Table of Contents

Author 3
Introduction 23
Chapter 1. The development of Caspian gas sector during the Soviet period
and relationship with Russia after independence .27
1.1. Central Asia and Azerbaijan contribution to the USSR natural gas industry 27
1.2. Russia-CIS gas supply relations after establishment of newly independent states . 31
1.3. Central Asia and Caspian countries in the global gas industry 40
Chapter 2. New export routes . 44
2.1. Supplies to Russia. North route . 45
2.2. Turkey energy hub policy. West route 54
2.3. South route 71
2.4. East route . 73
2.5. Consolidated capacities for North, West, South and East routes 76
Chapter 3. Export markets analysis: growth potential and profitability .78
3.1. Former Soviet Union (FSU) countries 78
3.1.1. Russia . 78
3.1.2. Ukraine . 86
3.1.3. Georgia 92
3.1.4. Tajikistan 96
3.1.5. Kyrgyzstan 98
3.2. Europe 101
3.2.1. Turkey . 101
3.2.2. Austria 108
3.2.3. Bulgaria 112
3.2.4. Hungary . 116
3.2.5. Romania . 122
3.2.6. Greece 128
3.3. Asia 133
3.3.1. China 133
3.3.2. India . 139
3.3.3. Pakistan 146
3.3.4. Northern Iran . 150
Chapter 4. Azerbaijan 156
4.1. Azerbaijan's gas industry: history and current state 156
4.2. Azerbaijan's energy and gas policy 160
4.3. Legal and tax regime in Azerbaijan 162
4.4. Gas reserves in Azerbaijan and potential for development . 163
4.5. Gas industry players and projects review . 165
4.6. Gas infrastructure of Azerbaijan . 170
4.7. Transit policy in Azerbaijan 172
4.8. Gas exports directions of Azerbaijan . 172
4.9. Azerbaijan's positions at current markets and growth potential 174
4.10. Gas production scenarios in Azerbaijan . 178
4.11. Gas export flows in Azerbaijan . 180
Chapter 5. Kazakhstan .183
5.1. Kazakhstan's gas industry: history and current state . 183
5.2. Kazakhstan's energy and gas policy . 187
5.3. Legal and tax regime in Kazakhstan . 190
5.4. Gas reserves in Kazakhstan and potential for development 195
5.5. Gas industry players and projects review . 198
5.6. Gas infrastructure of Kazakhstan 205
5.7. Transit policy in Kazakhstan . 209
5.8. Gas exports directions of Kazakhstan . 212
5.9. Kazakhstan's positions at current markets and growth potential .214
5.10. Gas production scenarios in Kazakhstan 220
5.11. Gas exports flows in Kazakhstan 222
Chapter 6. Turkmenistan 225
6.1. Turkmenistan's gas industry: history and current state . 225
6.2. Turkmenistan's energy and gas policy 228
6.3. Legal and tax regime in Turkmenistan . 229
6.4. Gas reserves in Turkmenistan and potential for development . 232
6.5. Gas industry players and projects review . 237
6.6. Gas infrastructure of Turkmenistan 246
6.7. Transit policy in Turkmenistan . 250
6.8. Gas exports directions of Turkmenistan . 250
6.9. Turkmenistan's positions at current markets and growth potential 252
6.10. Gas production scenarios in Turkmenistan 258
6.11. Gas exports flows in Turkmenistan 260
7. Uzbekistan . 262
7.1. Uzbekistan's gas industry: history and current state 262
7.2. Uzbekistan's energy and gas policy . 265
7.3. Legal and tax regime in Uzbekistan 268
7.4. Gas reserves in Uzbekistan and potential for development . 276
7.5. Gas industry players and projects review . 285
7.6. Gas infrastructure of Uzbekistan . 293
7.7. Transit policy in Uzbekistan . 296
7.8. Gas exports directions of Uzbekistan 299
7.9. Uzbekistan's positions at current markets and growth potential 300
7.10. Gas production scenarios in Uzbekistan 304
7.11. Gas exports flows in Uzbekistan 305
