Landmark Caspian Sea oil and gas agreement signed by five nations

No agreement on legal status of sea bed

President of Azerbaijan Ilham Aliyev, President of Iran Hassan Rouhani, President of Kazakhstan Nursultan Nazarbayev, President of Russia Vladimir Putin  and President of Turkmenistan Gurbanguly Berdimuhamedow   in Kazakhstan,  August 12th. Photograph:  Epa/Alexey Nikolsky/Sputnik/Kremlin/Pool

President of Azerbaijan Ilham Aliyev, President of Iran Hassan Rouhani, President of Kazakhstan Nursultan Nazarbayev, President of Russia Vladimir Putin and President of Turkmenistan Gurbanguly Berdimuhamedow in Kazakhstan, August 12th. Photograph: Epa/Alexey Nikolsky/Sputnik/Kremlin/Pool

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Iran and four ex-Soviet states, including Russia, agreed in principle on Sunday how to divide up the potentially huge oil and gas resources of the Caspian Sea, paving way for more energy exploration and pipeline projects.

However, the delimitation of the seabed – which has caused most disputes – will require additional agreements between the nations bordering the sea, Iranian president Hassan Rouhani said.

For almost three decades, the five coastal states – Russia, Iran, Kazakhstan, Turkmenistan and Azerbaijan – have argued over how to divide the world’s biggest enclosed body of water.

And while some countries have pressed ahead with large offshore projects such as the Kashagan oil field off Kazakhstan’s coast, disagreement over the sea’s legal status has prevented some other ideas from being implemented.

One of those is a pipeline across the Caspian which could ship natural gas from Turkmenistan to Azerbaijan and then further to Europe, allowing it to compete with Russia in the Western markets.

Some littoral states have also disputed the ownership of several oil and gas fields, which delayed their development.

“We have established 15-mile-wide (24km) territorial waters whose borders become state borders,” Kazakhstan president Nursultan Nazarbayev told a briefing after signing the Caspian convention.

“Adjacent to the territorial waters are 10 miles of fishing water where each state has exclusive fishing rights,” he said.

Armed presence

Nazarbayev also said the convention explicitly barred any armed presence on the Caspian Sea other than that of the littoral states.

The dispute began with the fall of the Soviet Union which had had a clearly defined Caspian border with Iran. In negotiations with post-Soviet nations, Tehran has insisted on either splitting the sea into five equal parts or jointly developing all of its resources.

None of its neighbours have agreed to those proposals and three of them – Russia, Kazakhstan and Azerbaijan – effectively split the northern Caspian between each other using median lines.

Azerbaijan, however, has yet to agree on how to divide several oil and gas fields with Iran and Turkmenistan, including the Kapaz/Serdar field with reserves of some 620 million barrels of oil.

The three countries have tried to develop the disputed fields while at times using warships to scare off contractors hired by other sides. As a result, none of the disputed projects has made much progress.

Speaking after the signing on Sunday, all five leaders praised it as historic event, but provided little detail about provisions on splitting the seabed.

However, making it clear that the document is no final solution, Rouhani said border delimitation would require further work and separate agreements, although the convention would serve as a basis for that.

Moscow has no outstanding territorial disputes but has objected, citing environmental concerns, to the construction of a natural gas pipeline between Turkmenistan and Azerbaijan which would allow Turkmen gas to bypass Russia on its way to Europe.

It remained unclear whether the convention adopted on Sunday would definitely clear a way for the pipeline. Kazakh president Nursultan Nazarbayev said the document allowed pipelines to be laid as long as certain environmental standards were met. - Reuters

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