ABSTRACT
The Caspian is important for Russia’s broader energy considerations for a number of reasons. This region contains significant oil and gas resources. Controlling the direction and volumes of exports from the states of this region is essential for Russia in order to reduce competition for its own energy exports on the international markets. Russia is particularly concerned with maintaining control over its relations with Europe: The greater Russia’s control of energy flows from the Caspian, the more dependent Europe will be on it. In the oil market, Russia ideally could use the Caspian as a “swing producer.” If it is able to control oil flows from the Caspian, it can calibrate the timing of all exports from the region so that if the market should need the extra oil production, the Caspian would be there to supply it, and if there were a glut in one market, Russia could switch supplies to another or reduce volumes from the south. If Russia also built the East Siberia Pacific Ocean (ESPO) pipeline, it could switch supplies among routes and markets. In the future, as Russia’s own West Siberian production declines further, Caspian oil could provide the output for Transneft’s pipelines.