Chapter 8. Scenarios for Caspian gas supply to global markets through 2020 307
8.1. Key trends in Caspian gas export supply to global markets 307
8.2. Gas exports from Central Asia and Azerbaijan: scenarios . 309
8.2.1. White scenario with oil prices over US$ 70 per barrel . 309
8.2.2. Blue scenario with oil prices from US$ 55 to US$ 70 per barrel . 317
8.2.3. Red scenario with oil prices from US$ 40 to US$ 55 per barrel 324
8.3. Conclusions 331

Tables
Table 1.1. Uzbekistan gas pipeline projects timeline and throughput capacity 28
Table 1.2. Gas exports from Russia to Ukraine, Kazakhstan
and Azerbaijan in 1990-2000 (bcm) . 32
Table 2.2. Potential transport capacities in the West route for gas exports from Turkey 68
Table 3.1. Net back from Russia to Turkmenistan and demand for Caspian
and Central Asian natural gas in Russia in 2009-2020. 85
Table 3.2. Gazprom's Central Asian gas exports, comsumed by Ukraine in 2009-2020 (bcm) 91
Table 3.3. Demand for Caspian natural gas in Georgia in 2009-2020. 96
Table 3.4. Demand for Caspian natural gas in Tajikistan in 2009-2020 98
Table 3.5. Demand for Caspian natural gas in Kyrgyzstan in 2009-2020 101
Table 3.6. Current contracts for gas exports to Turkey . 104
Table 3.7. Net back from Turkey to Turkmenistan and demand
for Caspian natural gas in Turkey in 2013-2020 107
Table 3.8. Net back from Austria to Turkmenistan and demand
for Caspian natural gas in Austria in 2013-2020 . 112
Table 3.9. Net back from Bulgaria to Turkmenistan and demand
for Caspian natural gas in Bulgaria in 2013-2020 . 116
Table 3.10. Net back from Hungary to Turkmenistan and demand
for Caspian natural gas in Hungary in 2013-2020 . 121
Table 3.11. Net back from Romania to Turkmenistan and demand
for Caspian natural gas in Romania in 2013-2020 . 127
Table 3.12. Net back from Greece to Turkmenistan and demand
for Caspian natural gas in Greece in 2013-2020 132
Table 3.13. Net back from China to Turkmenistan and demand
for Caspian natural gas in China in 2011-2020 138
Table 3.14. Net back from India to Turkmenistan and demand
for Caspian natural gas in India in 2016-2020 . 145
Table 3.15. Gas prices for various types of consumers in Pakistan as of August 2008 . 149
Table 3.16. Net back from Pakistan to Turkmenistan and demand
for Caspian natural gas in Pakistan in 2016-2020 150
Table 3.17. Demand for Caspian natural gas in Northern Iran in 2009-2020 . 155
Table 4.1. Recoverable gas reserves by major field in Azerbaijan 164
Table 4.2. Underground storage upgrades in Azerbaijan . 171
Table 4.3. Azerbaijan's gas balance in 2008-2020. White scenario (bcm) . 181
Table 4.4. Azerbaijan's gas balance in 2008-2020. Blue scenario (bcm) 181
Table 4.5. Azerbaijan's gas balance in 2008-2020. Red scenario (bcm) . 181
Table 4.6. Net back from Austria (Baumgarten) to Azerbaijan (Shah-Deniz)
(Euro/1,000 cubic meters) . 182
Table 5.1. Kazakhstan's fields with gas reserves, classified by type 196
Table 5.2. Gas reserves at largest fields in Kazakhstan . 197
Table 5.3. Specifications of Kazakhstan's active trunk gas pipelines 207
Table 5.4. Specifications of Kazakhstan's underground gas storage facilities . 208
Table 5.5. Export by Kazrosgaz (bcm) 214
Table 5.6. Kazakhstan's gas balance in 2008-2020. White scenario (bcm) . 222
Table 5.7. Kazakhstan's gas balance in 2008-2020. Blue scenario (bcm) 223
Table 5.8. Kazakhstan's gas balance in 2008-2020. Red scenario (bcm) . 223
Table 5.9. Net back from Austria (Baumgarten) to Kazakhstan (Beineu) with comparison
