The Caspian Energy Resources and the World’s Energy Needs Laurent Ruseckas First, I am going to outline the position of Caspian energy resources relative to global reserves and global supply. I argue that global energy security is not at the core of what is important to the west about the Caspian region, which is a contrary view. Second, I will look at the pipeline question and offer a few observations about what the market wants to happen with Caspian oil flows. It has become conventional wisdom that Caspian oil and gas will be crucial to world energy supplies in the next decade and beyond. The corollary of this that is held by a lot of policy makers in the foreign policy community – in the U.S. and Europe and elsewhere – is that energy security offers a very important reason, perhaps the main reason, for policy makers and think tank people to be concerned about the Caspian region. I would like to challenge both of these assumptions. First of all: gas. There is a great deal of gas in the Caspian: 8 trillion cubic meters. However, the Caspian region has the problem that it is stuck between number one and number two in the world in terms of gas reserves. Russia has about 6 times the reserves proven of the entire Caspian, and Iran comes in second with about 2.5 times Caspian reserves. When talking about gas, of course, we have to look at specific markets more closely since there is no global market for gas the way there is for oil. There are basically three markets here: China, South Asia and Turkey. For China, I would just like to point out that Central Asia is a long way away from China. There is a tremendous amount of gas there, but in the coastal regions it can be met at this point more economically by imports of liquefied natural gas, LNG. And in the northeast, where demand is also growing strongly, it is much closer to Russian gas fields. A gas pipeline from Central Asia to China will probably happen, not at all soon, but rather in the very long run. 17