Turkmenistan has proven oil reserves of roughly 600 million barrels based on estimates by Oil and Gas Journal, although IHS claims probable and possible oil reserves are over 2 billion barrels plus 6 billion barrels of undiscovered reserves. Most of the country's oilfields are situated in the South Caspian Basin and the Garashyzlyk onshore area in the west of the country. Turkmenistan’s oil production has rebounded since it obtained independence from the Soviet Union, increasing from 110,000 bbl/d in 1992 to approximately 214,000 bbl/d in 2004 before trending down to 180,000 bbl/d in 2007. The government has frequently targeted higher oil production, but the oil sector struggles to meet its growth goals due to a shifting interest to gas production, lagging foreign investment in this sector, and heavy competition for investment within the Central Asian region. According to previous reports in 2007, Turkmenistan aims to produce 2.2 million bbl/d by 2030. The Turkmen government recently announced plans to produce 216,000 bbl/d in 2008, though this amount is higher than the 190,000 bbl/d projected by EIA. Turkmenistan exports roughly 40 percent of its production. Local consumption is estimated at 110,000 bbl/d according to EIA and is subsidized by the Turkmen government. In February 2008, Berdymukhammedov instituted a new retail fuel system providing transportation customers with free gasoline up to a specified allocation (120 liters per month for car owners) and charging a market rate, established by the government, for any amounts exceeding the quota.

Foreign investment is limited to joint-ventures (JVs) and production-sharing agreements (PSAs) with Turkmenneft, the state-owned oil company, and has typically been concentrated on offshore oil projects in the Caspian Sea with a few small onshore fields by mid-sized international oil companies. Burren Energy (purchased by Eni in January 2008) produced over 20,000 bbl/d at the onshore Nebit Dag field during the first half of 2007. Petronas (Malaysia) began producing 10,000 bbl/d from the Diyarbekir field in 2006. Output from the offshore Cheleken block operated by Dragon Oil’s (UAE) and Turkmenneft averaged 32,000 bbl/d in 2007 and reached record production of 40,000 bbl/d in October 2007. Dragon Oil plans to invest more than $600 million in the contract area in 2008. Mitro International currently produces 7,000 bbl/d from the East Cheleken onshore fields. The consortium of Maersk Oil (Denmark), Wintershall (Germany), and ONGC (India) and the Zarit Consortium signed PSAs with Turkmenistan in recent years and other firms such as BP, Chevron, Buried Hill Energy, Lukoil, and ConocoPhillips are eager to explore and develop Caspian Sea blocks.

Many of the prime oil deposits are located in disputed areas of the Caspian Sea, and without an agreement between Iran, Azerbaijan, and Turkmenistan on maritime borders, these fields will likely remain undeveloped. In 2007, Chevron began negotiations with Turkmenistan on the disputed Kyapaz-Serdar oil and gas field linking Turkmen and Azeri maritime borders in the Caspian Sea, and in February 2008, Buried Hill claimed that it signed a PSA with the Turkmen government to begin production from this field. The field holds an estimated 700 million barrels of reserves according to some press reports. Turkmenistan is currently in political discussions with Azerbaijan.

President Berdymukhammedov is taking steps to improve the legal policies and institutional capacity to facilitate investment in the hydrocarbon industry; though, it is still too early to determine how much progress the new regime will make towards opening its hydrocarbon market and increasing transparency related to information and reserve audits. In March 2007, Turkmenistan’s new government established a hydrocarbon regulatory authority separate from the central government to provide greater revenue transparency and initiate more foreign investment. Turkmen officials hope to attract $46 billion in hydrocarbon-sector investment by 2010, and the country allocated about $3 billion in 2007. The European Bank for Reconstruction and Development (EBRD) estimates 2007 foreign direct investment (FDI) levels at $753 million.

Historically, Turkmenistan has been protective of its onshore basins, allowing foreign companies to participate in only offshore developments. While President Berdymuhammedov has been receptive to foreign participation, primarily from Russian and Asian firms in onshore fields during 2007, he invited several companies to develop the prolific Caspian basins.

The Oil and Gas Journal estimates that Uzbekistan has 594 million barrels of proven oil reserves, with 171 discovered oil and natural gas fields in the country. The majority of the known oil fields in Uzbekistan are in the Bukhara-Khiva region, including the Kokdumalak field, which accounts for about 70 percent of the country's oil production. The country also has oilfields in the Ferghana valley region in the northeast, the Ustyurt plateau, and the Aral Sea. The Ferghana Basin, bridging Uzbekistan, Kyrgyzstan and Tajikistan, contains reserves of 1.2 billion barrels and possibly up to 4 billion barrels including undiscovered reserves according to the USGS. Most of Uzbekistan’s petroleum production consists of about 60 percent high-sulfur crude and 40 percent gas condensate. Existing fields are depleting faster than new discoveries are coming online, spurring the need for further investment.

Uzbekistan was temporarily self-sufficient in oil production in the late 1990s until oil production dropped. During 2007, estimated total liquids production in Uzbekistan averaged 100,000 bbl/d, a 30 percent decline since 2004, and with consumption at 156,000 bbl/d in 2007, the country is a net oil importer. Despite having reserve levels similar to those of Turkmenistan, Uzbekistan produces significantly less oil due to lack of investment in new upstream reserves and few export options. According to APS Review (October 2006), oil liquids production could fall to 50,000 bbl/d by the end of the decade without significant investment in the upstream sector. Since retail prices are subsidized, as long as production declines continue, Uzbekistan runs a risk of continuous shortage of oil products.