to Chineese and Russian direction (Euro/1,000 cubic meters) 224
Table 6.1. Initial gas reserves of the major in-development fields
in Eastern Turkmenistan (bcm) . 232
Table 6.2. Current proved gas reserves of major onshore fields in Turkmenistan (bcm) 234
Table 6.3. Initial reserves of the major in-development
fields in Western Turkmenistan (bcm) 236
Table 6.4. Main specifications of Turkmenistan's major trunk pipelines . 247
Table 6.5. Turkmenistan's gas balance in 2008-2020. White scenario (bcm) . 260
Table 6.6. Turkmenistan's gas balance in 2008-2020. Blue scenario (bcm) 260
Table 6.7. Turkmenistan's gas balance in 2008-2020. Red scenario (bcm) . 261
Table 6.8. Net back from Austria (Baumgarten) to Turkmenistan (Shatlyk)
(Euro/1,000 cubic meters) . 261
Table 7.1. PSA executed with foreign investors in Uzbekistan . 270
Table 7.2. Profit tax and excess profit tax in Uzbekistan 274
Table 7.3. Basic taxes and mandatory payments rates in Uzbekistan in 2008 . 275
Table 7.4. Specifications of Uzbekistan's major trunk gas pipelines 294
Table 7.5. Main technical characteristics of existing export pipelines in Uzbekistan . 295
Table 7.6. Uzbekistan's gas balance in 2008-2020. White scenario (bcm) . 305
Table 7.7. Uzbekistan's gas balance in 2008-2020. Blue scenario (bcm) . 306
Table 7.8. Uzbekistan's gas balance in 2008-2020. Red scenario (bcm) 306
Table 7.9. Net back from Austria (Baumgarten) to Uzbekistan (Shurtan)
(Euro/1,000 cubic meters) . 306
Table 8.1. Gas supplies to global markets under
the White scenario in 2009-2020 (bcm) 315
Table 8.2. Gas supplies to global markets under
the White scenario in 2009-2020 (millions of euro) 316
Table 8.3. Gas supplies to global markets under
the Blue scenario in 2009-2020 (bcm) 322
Table 8.4. Gas supplies to global markets
under the Blue scenario in 2009-2020 (millions of euro) 323
Table 8.5. Gas supplies to global markets
under the Red scenario in 2009-2020 (bcm) . 329
Table 8.6. Gas supplies to global markets
under the Red scenario in 2009-2020 (millions of euro) . 330

Figures
Figure 1.1. Gas production in Uzbekistan in 1960-1990 (bcm) . 28
Figure 1.2. Gas production in Turkmenistan in 1960-1990 (bcm) . 29
Figure 1.3. Gas production in Kazakhstan in 1970-1990 (bcm) 30
Figure 1.4. USSR gas production in 1990 (bcm). 31
Figure 1.5. Price of gas exported to Azerbaijan in 2001-2006 and imports of Russian gas . 33
Figure 1.6. Gazprom gas exports to Kazakhstan
and Kazakhstan gas exports to Russia (bcm) 35
Figure 1.7. Gas exports from Turkmenistan in 1990-2000 (bcm) 37
Figure 1.8. Planned and actual Turkmenistan's gas imports by Russia in 2004-2007 (bcm) 38
Figure 1.9. Proved natural gas reserves in Central Asia and Azerbaijan
compared with global reserves 40
Figure 1.10. Gas production in the Central Asia and Caspian region
and global gas production in 2007 (bcm) . 41
Figure 1.11. Gas production growth in Central Asia and Caspian region in 2000-2007 (bcm) 41
Figure 1.12. Gas consumption growth in Central Asia and Caspian region in 2000-2007 (bcm) 42
Figure 1.13. Destinations of gas exports from Central Asia and Caspian region in 2007 (bcm) .42
Figure 2.1. CIS gas export routes. North, South, West, East 45
Figure 2.2. Transport capacities into Russia 2008-2020 as planned (bcma) . 50
Figure 2.3. Schedule of Nabucco project . 64
Figure 2.4. Potential capacities for gas exports
from Central Asian countries eastwards (bcma) 75
Figure 2.5 Potential export capacities from Azerbaijan, Kazakhstan,
Turkmenistan and Uzbekistan by destination (based on proposed projects, bcma) . 76
