility has been granted export status by the Obama Administration, showing acceleration in the approval process for gas exporters, as it has only been five weeks since the last export permit for natural gas exports was granted to a terminal in Lake Charles, Louisiana. Dominion Resource Inc is the latest recipient of a permit to export LNG from its Cove Point terminal on Maryland’s Chesapeake Bay. Cove Point is permitted to export up to 0/77 billion ft3/d of natural gas and increases overall US exports of natural gas to 6.37 billion ft3/d. Shipments from the terminal are under contract for 20 years with affiliates of Tokyo based company, Sumitomo Corp. and GAIL India Ltd. It is believed that approximately 24 projects are currently seeking export permits to ship surplus natural gas from the unconventional revolution abroad.