UNIDO Caspian Pollution Report,1998

THE INDUSTRIAL STRUCTURE OF THE CASPIAN REGION

Azerbaijan

The industrial potential of the Republic of Azerbaijan is among the highest in the region. Oil as the main resource of Azerbaijan determined the principal orientation of the Azerbaijan industry already in the nineteenth century.

In 70 years of Soviet rule the Azerbaijan economy developed in the framework of a planned and centralized system of distribution as an integral part of the USSR economic system. During this period a strong potential was established in power production, petroleum and basic engineering industries, chemistry and petrochemistry, metallurgy, oil-and gas production.

Nearly 70% of the Azerbaijan industrial potential is concentrated on the Apsheron peninsula (power industry 55.2%, oil production 86%, oil-refining industry practically 100%, chemical industry and petroleum chemistry 92%, engineering 84.1%, ferrous metallurgy 90.4% and non-ferrous metallurgy - 55.7%.) The two largest industrial centers are the cities of Baku and Sumgait.

Oil production in Azerbaijan is characterized by two factors. The old continental and water deposits are almost exhausted. The equipment and infrastructure for their extraction are becoming obsolete. The newly discovered large offshore deposits can only be extracted by use of new technologies. The new offshore project organized by the International Oil Consortium AIOC should augment the country’s oil production to some 40 million tons annually within a decade.

Based on the oil resources, a large petrochemical and chemical industry was built up during the Soviet era after World War II. The main refineries are in Baku (Azerneftyag and Azerneftyanadjag). The main chemical plants are in Sumgait, about 40 km north of Baku. Sumgait was one of the FSU’s largest chemical complexes and caused heavy pollution of water, air and soil. Besides the petroleum based production a large chlorine industry was developed that utilized the rock salt from the province of Nakhichevan in western Azerbaijan. The most significant chemical plants are EP300, Sintezkautchuk, Orgsintez, the Sumgait Chemical Company and the Sumgait Detergent Company. Also in Sumgait are a large steel plant and a large aluminum smelter, as well as some textile industry.

Although the production of almost all of the plants is fairly low at present, the expected increase in oil production and the Azerbaijanian government’s plan to install a Special Economic Zone in Sumgait in cooperation with UNIDO/UNDP will eventually lead to resumption of production, however with newer equipment and new product lines.

 

Iran

In the plateau region of the Alborz mountains on the slopes to the east and the Gorgan plains, due to the rich sediment type of soil and favorable climate, agricultural activities are dominant. Rice, cotton, wheat, barely, summer crops and citrus crops are the main products of this area. The west of Mazandaran is known for its woodlands and forests. Timber logging and production of charcoal has always been a source of income for this region.. Other important sources of income are tourism, craftsmanship, fishing and carpet production. In the cities of Babol and Sary they are canneries for fruits and vegetables, plants for the production of vegetable oil, textiles and ceramics, a cotton mill and a relatively large new paper mill which will start production this year (1997).

The province of Gilan has the main Iranian ports of Caspian in Bandar Anzali and Astara. Trade with the FSU was mainly carried out via these ports.

Gilan is also a significant agricultural area. Its plantations produce some 15,000 tons of tea per year, which is over 80 percent of the tea consumed in Iran. Growing rice and citrus fruits are the main products of its farms, along with tea. The provinces of Gilan and Mazandaran produce 890,000 tons of rice per year (95% of countries total production). Other products include cotton, wheat, summer crops, and almost 74 percent of all citrus fruit produced in Iran.

Fishing is also a dominant source of income, which include some 140 tons of Caviar production per year which is mostly exported.

Rasht and its surroundings area house some 90 percent of all industries in the Gilan province; mainly food and fish processing, wood and textile plants. The largest paper mill in the country is Chouka with a production of 400 tons of paper per day in Hashtpar (western part of Gilan).

GILAN & MAZANDARAN STATISTICS (1995)

 

GILAN

MAZANDARAN

Area (sq. km)

14,820

46,956

Population

2,412,386

3,925,952

No. of workshop, factories

8,880

6,359

Cultivated Land (hectares)

350,149

823,000

Forests & woodland (hectares)

565,000

1,342,000

Meat production (tons/yr)

9,900

67,000

Fishing (tons/yr)

40,000

29,776

Caviar production (tons/yr)

38

95

Tourists (per year)

480,000

2,100,000

Waste water (untreated) (l/s)

3,270

7,010

Solid waste (tons/yr)

504,401

574,510

Fertilizers and Chemicals (tons/yr)

51,553

215,029

Pesticides (tons/yr)

1050

1,761

Farming, horticulture, animal husbandry, forestry and fishing are still the most important contributions to Iran’s GDP and employment. The share of agriculture in GDP at current market prices even increased from 17.6% in 1980 to 23.8% in 1995. The latest available statistics on the sectoral distribution of employment shows that although the share of agriculture in total employment declined from 56.3 % in 1956 to 29% in 1986 and further to 21% in 1995 as a result of the declining capacity of the sector to absorb additional unemployment from other sectors, the actual number of people employed in agricultural activities increased from 3.3 million to 3.5 million during this period.