Figure 2.6. Potential export capacities from Azerbaijan, Kazakhstan,
Turkmenistan and Uzbekistan by destination (based on proposed projects, %) 77
Figure 3.1. Natural gas consumption by sector in Russia, 2007 78
Figure 3.2. Total primary energy supply in Russia, 2007 . 79
Figure 3.3. Historical gas consumption and average gas prices
for industrial and residential consumers in Russia, 2000-2007 . 80
Figure 3.4. Gas demand forecast for Russia in 2008-2020 82
Figure 3.5. Potential gas production volumes in Russia in 2008-2020, by 3 scenarios (bcm) . 84
Figure 3.6. Total primary energy supply in Ukraine, 2007 . 86
Figure 3.7. Natural gas production in Ukraine in 2000-2007 (bcm) 87
Figure 3.8. Rosukrenergo's sales outside of Ukraine in 2005-2007 (bcm) 88
Figure 3.9. Ukrainian trunk gas pipelines length (thousand kilometers) . 88
Figure 3.10. Ukrainian gas transit to Europe in 2000-2007 (bcm) 90
Figure 3.11. Forecast of gas consumption
in Ukraine, by three scenarios in 2008-2020 (bcm) . 91
Figure 3.12. Total primary energy supply in Georgia, 2007 93
Figure 3.13. Georgian gas supply structure in 2007 93
Figure 3.14. Price and volumes of Georgia's gas imports from Russia in 2004-2007 . 94
Figure 3.15. Uzbekistan gas exports to Tajikistan in 2000-2007 (bcm) . 97
Figure 3.16. Tajikistan's gas supply structure in 2007 . 98
Figure 3.17. Gas deliveries from Uzbekistan to Kyrgyzstan in 2000-2007 (bcm) 100
Figure 3.18. Kyrgyzstan gas supply structure in 2007 101
Figure 3.19. Total primary energy supply in Turkey, 2007 . 102
Figure 3.20. Gas imports to Turkey in 2007 . 102
Figure 3.21. Turkey gas demand forecast with current gas export
contract with Greece by 3 scenarios (bcm) 105
Figure 3.22. Botas possible natural gas re-export volumes demand
in 2014-2020, according to White scenario (bcm) 106
Figure 3.23. Breakdown of Turkey's demand for Caspian gas
(exports and domestic consumption) by three scenarios starting from 2008 (bcm) . 106
Figure 3.24. Total primary energy supply in Austria, 2007 108
Figure 3.25. Gas consumption in Austria in 2000-2007 (bcm) 109
Figure 3.26. Gas imports to Austria in 2007 111
Figure 3.27. Total primary energy supply in Bulgaria, 2007 . 113
Figure 3.28. Gas consumption in Bulgaria in 2000-2007 (bcm) 115
Figure 3.29. Total primary energy supply in Hungary, 2007 . 117
Figure 3.30. Gas consumption in Hungary in 2000-2007 (bcm) 118
Figure 3.31. Gas imports to Hungary in 2007 120
Figure 3.32. Total primary energy supply in Romania, 2007 . 122
Figure 3.33. Gas production in Romania in 2000-2007 (bcm) . 123
Figure 3.34. Gas consumption in Romania in 2000-2007 (bcm) . 125
Figure 3.35. Structure of gas imports to Romania . 126
Figure 3.36. Total primary energy supply in Greece, 2007 128
Figure 3.37. Gas consumption in Greece in 2000-2007 (bcm) . 129
Figure 3.38. Gas imports to Greece in 2007 131
Figure 3.39. Total primary energy supply in China, 2007 133
Figure 3.40. Natural gas production in China in 2000-2007 (bcm) . 134
Figure 3.41. Gas consumption in China (including Hong Kong) in 2000-2007 (bcm) 135
Figure 3.42. Central Asian gas supply to China in 2020, by country,
with total gas pipeline capacity of 40 bcm (Blue scenario) . 137
Figure 3.43. Total primary energy supply in India, 2007 . 139
Figure 3.44. Natural gas production in India in 2000-2007 (bcm) 140
Figure 3.45. Gas consumption in India in 2000-2007 (bcm) . 142
Figure 3.46. Potential uncontracted gas demand in India (bcm) . 144
