Five nations agree on divisions to oil-rich bed of Caspian Sea

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

However, the delimitation of the seabed, the cause of most disputes, will require additional agreements between littoral nations, Iranian President Hassan Rouhani said.

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

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 other ideas from being implemented.

One of those is a pipeline across the Caspian that 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 has delayed development.

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.

Post-Soviet issue

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

However, Rouhani said border delimitation would require further work and separate agreements.