This is not the first time that the Caspian has been viewed as a major source of oil, and so potential conflict. In the late nineteenth century, the region around the city of Baku — then part of the Russian empire, now in Azerbaijan — was a prolific source of petroleum and so a major strategic prize. Future Soviet dictator Joseph Stalin first gained notoriety there as a leader of militant oil workers, and Hitler sought to capture it during his ill-fated 1941 invasion of the USSR. After World War II, however, the region lost its importance as an oil producer when Baku’s onshore fields dried up. Now, fresh discoveries are being made in offshore areas of the Caspian itself and in previously undeveloped areas of Kazakhstan and Turkmenistan.
According to energy giant BP, the Caspian area harbors as much as 48 billion barrels of oil (mostly buried in Azerbaijan and Kazakhstan) and 449 trillion cubic feet of natural gas (with the largest supply in Turkmenistan). This puts the region ahead of North and South America in total gas reserves and Asia in oil reserves. But producing all this energy and delivering it to foreign markets will be a monumental task. The region’s energy infrastructure is woefully inadequate and the Caspian itself provides no maritime outlet to other seas, so all that oil and gas must travel by pipeline or rail.
Russia, long the dominant power in the region, is pursuing control over the transportation routes by which Caspian oil and gas will reach markets. It is upgrading Soviet-era pipelines that link the former SSRs to Russia or building new ones and, to achieve a near monopoly over the marketing of all this energy, bringing traditional diplomacy, strong-arm tactics and outright bribery to bear on regional leaders (many of whom once served in the Soviet bureaucracy) to ship their energy via Russia. As recounted in my book ” Rising Powers, Shrinking Planet,” Washington sought to thwart these efforts by sponsoring the construction of alternative pipelines that avoid Russian territory, crossing Azerbaijan, Georgia and Turkey to the Mediterranean (notably the BTC, or Baku-Tbilisi-Ceyhan pipeline), while Beijing is building its own pipelines linking the Caspian area to western China.
All of these pipelines cross through areas of ethnic unrest and pass near various contested regions like rebellious Chechnya and breakaway South Ossetia. As a result, both China and the U.S. have wedded their pipeline operations to military assistance for countries along the routes. Fearful of an American presence, military or otherwise, in the former territories of the Soviet Union, Russia has responded with military moves of its own, including its brief August 2008 war with Georgia, which took place along the BTC route.
Given the magnitude of the Caspian’s oil and gas reserves, many energy firms are planning new production operations in the region, along with the pipelines needed to bring the oil and gas to market. The European Union, for example, hopes to build a new natural gas pipeline called Nabucco from Azerbaijan through Turkey to Austria. Russia has proposed a competing conduit called South Stream. All of these efforts involve the geopolitical interests of major powers, ensuring that the Caspian region will remain a potential source of international crisis and conflict.