BAKU, Azerbaijan, November 25. The Caspian region has great potential for discovering new resources, Managing Director and Partner at BCG (Boston Consulting Group) in Azerbaijan, Vladimir Rogov said during the SPE 2025 Caspian Technical Conference held in Baku today, Trend reports.
According to him, when looking at the processes that have taken place in parallel over the past five years, it becomes clear that the direction of the industry has changed.
“Companies have shifted their priorities, giving preference to shareholder payouts while reducing reinvestment levels. The need to keep these payouts sustainable creates additional pressure on capex spending and ultimately intensifies competition for capital. Therefore, if the Caspian region wants to attract these investments, we must create the right conditions so that capital flows not to other geographies, but specifically here.
Against the backdrop of the energy transition, investor expectations have also changed: hurdle rates are rising, investments are being assessed as higher-risk compared to previous decades, and investors are demanding both faster and higher returns. This adds extra pressure to projects and requires the application of more advanced technologies, as well as engaging the entire ecosystem more actively in the process.
This is because, unlike other regions, investment activity in the Caspian basin has weakened somewhat since the beginning of this decade. Yet in the previous decade, the region accounted for a higher share of capex compared to other areas. In this decade, however, investment levels have decreased because major projects in both Kazakhstan and Azerbaijan have largely been completed and have moved into the production phase. Currently, investments are roughly 50 percent lower than before and, based on existing plans, may remain at a lower level throughout the next decade,” Rogov explained.
He noted that although oil reserves in the region make up only two percent of the global total, 10 percent of the world’s natural gas reserves are located here.
“The region is equipped with infrastructure connecting it to both Europe and Asia. For nearly all major global companies, some of their most strategic projects are located here. Projects implemented with the participation of bp in Azerbaijan and Chevron, Exxon, Shell, Eni, and other major companies on the other shores of the Caspian are among the largest assets in their portfolios,” the managing director said.
Rogov emphasized that the opportunities for discovering new resources are substantial.
“In the past, geological exploration costs were relatively low, which is why much potential remains unexplored. The increased exploration activity in recent years, both in Azerbaijan and in other parts of the Caspian, as well as newly signed Memoranda of Understanding, confirm this once again. At the same time, there are also significant opportunities for the rejuvenation of fields that have been in operation for nearly 80 years.
Recovery factors in these fields are still low, and a considerable amount of oil and gas remains underground. Many technologies widely applied in various regions of the world are still in the testing stage here and are not used on a large scale. For example, widely used Enhanced Oil Recovery (EOR) methods have not yet been fully implemented here.
In this context, we believe that today’s panel will offer an important perspective on the existing opportunities, unlocking hard-to-recover reserves, and how leading companies operating in the Caspian region plan to utilize these opportunities amid the region’s geopolitical and economic environment,” he added.
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