Leaders from Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan have spent over 20 years trying to negotiate a deal over how to manage the ownership of the Caspian Sea and its surrounding areas. On Aug. 12, in the Kazakh city of Aktau, they finally signed a legal convention. But despite the fanfare surrounding the summit, the agreement will not resolve all of these countries' complex and contentious debates over the Caspian Sea.
In previous assessments, Stratfor anticipated that Russia would try to prevent neighboring Eurasian countries from constructing the Trans-Caspian Gas Pipeline, since it would compromise Russia's current control over energy exports to Europe. Now, despite several countries adjacent to the Caspian Sea signing a landmark agreement, disputes continue and Russia is beginning to re-engage in energy talks with Turkmenistan.
Some Caspian Context
The Caspian Sea is a geopolitically strategic body of water, both in terms of its location and its resources. Situated in a transcontinental zone between Europe and Asia, it has historically been a key trade and transit corridor between eastern and western powers. The Caspian Sea became even more important in the modern era after the discovery of significant energy resources, including over 50 billion barrels of oil and 9 trillion cubic meters of natural gas in proven or probable reserves.
Naturally, the countries surrounding the Caspian Sea make use of its strategic qualities. Russia and Iran are among the world's largest energy producers and exporters, while Kazakhstan, Turkmenistan and Azerbaijan produce significant amounts as well. However, since the 1991 collapse of the Soviet Union established Azerbaijan, Kazakhstan and Turkmenistan as independent states and competitors in the region, ongoing disputes about how to draw boundaries in the Caspian have limited all the surrounding countries' ability to exploit its resources.
The primary issue has been whether to legally classify the Caspian as a sea or a lake. The former would require the division of the Caspian based on the shorelines of each littoral state, while the latter would divide the Caspian's resources equally among all five states, regardless of the length of their coasts. Until now, the dispute has not stopped the Caspian states from accessing energy resources close to their shorelines, but it has prevented energy exploitation from taking place deeper offshore. Moreover, it has stalled the progress of any pipeline projects that would go across the seabed itself.
What Was Settled At the Summit
Since 1996, the Caspian Sea states have been holding regular summits to discuss everything from environmental safety issues to fishing rights to security cooperation. And during the previous summit in 2017, the five countries announced that they had laid over 90 percent of the groundwork for an agreement about ownership. A draft of the legal convention that was posted by Russian Prime Minister Dmitry Medvedev's website prior to the Aug. 12 summit suggested that the leaders had agreed to recognize the Caspian as a sea rather than a lake.
The convention signed at the recent summit did indeed confirm that the surface of the Caspian Sea would be legally classified as a sea, meaning each country would control 15 nautical miles of water from its shoreline for mineral exploration and 25 natural miles of shoreline for fishing. All other parts of the Caspian Sea would be considered neutral waters for common use. The summit also produced important security decisions, including an agreement that military vessels from non-Caspian states would be prohibited from entering the sea. This is a boon for both Russia and Iran, who have long had concerns about a U.S. or NATO military presence increasing Western influence, particularly over Azerbaijan. The agreement does not prevent the shipment of military cargo through the Caspian, though, since both Azerbaijan and Kazakhstan have played logistical supply roles for U.S. and NATO forces in Afghanistan.
However, many issues remain unsettled. For example, the delimitation of the seabed itself, where most energy resources are located, was left pending, meaning the Caspian countries will need to negotiate bilateral agreements. And Iranian President Hassan Rouhani said during the summit that the littoral states would need to hold further talks to clarify environmental responsibilities; Turkmen President Gurbanguly Berdymukhammedov subsequently offered to host another summit in his country. Moreover, deputy foreign ministers of the Caspian states are scheduled to hold consultations in Azerbaijan over the legal convention sometime within the next six months, suggesting the document produced at the Aktau summit is still flexible.
Why Russia and Iran Could Resist
Russia and Iran, the two largest and most influential Caspian states, are particularly interested in preventing a conclusive agreement for the sake of their own energy interests. From a resource division standpoint, Iran would stand to lose the most from a strict classification of the Caspian as a sea, given that the distinction would give Iran the smallest and least resource-rich section of the Caspian.
Russia, meanwhile, is concerned about a Caspian Sea legal agreement facilitating pipeline projects like the Trans-Caspian Gas Pipeline. Such a project would link Turkmenistan's sizeable natural gas resources to a Southern Corridor route beginning in Azerbaijan, allowing the country to export its natural gas to Europe and potentially cut into Russia's main market for natural gas exports.
Thus Tehran and Moscow may both try to drag out subsequent Caspian Sea negotiations as much as possible. In the meantime, Russia will try to sway Turkmenistan from pushing ahead with the Trans-Caspian pipeline project. Indeed, there has been speculation that Russia could potentially resume some imports of natural gas from Turkmenistan after nearly 10 years. For much of the past decade, Turkmenistan has exported its natural gas solely to China, and resuming some level of exports to Russia once again could provide a critical boost to the struggling Turkmen economy. Only three days after the Aktau summit, Russian President Vladimir Putin met with Berdymukhammedov in Sochi to discuss energy cooperation.
The Ultimate Takeaway
The legal convention signed at the Caspian Sea summit in Aktau is far from the final word on the division of the strategic sea and its abundant energy resources. It does indicate progress in certain areas such as security, but Russia and Iran will likely try to delay any finalized protocol for managing the body of water in order to protect their strategic energy interests.