The manufacturing sector in Iran has evolved in the past five decades. The plants in Gilan and Mazandaran are light industries. As a result of environmental conservation laws, only agricultural based industries should be allowed in this region. There are no heavy industries such as steel mills, petrochemical plants, oil & gas refineries. Larger textile plants exist in the whole region. Other industries are mainly food processing plants.

Exceptions are in Gilan a paper mill (400 ton /day), and a small cement plant and in Mazandaran a paper mill (not started yet), a plant producing dichromates and a large cement plant. Two power plants, fueled by oil and gas, are in this region. The Neka power plant in Mazandaran is one of the largest in the country with nearly 2000 MW capacity. Some activities on exploitation and drilling for oil production has started in north east of Mazandaran, but so far no oil or gas has been produced yet. However, very little information is released by N.I.O.C. (National Iranian Oil Company) on the progress made on offshore drilling and exploration in the Caspian.

No significant mining activities are carried out in the Caspian area. There are some small coal mines, quite far from the Caspian, and a few mines for gypsum, lime stone, and other minerals.

The Iranian Caspian region is a popular holiday resort for Iranian tourists. Official figures indicate 2.2-2.5 million visitors per year, but the actual number is estimated to be higher.

The economical benefit of this industry is high. The growing number of small bungalows and villa complexes for wealthier Iranians in Mazandaran has brought a new source of income for local residents. Construction of new roads to connect the Caspian region with Tehran has been started this year. The government wants to promote the tourist industry of the region.

 

Kazakhstan

The collapse of the former USSR's markets put the economics of Kazakhstan in a very hard situation. During the Soviet era Kazakhstan’s natural resources were developed and exploited in the USSR’s interest of the former in a technologically rather primitive way. Kazakhstan became a source of raw materials for the more developed regions of the former USSR, where they would be processed further.

On December 3,1993 an agreement on the establishment of an International Consortium "Kazakhstancaspyshelf" was signed. The Consortium consists of "Kazakhstancaspyshelf" (Kazakhstan),"Agip"(Italy), "British Gas" (UK),"British Petroleum "(UK), "Statoil"(Norway),"Mobil" (USA),"Shell" (The Netherlands) and "Total" (France). The seismic exploration has recently been finished in Kazakhstan's part of the Caspian and a preliminary program for exploratory drilling has been formulated.

Today, Kazakhstan is independent and can utilize all its natural resources following its own policy. At present there are more than 180 deposits of hydrocarbons. The Caspian region is the main source of oil and gas production in Kazakhstan. Out of 122 oil fields in the republic, 112 are located in the Caspian region. 95% of the whole amount of oil of the republic is extracted in this area. All the rest oil fields are concentrated in the same region with extracted deposits of more than 100 million tons. Enormous reserves of oil give us a right to increase yearly volume of oil production up to 40-50 million of tons and to 2010 year up to 70 million of tons.

Kazakhstan depends on Russia’s pipelines. Therefore, Russia can control Kazakhstan’s oil export. Kazakhstan investigates the option of building new export pipelines and an internal pipeline, which will transport oil from the Caspian to the refineries in Chimkent and Pavlodar. These refineries do not work at full capacity now, because they depend on oil supplies from Western Siberia.

Since the middle of 1992 efforts have been taken for the construction of an export pipeline of 1500 km length from the Western part of Kazakhstan to Novorossisk on the Black . This project is to be realized in two phases. The first phase is supposed to use the existing pipeline (with 40 inch diameter and a maximum capacity of 47 million tons per year from Tengis through Atyrau and Astrakhan to Komsomolskaya, and the construction of a new pipeline (with 42 inch diameter and 62 million of tons of capacity per year) from Komsomolskaya to Tichoretsk and further to Novorossisk.

The second phase should increase the productivity of the existing pipeline. The project is known under the name of "Caspian Pipeline Consortium". In the end of November 1996 the Consortium’s shares were distributed as follows: Russia - 24%, Kazakhstan - 19 %, Oman-7%, Chevron (USA) - 15%, Lukoil (Russia) - 12.5%, Joint-Venture "Rosshell" ("Rosneft" and "Royal Dutch Shell" - 7.5 %, Mobil (USA) - 7.5 %, "British Gas"(UK) - 2%, Agip (Italy) - 2%, Orix (USA) - 1.75 %, "Munaigas"(Kazakhstan) and Tengismunaigas"(Kazakhstan) - 1.75 %. However, the signing of the agreement has been delayed because of one more Russian company "Transneft" demanding its share in the Consortium on the grounds of the company's responsibility for the pipeline.

In November 1996 State Oil Company of Azerbaijan (SOCAR) signed an agreement with Brown and Boot of the UK and a Turkish firm for the transport of oil from Kazakhstan across Azerbaijan and Georgia out to the Black port of Batumi for 1.2 million tons per year. There is another project under discussion for a pipeline through Turkey. The USA supports a Turkish pipeline route, but it is not yet clear how to bring the oil to Turkey first.. Iran has also proposed a similar project. A pipeline through Iran would certainly help to alleviate Kazakhstan's problems in exporting its oil.

