Central Asia: Locus of World Energy Resources

Central Asia, a landlocked region with huge hydrocarbon resource base on the global energy map has no direct access to world markets; the available option for energy transportation to world markets is the pipelines which are cost effective and reliable. Pipelines have gained the attention of regional and as well as world powers. Therefore, after gaining independence, Central Asian countries gave considerable attention to the development of their energy sector by exporting energy resources to achieve their economic sovereignty as there was ready demand for these products in the world markets through which they were able to earn much needed hard currency for survival and the economic development. In this way Central Asia emerged as a vibrant source of energy supply, there has been a new quest for alternative and shortest transportation routes to export hydrocarbons from this region to rest of the world as most of the energy importing countries have been diversifying their sources of supply since the volatile nature of gulf region – the main source of energy in the world. But the region being landlocked has faced considerable difficulties in exporting energy products since the prevailing pipelines laid during the Soviet era. Therefore, Central Asian countries need multiple transport linkages such as pipelines, an important means to enter the energy markets and integrate the region with other parts of the world keeping in view the magnitude of future energy use through sea, road and rail is expensive rather dangerous and almost unfeasible for mass quantity.

However, hype was created when Central Asian countries gained independence in the aftermath of Soviet breakup and they tried to use their natural resources such as hydrocarbons in the task of achieving their economic independence and therefore, several big powers entered the scene in exploring and exploiting these resources. This way, the Central Asian countries got the opportunity to build the energy pipelines and export their resources to the world markets in different directions in order to minimize the Russian monopoly. In doing so, Central Asian countries developed connections with different big world players in order to gain maximum benefits from the New Great Game of their involvement in the regional trade, transportation and energy resources. Therefore, the geo-strategic dimension is providing them opportunities to play geopolitical role and in accordance to that some steps have been taken by them to secure their geopolitical role in the New Great Game.

Because of the energy wealth, Kazakhstan, Turkmenistan and Uzbekistan got a prominent space on the hydrocarbon map of the world. Kazakhstan has proven reserves estimated at 30.0 thousand million barrels (3.9 thousand million tons) of oil and proven natural gas reserves of 35.0 trillion cubic feet (1.3 trillion cubic meters), which constitutes 1.7% and 0.5% of global proven reserves with a reserve to production ratio (R/P) of 42.7 years and 40.7 years respectively. Turkmenistan has proven reserves estimated at 0.6 thousand million barrels (0.1 thousand million tons) of oil and proven natural gas reserves of 688.1 trillion cubic feet (19.5 trillion cubic meters), which constitutes 0.05% and 9.9% of global proven reserves respectively with a reserve to production ratio (R/P) of 7.4 years and more than 316.8  years respectively. Uzbekistan has proven reserves estimated at 0.6 thousand million barrels (0.1 thousand million tons) of oil and proven natural gas reserves of 42.7 trillion cubic feet (1.2 trillion cubic meters), which constitutes 0.05 % and 0.6% of global proven reserves respectively with a reserve to production ratio(R/P) of 25.4 years and 21.4 years respectively.

The overall picture of these three republics shows that the proven oil and gas reserves are 31.2 thousand million barrels (4.1 thousand million tons), and 766.2 trillion cubic feet (21.71 thousand cubic meters), which represents 1.9% and 11.6% of proven oil and gas reserves of the world respectively. The total reserve to production ratio (R/P) of all the three republics stand at 83.4 years, 324.2 years and 66.8 years which accounts 474.4 years and in an average the Mean Life of proved hydrocarbon reserves of all the three republics is 158.13 years.

However, taken together proven and probable (possible) reserves of oil and natural gas reserves, the region has 102.0-193.3 billion barrels of oil and 507-608 trillion cubic feet of natural gas, which constitutes 23-25% of world proven and probable hydrocarbon reserves, nevertheless, even at this level, they would still be of strategic importance to the overall global balance. Given these reserves the region is going to hold a vital position in the world in times to come. Though, the share of the region is not so large and the impact in the normal times would not be so hulking in global energy scenario, but, in case of any eventuality in the Gulf region this could nudge the world’s attention and accordingly be an alternative source. The region will have a large impact when it comes to the element of natural gas as the preference for this energy element is on rise. So, the diversification of hydrocarbon supply through the development of energy pipelines of Central Asian region would lessen the anxiety of consumers relying on only major sources of energy like Persian Gulf over the period of time.

Having this kind of potential, Central Asia emerged as a vital region on the global energy map and is the only overland connection between two important continents i.e., Asia and Europe. The region, therefore, enjoys both economic and strategic importance in the continental as well as global context, this lead to the attention of big powers as it is a nucleus around which they revolves. Therefore, with the development of this vast energy wealth, the region is going to be the centre of attention of the nations surrounding and the countries are in need of energy and would enhance the importance of the region even further if new transportation routes and energy pipelines would become available and Central Asia would be in a position to gain better access to the Persian Gulf. In the background of this support lies the thought that by virtues of energy pipelines, the natural resources in the Central Asia could be transmitted to the international markets through the New Silk Route that includes railways, highways, pipelines, airlines and energy cables. This would lead to New Silk Road strategy.

Dr. Mohammad Ibrahim Wani is Post Doctorate, Energy Economist, Department of Economics, University of Kashmir