The Gulf and the Caspian: who gets to have their cake - and eat it as well?

Contractual developments in Central Asia and the Middle East and their impact on the petroleum industry are reviewed. Until recently, both regions were mostly closed to investment by the international oil companies. As of late 1998, however, all countries in the two regions, apart from Saudi Arabia, have opened, or are planning to open their doors to foreign investment. The contractual terms being offered, the relative severity of the fiscal terms and the response of the oil companies are examined for the Gulf states of Iraq, Iran and Kuwait, and Kazakhstan, Azerbaijan and Turkmenistan in the Caspian region. It is concluded that fiscal terms in the Caspian states will become increasingly attractive, while the Gulf states should, subject to political considerations, be in a much stronger position both to attract foreign investment dollars and to ask a high economic rent for the state. (UK)