This paper argues that Azerbaijan strength is its key geostrategic position, while Kazakhstan’s strength is its abundance of energy resources. However the heavy dependence on the energy sector makes both countries victims to fluctuating oil and gas prices. While Azerbaijan is reluctant to reform, Kazakhstan is more concrete in increasing the amount of renewables in its energy industry and more ambitious in adapting its tariffs to the decreasing oil prices on the world market. Thus, it is possible that Kazakhstan will attract more investment and growth in the long-run.
This paper is structured as follows: firstly, a background outlines the historical development of the Caspian Sea region. Secondly, a theoretical part discusses the approach used to analyse Azerbaijan and Kazakhstan, outlining the factors identified by IEA. Thirdly, in an analytical part, the theoretical framework by the IEA is applied to both countries.
Table of Contents
1) INTRODUCTION
2. BACKGROUND
3. THEORY
4. ANALYSIS
4.1 General Energy Policy
4.2 Energy security
4.3 Market Convergence
4.4 Sustainable Development
4.5 Investment Attraction
5) Conclusion
Objectives & Topics
This paper provides a comparative energy policy review of Azerbaijan and Kazakhstan, focusing on their strategic importance and potential as key energy producers in the Caspian Sea region. The research aims to evaluate their future potential and reform progress using an analytical framework based on the International Energy Agency's (IEA) key policy factors.
- Comparative energy policy analysis of Azerbaijan and Kazakhstan
- Application of the IEA analytical framework to regional states
- Assessment of energy security and geopolitical dependencies
- Economic diversification and sustainable energy development strategies
- Investment climate and market convergence challenges
Excerpt from the Book
4.1 General Energy Policy
Azerbaijani’s Baku Region accounted for half of the world’s oil production in 1900 and had been of strategic interest in both World Wars. The discovery of oil reserves in the Caspian Sea made it attractive for foreign investment. After the collapse of the SU, Azerbaijan developed an independent energy policy. In 1994, Azerbaijan struck an agreement, also called ‘contract of the century’, with British Petroleum. Since this deal, Azerbaijan has become a partner of Western countries as an energy supplier. As a result of the deal with BP, the Baku-Tbilisi-Ceyhan pipeline was build (Misiagiewicz, 2016, p. 191).
Due to the energy boom, Azerbaijan’s economy has grown exceptionally in the past decade, its GDP has quadrupled since 2000 (IEA, 2015, p. 65). However, Azerbaijan’s GDP has decreased since 2014 to 2016, from 75.2 billion to 37.8 billion (World Bank, 2017a). The well-being of Azerbaijan and energy are very closely interlinked (IEA, 2015, p. 65).
The main energy policy can be found in the 2004 State Programme on the Development the Fuel-Energy Complex in Azerbaijan for 2005-2015, as a new program could not be found. The program foresees the investment in “capacity building, rehabilitation and natural gas extraction, reducing electricity shortages and improving energy supply security” (Ibid, p. 71). Azerbaijan maintains good relations with the EU, bilateral cooperation occurs in the context of the EU Neighbourhood Policy. In 2017, negotiations for a new agreement started, political dialogue takes place in the framework of the Baku Initiative (IEA, 2015, p. 83). The EU is the biggest export and import market of Azerbaijan. In 2011, the Joint Declaration on the Southern Gas Corridor was signed (EEAS, 2017a).
Summary of Chapters
1) INTRODUCTION: This chapter introduces the strategic importance of the Caspian Sea region and outlines the methodology for evaluating the energy policies of Azerbaijan and Kazakhstan.
2. BACKGROUND: This section provides a historical overview of the regional energy sector development following the dissolution of the Soviet Union and identifies key geopolitical challenges.
3. THEORY: This chapter establishes the analytical framework based on International Energy Agency (IEA) pillars to facilitate a structured comparison of the two countries.
4. ANALYSIS: This core section applies the theoretical framework to examine general energy policy, security, market convergence, sustainable development, and investment conditions in both nations.
5) Conclusion: The final chapter synthesizes the findings, highlighting the varying levels of reform readiness and future potential of Azerbaijan and Kazakhstan.
Keywords
Caspian Sea, Azerbaijan, Kazakhstan, Energy Policy, IEA, Energy Security, Sustainable Development, Investment Climate, Oil and Gas, Southern Gas Corridor, Geopolitics, Energy Diversification, Market Convergence, Infrastructure, Renewables
Frequently Asked Questions
What is the primary focus of this research?
The paper provides an energy policy review of Azerbaijan and Kazakhstan, comparing their strategic potential and economic approaches to their massive oil and gas resources.
Which regional countries are the main subjects?
The study centers on Azerbaijan and Kazakhstan, as they possess the largest shares of oil and gas reserves within the Caspian Sea region.
What is the central research goal?
The objective is to evaluate the future potential of these two countries by applying a standardized framework to their current energy policies and reform efforts.
Which methodology is utilized?
The author uses the International Energy Agency (IEA) framework, focusing on five factors: general energy policy, energy security, market convergence, sustainable development, and investment attraction.
What topics are discussed in the main analysis?
The analysis covers historical developments, current legislative programs for the fuel-energy complexes, infrastructure challenges, and the states' progress regarding privatization and renewable energy targets.
Which keywords define the scope of the work?
Key terms include Caspian Sea, energy security, energy diversification, geopolitics, and sustainable energy development.
How does the author assess Kazakhstan's readiness for reform?
The paper suggests that Kazakhstan appears more concrete in its reform ambitions, such as its "Green Economy Concept" and efforts to adjust to low global oil prices compared to Azerbaijan.
What is the significance of the "Grand Chessboard" reference?
It highlights the perception of the Caspian Sea region as a strategically contested area where external powers and regional states compete for influence over energy resources.
- Arbeit zitieren
- Inga von der Stein (Autor:in), 2017, Kazakhstan and Azerbaijan: Great Potentials for energy diversification in the Caspian Sea, München, GRIN Verlag, https://www.grin.com/document/435461
