Paper Presented by Nathaniel Babajideat at the 1st IAEE Eurasian Conference, 28th - 31st August 2016, Hilton Hotel - Baku, Azerbaijan.

1. a.babajide@dundee.ac.uk │ www.cepmlp.org
Energy Security and Economic Performance
of the Caspian Region: How Vulnerable is the
Region to Falling Oil Price?
Presented by
Nathaniel Babajide
PhD Scholar
Centre for Energy, Petroleum and Mineral Law and Policy (CEPMLP)
University of Dundee, United Kingdom
1st IAEE Eurasian Conference Presentation
August 28 - 31, 2016, Baku, Azerbaijan.

2. Presentation Outline
Introduction
Overview of Caspian Region
Research Methodology
Findings and Discussion
Conclusion and Recommendation

3. Caspian Region – Overview
Basin countries: Azerbaijan, Iran,
Kazakhstan, Russia,
Turkmenistan
World’s Location: 41°40′N, 50°40′E
Surface Area: 22,142,990 sq. km
Water volume: 78,200 km3 (18,800 cu mi)
Population: 254.1 million (1.1%AGR)
GDP (current US$): $2.63 trillion (2014)
GDP Growth (Av.): 4.3% in (2014)
Energy Reserves:
Crude oil: 298.6 billion barrels
Natural gas: 86.8 trillion m3
Coal : 190.6 billion toe
Nathaniel Babajide │ a.babajide@dundee.ac.uk │ www.cepmlp.org

4. Source: BP, 2015
Caspian’s Energy Reserves and R/P Ratio
• Caspian holds about 17.6%, 46.4% and 21.4% of global proven reserves of
oil, natural gas and coal respectively
• Iran (53%) and Russia (35%) hold the region’s highest oil reserves
• Iran and Russia collectively accounts for 77% of Caspian gas reserves
• Russia (82%) and Kazakhstan (18%) own the entire Caspian coal reserves

5. Source: World Bank (2016)
Caspian’s Key Indicators
Surface Area
(Million
sq. km)
Population
(Million)
GDP (in Billion
constant 2005
US$)
GDP per
capita
constant 2005
US$)
Energy use
per capita
(Kg of oil
equivalent)
Azerbaijan 0.09 9.53 31.24 3275.71 1472.90
Iran 1.75 78.14 276.74 3541.43 2883.40
Kazakhstan 2.72 17.29 96.50 5580.89 4457.80
Russia 17.10 143.82 999.83 6843.93 5283.41
Turkmenistan 0.49 5.31 20.56 3873.77 4943.05
Region
Total/Average*
22.14 254.09 1424.86 4623.15* 3808.11*
• Russia covers about 77% of Caspian’s total surface area
• Russia and Iran are the two most populous and biggest economies in the
region
• In terms of GDP and energy use per capita, Russia and Azerbaijan
respectively have the highest and lowest values

6. Caspian’s Energy Outlook
• Caspian's TPEC stood at 1032.7
million toe (~8% of world’s TPEC ) in
2014
• Energy mix is dominated by fossil
fuels (>90%), with natural gas as
dominant fuel
• In 2014, Caspian produces and
consumes 17.2 and 5.7 million b/d
of crude oil respectively
• Caspian economies export 40-80%
of their total oil production
• Russia supplies >60% of the
region’s export total followed by
Caspian’s TPEC by Fuel, 2014
Source: BP, 2015
Source: Worldbank, 2015
Source: BP, 2015

7. Economic Outlook of Caspian Region
• Caspian's intermittent economic growth averaged 7.3% from 2000-2014 and
4.3% in 2014
• From 2010-2014, Turkmenistan recorded the highest average GDP growth
rate 11.1%, followed by Kazakhstan (6.0%), Azerbaijan (3%) and Russia 2.8%
Source: Worldbank, 2015

8. • In 2014, Caspian states emitted 2607.7 Mt of CO2 (7.4% of global emission)
• Although with declining trend, Russia is the biggest emitter, followed by Iran
• Caspian’s high CO2 emissions makes the region highly susceptible to global
climate change threat
Source: BP, 2015

9. Methodology
Source: APEC, 2007

10. Result and Discussion – Vulnerability Index
• Caspian economy is much more vulnerable to oil price changes as the oil
export share of GDP moves in the direction of variation in global oil market
• Vulnerability impact is more pronounced in Azerbaijan and Kazakhstan
owning to their largest contribution of oil export revenue to their GDP.

11. Result and Discussion - DPES
• DPES > 50 in Russia, Iran and Kazakhstan signifies moderately diversified
supply portfolios and thus less prone to energy supply security risk.
• Conversely, DPES < 50 in Azerbaijan and Turkmenistan suggests high
dependence on few sources of energy, thus highly prone to supply risk
• Nevertheless, the constancy of growth suggests absence of serious attention.

12. Result and Discussion - CFEP
• Caspian’s CFEP is very low, less than 4% throughout the considered period.
• Russia’s CFEP share was 3.0%, this improve to 3.7% (the highest) in 1995
and thereafter declined over the years reaching a low figure of 2.9% in 2014
• CFEP discloses the region’s high vulnerability to possible environmental
degradation

13. Conclusion
• Caspian states heavily depend on oil and gas inflows which
accounts for 40-80% of their total GDP
• Vulnerability Indicator reveals the region’s high susceptibility to
global oil price fluctuation, thus inimical to economic growth
• Although experienced meaningful economic growth under high oil
prices, but the recent downward trend places crucial burden on
economic growth
• Also, the region’s reliance on few energy sources predisposes it to
supply disruptions
• Historical trend shows fluctuating but high CO2 emission owing to
increasing fossil fuel consumption in the region

14. Recommendations
• Diversification of energy supply and foreign earning
sources
• Adoption of effective demand side management
cum energy efficiency measures
• Huge investment in renewable energy technologies
• Promoting research and development (R&D)
initiatives
• Regional cooperation among member states

15. a.babajide@dundee.ac.uk │ www.cepmlp.org
Centre for Energy, Petroleum and Mineral Law and Policy
1st IAEE Eurasian Conference Presentation
August 28 - 31, 2016, Baku, Azerbaijan.
Thanks For Listening