Uzbekistan has made several bilateral agreements with foreign oil companies, especially ones from Russia and Asia. In April 2001, Uzbekneftegaz signed its first PSA with Britain's Trinity Energy (through a specially formed subsidiary known as UzPEC Ltd, now controlled by Soyuzneftegaz). The $400 million project entails the development of fields in Uzbekistan's central Ustyurt and Southwest Gissar regions. However, Uzbekneftegaz cancelled the PSA in February 2005, alleging that UzPEC had not met conditions specified in the PSA. The parties signed a new PSA in February 2007, and Soyuzneftegaz agreed to invest $462 million. In June 2005, CNPC agreed to form a $600 million, 25-year JV with Uzbekneftegaz, the state oil and gas holding company, to develop primarily small oilfields in the Bukhara and Khiva regions. Combined, these oilfields will produce about 20,000 bbl/d by 2015. Petronas signed a PSA and exploration agreement with Uzbekneftegaz in 2008. Under the PSA, Petronas will be a 100 percent equity owner and operator to develop hydrocarbon resources in the Baisun Block. Uzbekistan also signed several energy cooperation agreements with other Asian companies such as India’s GAIL involving them in technical discussions of exploration and development efforts in the country.

Despite gradual steps to improve its foreign investment climate, Uzbekistan still faces serious hurdles to develop its hydrocarbon sector. Sinopec rescinded a $106 million deal to rehabilitate existing oilfields with Uzbekneftegaz in 2007 on account of high investment costs and resource taxes.

Uzbekistan has one of the lowest FDI levels in the former Soviet Union, and investment for the hydrocarbon industry is currently insufficient to raise oil production. According to the EBRD, total FDI for 2007 is estimated at $260 million; however the Uzbek government reports a higher FDI of $693 million. The discrepancy could be due to a difference in the types of investments included. Also, only $114 million was slated for investment in 2005 for oil and gas exploration according to an International Crisis Group report. The Uzbek government has invested about $2 billion of mostly commercial and export credit loans in the hydrocarbon sector since 1991. In order to boost foreign investment, Uzbekistan recently has taken various steps such as reversing its previous tax level increases on subsoil hydrocarbon production in 2007 (now 20 percent and 30 percent tax for crude and gas production, respectively) and modifying its regulations for PSA developments. In addition, Uzbekistan has attempted to privatize Uzbekneftegaz several times since 2003, but its desire to maintain majority control over the company is thwarting its plans to attract foreign investors.

Turkmenistan has two major refineries, the Seidi (Chardhzou) and Turkmenbashi, with a combined total capacity of 237,000 bbl/d. Turkmenistan's refinery system is underutilized and processes crude oil at about 50 percent of capacity. The Turkmenbashi refinery was upgraded in 2002, and in 2004, the Turkmen government announced plans to upgrade the Seidi refinery which processes only high-sulfur crude. In March 2007, Dragon Oil commissioned the first foreign-owned refinery with a capacity of less than 50,000 bbl/d.

Uzbekistan has three refineries, at Ferghana, Alty-Arik, and Bukhara, with a total refining capacity of 222,000 bbl/d. The $400 million Bukhara refinery has a capacity of 50,000 bbl/d, although it is expected to expand to 100,000 bbl/d and refine both crude oil and gas condensate. Due to the country's decline in oil production in recent years, Uzbek refineries are operating at only 60 percent of design capacity. Uzbekistan's limited refined product exports move by rail and road to neighboring countries and to export ports on the Black Sea.

Oil export options for Turkmenistan and Uzbekistan are limited. Turkmenistan has almost no international oil pipelines apart from an import pipeline in the east running from Kazakhstan, meaning that all crude oil exported from the country is shipped across the Caspian Sea.

The actual amount of Turkmenistan’s total petroleum exports is debatable, though a large share is in the form of refined products. According to APS Review, (October 2006) Turkmenistan exports up to 120,000 bbl/d of crude oil, condensates, and refined products. Turkmenistan ships a small amount of crude oil by tanker to Russia's Caspian Sea port of Makhachkala, however, securing pipeline access has been a problem due to the poor quality of some Turkmen crude.

In December 2001, Burren Energy opened a crude oil marketing route through Baku, Azerbaijan. Turkmenistan is increasing its oil product exports to the north-eastern Iranian market, shipping products from the Turkmenbashi refinery to the Iranian port of Neka. In addition, Dragon Oil began an oil swap deal with Iran’s Naftiran Intertrade Co. (Nico), a NIOC subsidiary, in 1998. Under this agreement, Dragon Oil transfers over half of its crude oil production at Hazar, Turkmenistan and ships it to the Caspian port of Neka. Dragon then receives an equal swap volume of Iranian crude oil from the Persian Gulf for marketing to international third parties. As a result of Iran’s upgrades to its distribution network and the Neka terminal, capacity increased from 50,000 bbl/d to 150,000 bbl/d, and the Neka to Tehran oil pipeline capacity rose to 300,000 bbl/d, facilitating more swap volumes from Central Asia and Russia. Iran intends to upgrade the pipeline capacity to 500,000 bbl/d.

Uzbekistan has virtually no international oil pipeline infrastructure except for a pipeline linking the Kazakhstani Shymkent refinery to the Chardzhou refinery in northeastern Turkmenistan. A smaller petroleum products pipeline linking Shymkent to Tashkent, the Uzbek capital, resumed imports for Uzbekistan in 2003. Uzbekistan's only current oil export option is to reverse an existing crude oil pipeline that brings oil from Omsk, Russia, to Uzbek refineries.