Figure 3.47. Total primary energy supply in Pakistan, 2007 146
Figure 3.48. Gas production and consumption in Pakistan in 2000-2007 (bcm) 147
Figure 3.49. Total primary energy supply in Iran, 2007 . 151
Figure 3.50. Gas production in Iran in 2001-2007 (bcm) . 151
Figure 3.51. Natural gas consumption structure in Iran 152
Figure 4.1. Azerbaijan gas production in 2000-2007 (bcm) 157
Figure 4.2. Azerbaijan gas consumption in 2000-2007 (bcm) 158
Figure 4.3. Azerbaijan gas imports in 2000-2007 (bcm) . 159
Figure 4.4. Azerbaijan gas export in 2007 159
Figure 4.5. Total primary energy supply in Azerbaijan, 2007 . 161
Figure 4.6. Gas reserves by location in Azerbaijan 164
Figure 4.7. Gas production by top three players in 2006 and 2007 in Azerbaijan (bcm) . 166
Figure 4.8. AIOC shareholding structure . 167
Figure 4.9. Shah-Deniz shareholding structure 168
Figure 4.10. Shah-Deniz field gas production potential (bcm) . 169
Figure 4.11. Existing and potential capacities for export from Azerbaijan (bcma) 173
Figure 4.12. Possible equity gas volumes of the Shah-Deniz project participants
under the second phase in proportion to equity participation (bcma) 175
Figure 4.13. Botas plans for gas supply to Greece (bcm) . 176
Figure 4.14. Three scenarios of gas production in Azerbaijan till 2020 (bcm) . 180
Figure 5.1. Gas production in Kazakhstan in 2000-2007 (commodity gas, bcm) . 185
Figure 5.2. Gas consumption in Kazakhstan in 2000-2007 (bcm) 185
Figure 5.3. Gas exports from Kazakhstan in 2000-2007 (bcm) . 186
Figure 5.4. Total primary energy supply in Kazakhstan, 2007 187
Figure 5.5. Gas reserves by location in Kazakhstan 196
Figure 5.6. Gas production by top 5 players in 2006 and 2007 in Kazakhstan (bcm) . 199
Figure 5.7. Karachaganak Petroleum Operating Company shareholders 200
Figure 5.8. Tengizchevroil shareholders 202
Figure 5.9. Agip KCO shareholders. 205
Figure 5.10. Gas transit volumes in Kazakhstan in 2003-2007 (bcm) 210
Figure 5.11. Existing and potential capacities for export from Kazakhstan (bcma) 213
Figure 5.12. Proposed business model of Karachaganak gas processing 217
Figure 5.13. Three scenarios of gas production in Kazakhstan till 2020 (bcm) 221
Figure 6.1. Gas production in Turkmenistan in 2000-2007 (bcm) 226
Figure 6.2. Gas consumption in Turkmenistan in 2000-2007 (bcm) . 227
Figure 6.3. Gas exports from Turkmenistan in 2000-2007 (bcm) . 228
Figure 6.4. Total primary energy supply in Turkmenistan, 2007 228
Figure 6.5. Gas reserves by location in Turkmenistan . 233
Figure 6.6. Gas reserves estimates in Turkmenistan (tcm) 236
Figure 6.7. Existing and potential capacities for export from Turkmenistan (bcma) . 252
Figure 6.8. Business model for gas exports to China . 256
Figure 6.9. Three scenarios of gas production in Turkmenistan till 2020 (bcm) . 260
Figure 7.1. Gas production in Uzbekistan in 2000-2007 (bcm) . 263
Figure 7.2. Gas export in Uzbekistan in 2007 264
Figure 7.3. Natural gas consumption in Uzbekistan in 2001-2007 (bcm) 264
Figure 7.4. Total primary energy supply in Uzbekistan, 2007 . 265
Figure 7.5. State objectives in development of Uzbekistan's gas industry 268
Figure 7.6. Foreign investment dynamics (US$ million) 269
Figure 7.7. Area of prospective oil- and gas-bearing regions (square kilometers) 277
Figure 7.8. Depletion rate of Uzbekistan's oil and gas regions (percent) 278
Figure 7.9. Dynamics of proven gas reserves in Uzbekistan (tcm) 281
Figure 7.10. Delineation of forecast resources of natural gas in Uzbekistan . 282