 

Russia

The territories belonging to the Russian Federation in the Caspian region are the Republic of Daghestan, the Kalmykia Republic and the Astrakhan Oblast. The most important fields of industrial development in the Caspian region of Russia are: extraction, treatment and transportation of oil and gas, fuel industry, machine-building, light and food industry, construction of new and reconstruction of existing ports and railroads.

 

Daghestan

The Republic of Daghestan occupies an area of 50,3 thousand square km (0,3% of the territory of Russia). Its population is 2,1 million people (1,4% of population of Russia), including 41,7% of urban population.

Daghestan’s share of Russia’s total industrial production in 1995 was 0,08%. Major centers are the capital and main port Makhachkala, Derbent, Kaspyisk, Izberbash, Hasavyurt, Kyzlyar, Kyzylyurt and Buinaksk. Machine building and metal works are developed (production of separators, heat generating and electromechanical equipment, machine-tool construction, production of excavators, instrument building, ship repair) along with food industry, light industry (wool, knitting, leather and footwear industry), chemical industry (production of phosphoric salts, glass fiber, varnishes, paints and colors), production of construction materials. Oil and gas extraction is also developed.

Issues that make the socioeconomic situation in the Republic unstable are disputes over nationality and territory; the high level of unemployment; insufficient industrial development and infrastructure, especially in mountainous areas.

In spite of these impediments, a sustainable increase of industrial production in Daghestan by the year 2000 is possible, provided the reconstruction of the manufacturing industry in order to add higher value to the products; the development of electric power production, including medium sized and small power plants. Another priority is the modernization of Makhachkala’s port and air terminal. The improvement of the oil pipe-line Baku-Novorossisk, which crosses Daghestan, is a strategically important task.

 

Kalmykia

The Republic of Kalmykia occupies 76,1 thousand square km (0,4% of Russia’s territory). Its population is 320,000 (0,2% of Russia’s population), 38,5% of which live in cities. The Republic of Kalmykia possesses significant natural resources but is one of the most economically undeveloped parts of the Russian Federation. The share of its industrial production is only 0,5% of the Volga region. Major centers are the capital Elista, Lagan, Arshan and Troitskoe. The main industries are - machine-building and metallurgy, leather, fur and food industry as well as extraction of oil and gas by the joint stock companies “Astrakhanneft” and “Kalmneft”.

Development and increase of efficiency of the transport, power and construction sectors have high priority: About 400 km of new roads should be built as well as a railroad from the port under construction near Olya (Astrakhan Oblast) to Zenzeli (Republic of Kalmykia) and further to Elista. The construction of the Trans-Kalmuck railroad will help to improve the economic situation of the Republic by connecting ports on the Caspian and the Black coasts.

 

Astrakhan Oblast

The Astrakhan Oblast occupies 44,100 square km (0,26% of the total territory if Russia). Its population is about 1 million people, including 66,7% of urban population. Major centers are Astrakhan, a big river and port, Akhtubinsk and Aksaraiskyi. The main industries are extraction and treatment of gas condensate and production of sulfur (from Europe’s biggest deposit of gas condensate), machine building, ship building and repair, timber, pulp and paper, leather and footwear, fur, knitted fabric and garment, food processing (fish, vegetable cans, meat and salt), chemistry, river and marine transport.

A steady increase of production in all sectors was typical for the Astrakhan Oblast during 1986-1990. Later a decrease of economic growth occurred, which has been stopped in 1994. Expansion and reconstruction of existing industries began, but with changing emphasis. The most rapid growth was observed in the light industry and in machine-building, metal, fuel and electric power production.

In the future gas extraction will increase along with the increase in oil and gas condensate processing. Also, machine-building, textile and food industries should increase. Some changes in the industrial structure are expected: the fuel sector will increase from 5,9% in 1990 to 9% in 2000, the machine building and metal sector from 13,7% in 1990 to 19% in 2000. Light industry will increase from 19,6% in 1990 to 24% in 2000. Food industry will decrease from 42,9% in 1992 to 34% in 2000. One of the most important strategic projects, that are being implemented in the region is the construction of a new port near Olya.

 

Turkmenistan

Turkmenistan’s key industry is the extraction of natural gas, of which the country is the world’s fourth largest producer. Historically, the gas was exported to Russia or via Russia to Europe and the Caucasus. Now, a new pipeline to Iran has been constructed and will increase the countries economic independence.

On Turkmenistan’s northern part of the coast is a production of mineral salts and in Cheleken some chemical industry.

Turkmenistan’s principal port is Turkmenbashi (Krasnovodsk). From Turkmenbashi goes also a ferry boat to Baku. There is also a refinery in Turkmenbashi.

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Section 5

Section 6

Section 7

Section 8

Section 9

Section 10

Section 11

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