After the collapse of the Soviet empire, the Caspian states of Azerbaijan and Kazakhstan generated a great deal of excitement because of their oil and gas fields, about which little was known. Despite falling oil prices, uncertain reserve sizes and a non-existent legal framework, an extraordinary volume of international investment poured into the region in 1997 and 1998. By 1999, more than 20 oil exploration contracts were signed in Azerbaijan alone, representing more than $30 billion in long-term capital investment and some $2.5 billion in committed investment. It was widely expected that the poorly explored, but high-potential Caspian oil reserves would change the world energy market and provide an alternative to Middle Eastern oil and Russian regional dominance. These expectations turned out to be exaggerated, however, and soon the Caspian hype faded away. After 1999, most contracts were either closed or put on hold. Two oil companies, Arco and Conoco, decided to exit the region.
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