Energy Opportunities in the Greater Caspian Region: Unlocking Strategic Gains for Europe

Amid the ongoing war in Ukraine and the urgent need to reduce dependency on the Russian energy sector, the EU has intensified the diversification of its fossil fuel imports and expanded renewable energy sources in line with the REPowerEU plan to enhance overall energy security. A key aspect of this strategy has been increasing liquefied natural gas (LNG) supplies from the United States, Norway, and North Africa. However, the need for diversified energy sources persists. The Greater Caspian Region, in particular, offers substantial potential for rapidly boosting exports within a short timeframe. To fully capitalise on the opportunities in the Greater Caspian Region, European companies and governments should navigate a complex landscape of geopolitical dynamics and infrastructural commitments. Balancing the urgent need for energy security with the long-term goals of sustainable development will be crucial for the success of these endeavours.

The Caspian Sea and its energy resources have elevated the region to a place of significant international importance. Forecasts indicate the presence of approximately 48 billion barrels of oil and 292 tcm (trillion cubic metres) of natural gas in proven and probable reserves. Three Caspian Sea littoral countries—Azerbaijan, Kazakhstan, and Turkmenistan—boast significant energy resources. They currently export oil and gas to European and Mediterranean markets and are, to varying extents, pursuing efforts to increase their contributions.

European companies show increasing interest in the region’s energy market, but their involvement remains at an early stage. Notable firms such as BP, TotalEnergies, Siemens Energy, Equinor and ENI are exploring opportunities to expand their presence. Although the Caspian coastal countries have the potential to strengthen European energy security, economic and infrastructural challenges could impede the swift production and export of additional supplies from the region. Securing financing for oil and gas production and transportation has become increasingly challenging, as international financial institutions are curtailing funding for fossil fuel projects, and the European Commission is ramping up investments in the energy transition, focusing on renewables and green hydrogen.

Author: Luca Urciuolo, EIAS Associate Research Fellow

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