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Oil Market in The Azerbaijan Republic - Essay Example
The global demand for oil is rising at a much greater rate than existing energy resources are able to sustain. Today 85 million barrels of oil are produced each day. It is expected that the demand for oil would reach 115 million barrels a day by 2030 (Klare 2007).
It also contains the world's largest deposits of natural gas (Energy Information Administration 2008).
The breakup of the former Soviet Union has attracted much of the world's interests in the huge oil and gas reserves of the Caspian Sea region. The newly independent countries have signed many contracts worth billions of dollars to develop the region's oil and gas fields. The Caspian Sea has the potential to become one of the major oil and gas production areas in the world similar in its capacity to the North Sea and the Gulf of Mexico (Energy Information Administration 2008).
During World War II, Azerbaijan's oil production peaked at about 500,000 barrels per day (bbl/d). Oil extracted from Azerbaijan constituted 71.4% of overall oil output of former Soviet Union. Following the war, the former Soviet Union directed resources elsewhere causing Azerbaijan's oil production to drop dramatically. In 1991, Azerbaijan gained its independence from the former Soviet Union and oil production was at a minimum low of 180,000 bbl/d (Energy Information Administration 2008).
The ability of Azerbaijan to develop its oil and natural gas resources was dependent on the availability of sources of capital and technology. Since then, Azerbaijan officials have been trying to attract foreign investments into their oil and gas industry. ...