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Boom or bust in the Caspian?

Bullish predictions of the size of Caspian oil reserves made in the 1990s now look greatly exaggerated. With the BTC pipeline linking Azerbaijan to Turkey opening this year, Julian Evans asks just how much oil there is in the region, and whether there will be any more finance deals anything like the size of BTC.

IN THE MID-1990s, the eyes of the world turned to central Asia, to countries most people could barely spell let alone place on a map – Kazakhstan, Turkmenistan, Azerbaijan. These countries, newly liberated from the Soviet Union, were said to be home to fabulous energy reserves.

A report from the US State Department claimed that offshore the Caspian Sea there were reserves of as much as 200 billion barrels of oil – enough to rival reserves in the Persian Gulf.

Suddenly, the future of the Caspian littoral states, and of their oil, became a matter of great importance to the west and, in particular, the US. In 1998, the CEO of Halliburton, Dick Cheney, said: "I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian."

Commentators quickly dubbed the jostling between nations and oil companies for position in the region a new Great Game, rivalling the competition between Russia and the UK for influence in the region in the late 19th century.

At the centre of this Great Game, supposedly, was the Baku-Tblisi-Ceyhan (BTC) pipeline, which would take Azerbaijan's great oil wealth via Georgia to Turkey's Mediterranean coast.