21 August 2018

Rich in oil, gas, and caviar: Five countries move to settle decades-long Caspian dispute — why now?

By Christina Zhou

But now, the leaders of the five countries bordering the world's biggest enclosed body of water have finally made significant headway after agreeing — at least, in principle — on how to divvy up its potentially vast oil and gas resources. Russia, Iran, Kazakhstan, Turkmenistan and Azerbaijan signed the Convention on the Legal Status of the Caspian Sea in the Kazakhstan city of Aktau on Sunday. What the agreement establishes is a set of ground rules for determining each country's specific territorial waters and fishing zones. But the issue of how the contentious seabed — which contains a plethora of rich oil fields — will be delineated between the countries will still need further negotiation.

So while the document has shown some light at the end of the tunnel, it is no final solution.

Here's why the deal is important for easing tensions, and what you need to know about the long-disputed Caspian Sea.
Is it a Caspian Sea or Caspian Lake? It makes a difference

Despite its name, the Caspian Sea has been classed by some as the world's largest lake, with a surface area of more than 370,000 square kilometres — larger than Victoria.

This is because the Caspian has many defining characteristics of a lake: it is surrounded by land and has no outflowing rivers.

But the body of water is salty because it was once part of a the Paratethys Sea before it became land locked after land drifts and a fall in sea level — however, the difference is more important than just for the sake of names.

Classifying it as a lake would mean it should ultimately get equally divided among the five countries, but, if the water is treated as a sea, it then becomes governed by the principles of international marine law.
New 'special legal status' means it remains neither

The document grants the Caspian Sea "special legal status" which means it is not defined as a sea or a lake, the BBC quoted Russian officials as saying.

The surface water will be in common usage, meaning freedom of access for all littoral states beyond territorial waters.

However, there was little detail about provisions on splitting the seabed.

Iranian President Hassan Rouhani said border delimitation would require further work and separate agreements, although the convention would serve as a basis for that.
Warships used to scare off contractors

One of the reasons the Caspian has been so hotly contested is its abundance of oil and gas reserves.

The US Energy Information Administration estimated in 2012 there were 48 billion barrels of oil and 8.3 trillion cubic metres of natural gas beneath its seabed.

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.

Some countries have tried to develop the disputed fields while at times using warships to scare off contractors hired by other sides.
Russian caviar? The Caspian Sea provides 90 per cent

The Caspian Sea has several species of sturgeon, the fish that yields roe — or eggs — that are processed into caviar.

Up to about 90 per cent of the world's caviar is reportedly sourced from the Caspian, but overfishing has resulted in bans on sturgeon fishing in the wild.

According to a 2016 report from German broadcaster Deutsche Welle, Russia's move to enact the ban received the backing of the other four countries around the Caspian Sea.

Kazakhstan President Nursultan Nazarbayev said the convention would set the quotas for fishing and forbid any foreign military presence.

He also said the document allowed pipelines to be laid as long as certain environmental standards were met.

But it remained unclear to observers whether the convention adopted yesterday would definitely clear a way for the pipeline, and no future dates for further discussion were set, beyond an agreement to cooperate.

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