The status of the Caspian and the "great game" of energy

The status of the Caspian and the "great game" of energy

Lello Stelletti
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By the end of the year Turkmenistan plans to hold a summit with the heads of state of Azerbaijan and Turkey, in order to enter the European energy market. However, a legal definition of the maritime area is needed

Turkmenistan plans to hold a summit with the heads of state of Azerbaijan and Turkey by the end of 2016 in order to discuss the prospects of building the Trans-Caspian pipeline. In this way, Ashgabat is attempting to enter the European energy market, by accelerating negotiations with Baku and Ankara, and strengthening itself as a result of the latest meetings of the littoral countries of the Caspian Sea, the so-called "Caspian Five": Russia, Kazakhstan, Azerbaijan, Iran and Turkmenistan, for the purpose, focusing on the legal status of the maritime area. According to Ashgabat government sources, there are frequent talks with Baku and Ankara on whether to open the European market to Turkmen gas, especially following the declaration that the three countries have signed with the EU on the development of cooperation in the energy industry. Azerbaijan has repeatedly expressed its willingness to provide the land necessary for the transit of infrastructure required to implement the project, having considered a natural extension of the so-called "Southern Gas Corridor". A feasibility study, conducted by the United States’ Agency for Trade and Development, has estimated that the gas pipeline could reach a capacity of 30 billion cubic meters per year, with a total construction cost of $5 billion. The main problem, however, is the legal status of the Caspian Sea, which is still undefined. The recent meeting of foreign ministers of the littoral companies, held in Astana on July 13, 2016, closed, however, with positive intentions and with optimistic forecasts by Russian Foreign Minister Sergej Lavrov, according to whom, by the first half of 2017, the convention on the legal status of the Caspian Sea will be signed.

After the dissolution of the Soviet Union

The issue became topical after the dissolution of the Soviet Union: the emergence of new subjects of international law, namely Azerbaijan, Kazakhstan and Turkmenistan, which have become independent, has opened the debate on maritime rights between the five Caspian countries. Resolving the long-standing dispute would revitalize the economies of the three former Soviet countries. As also stated by Azeri Foreign Minister Elmar Mammadyarov, however, any solution will have to respect the sovereign rights of the coastal countries and form the basis of a profitable partnership for all. "Trust measures must also ensure equal security conditions for all coastal countries of the Caspian Sea", the head of Azeri diplomacy stated clearly at the end of the meeting of July 13, 2016. "We are also sure that the strengthening of the stability in the Caspian Sea is a goal to be achieved, taking into account the interests of all parties and so as not to cause damage to the security of any other country, in respect of the sovereignty, territorial integrity, the independence of the Caspian Sea countries, and not interfere in the internal affairs of others," added Mammadyarov. The issue of security, which is topical now more than ever, was also commented on at the end of the recent meeting in Kazakhstan by Iranian Foreign Minister Mohammad Javad Zarif, according to whom the security and stability of the Caspian region are of paramount importance. Zarif also proposed that the five coastal states establish a permanent regional body, the composition, duties and powers of which are determined in joint consultation. "The creation of this body will serve to demonstrate our long-term global vision of the problems of the Caspian Sea," noted Zarif.

Sea or inland lake? The name makes all the difference

The question of the legal status has been the subject of discussion for some time, and was also addressed at the United Nations’ Convention on the Law of the Sea, signed in 1982 in Montego Bay, which, however, was not helpful in finding a definitive solution. The definition of the Caspian as an inland lake or sea is not a matter of mere geographical nomenclature, as the former allows Russia and Iran to prevent the other countries from exploiting the oil fields located beyond the border of their territorial waters. Moscow, in particular, seems to fear that the possible arrival of western oil companies may be followed by the deployment of NATO forces: a scenario that would make the Caspian Sea a "new Black Sea." So far, Russia and Iran have followed along this line, and it does not seem that the thawing between the U.S. and Tehran can change this situation. If the Caspian were declared a sea (closed, but still a sea) the 1982 Treaty of Montego Bay would apply: the coastal states govern within the 12 nautical miles, but beyond this they can take advantage of an exclusive economic zone that may extend to up to 200 miles from the base line. The legal connotation of “sea” would imply the application of the principle of the so-called “median line”, according to which the border is determined by all of the points equidistant from the 12-nautical mile coastline. In this way the division of the Caspian Sea into sectors would mean an area equal to 30 percent of the total for Kazakhstan; 20.6 percent for Azerbaijan; 19.2 percent for Turkmenistan; 15.6 percent for Russia, and 14.6 percent for Iran. However, in the event that that Caspian is recognized as a lake, the coastal states could exercise their exclusive territorial jurisdiction only within the 12 miles, while beyond this, exploitation would become common and would require an international authority called to coordinate the extraction and division of wealth present in the seabed. Since its independence, Azerbaijan has started strong business relationships with the main western energy companies, while Turkmenistan, with the Trans-Caspian oil pipeline project which would bypass Russian territory, can rely on a fair amount of international support. Kazakhstan, although bound by its solid alliance with Moscow, remains interested in joining the game of alternative energy routes, to deliver its supplies to Europe. The Trans-Caspian pipeline would reduce Russia’s influence in the EU’s energy policy and would downsize its role as regional leader. The Caspian, moreover, is to Moscow a buffer zone of strategic importance from a military point of view and in the fight against international terrorism, as well as a considerable energy and economic resource.