Figure 7.11. Allocation of investment blocks in Uzbekistan by region (number of blocks) 284
Figure 7.12. Transit charges for pumping gas through Uzbekistan (US$ per 100 kilometers) 298
Figure 7.13. Scheme of Uzbekistan's gas deliveries to Central Asian states. 298
Figure 7.14. Existing and potencial capacities for export from Uzbekistan (bcma) 300
Figure 7.15. Price dynamics for Uzbek gas imported by Gazprom
(US$ per 1,000 cubic meters) . 301
Figure 7.16. Uzbekistan gas prices for Russia and Central Asian countries
(US$ per 1,000 cubic meters) 302
Figure 7.17. Three scenarios of gas production in Uzbekistan till 2020 (bcm) . 305
Figure 8.1. Caspian countries' export potential and gas demand
by destination in 2010, 2015 and 2020. White scenario (bcm) . 310
Figure 8.2. Caspian gas distribution within Southeastern Europe
under the White scenario in 2020 314
Figure 8.3. Caspian countries' export potential and gas demand
by destination in 2010, 2015 and 2020. Blue scenario (bcm) 318
Figure 8.4. Caspian countries' export potential and gas demand
by destination in 2010, 2015 and 2020. Red scenario (bcm) . 325
Figure 8.5. The gap between Russian demand for Central Asian
gas and estimated supplies from 2011 to 2020 327
Figure 8.6. The gap between Chinese demand for Central Asian
gas and estimated supplies from 2011 to 2020 328

Maps
Map 2.1. Central Asia-Center gas system . 46
Map 2.2. Pre-Caspian gas pipeline . 49
Map 2.3. South Stream pipeline project . 52
Map 2.4. Turkish gas import and export infrastructure 55
Map 2.5. Trans-Caspian gas pipeline 61
Map 2.6. Nabucco gas pipeline project 63
Map 2.7. IGI and TAP gas pipelines 66
Map 2.8. White Stream pipeline route . 70
Map 2.9. Turkmenistan-Afghanistan-Pakistan-India pipeline . 72
Map 3.1. Ukrainian gas transportation system . 89
Map 3.2. Georgian gas transportation system 92
Map 3.3. Transit routes for Russian and Azerbaijani gas and transit payments 95
Map 3.4. Gas transportation system of Tajikistan . 96
Map 3.5. Gas transportation system of Kyrgyzstan 99
Map 3.6. Gas transportation system of Turkey . 103
Map 3.7. Austrian gas transportation system . 110
Map 3.8. Bulgarian gas transportation system . 114
Map 3.9. Hungarian gas transportation system . 119
Map 3.10. Gas transportation system of Romania 124
Map 3.11. Gas transportation system of Greece . 129
Map 3.12. Gas transportation system of India 142
Map 3.13. Gas transportation system of Pakistan . 148
Map 3.14. Gas transportation system of Iran 153
Map 3.15. Turkmenistan gas distribution in Northern Iran 154
Map 4.1. Azerbaijan gas fields . 165
Map 4.2. Gas transportation system of Azerbaijan 171
Map 5.1. Regions of Kazakhstan 189
Map 5.2. Main gas fields of Kazakhstan . 197
Map 5.3. Kazakhstan's main gas pipelines (current and planned) . 206
Map 6.1. Turkmenistan's gas fields. Central and Eastern Turkmenistan 234
Map 6.2. Turkmenistan's gas fields. Western Turkmenistan and Offshore Caspian Sea . 235
Map 6.3. Gas transportation scheme for Eastern Turkmenistan gas fields . 238
Map 6.4. Bagtiyarlyk area map 240
Map 6.5. 3D map of Gunorta Yeloten-Osman fields 242
Map 6.6. Geological profile of Gunorta Yeloten-Osman fields . 243
Map 6.7. Uzbekistan-Turkmenistan border area of Dovletabad-Daryalyk pipeline . 249
Map 7.1. Uzbekistan oil and gas provinces 277
Map 7.2. Fields in the Bukhara-Khiva region . 279
Map 7.3. Fields in the Ustiurt region . 280
Map 7.4. Fields in the Fergana valley . 281
Map 7.5. Lukoil operations in Uzbekistan . 289
Map 7.6. Gas pipelines in Uzbekistan 294