Security & Geopolitics

The Caspian Basin Agreement and the Overlooked Energy Element

"caspian sea agreement"

On August 12th, the five countries littoral of the Caspian Basin met in Aktau, Kazakhstan, reaching a partial agreement on the status and jurisdiction of the international basin.

The Caspian is the world’s largest landlocked body of salty water and, bearing characteristics of both a sea and a lake, its legal status has never been agreed, as any definition comes with relevant implications.
If it is a lake, the littoral states would divide its waters and resources equally and exclusively among themselves.
If it is a sea, the Caspian is subject to international maritime law, the littoral states have to draw lines extending from their shores towards the midpoint, and other states can seek access to its resources.

The problem only emerged with the dissolution of the USSR, when the littoral states, that were initially just the Soviet Union and Iran, became five, including Kazakhstan, Azerbaijan and Turkmenistan.

The Energy Dimension

Abundant energy resources are one of the main reasons why determining the status and jurisdiction of the Caspian is so crucial.
The reserves of the Caspian region have been estimated to be around 48 mb of oil and almost 300 tcf of natural gas, even though territorial disputes among littoral states have prevented full exploration.
In particular there is an ongoing dispute between Azerbaijan and Iran over the territory around the Araz-Arov-Sharg field and another one around Azerbaijan and Turkmenistan over the Serdar/Kapaz field.

Besides deciding on exploitation of the resources, a water basin of that dimension whose jurisdiction is undecided, becomes a physical obstacle to the transit of hydrocarbons produced onshore in the region and destined to western markets.

The Agreement

The parties attributed to the Caspian basin a hybrid status, it is not a sea, but it is not a lake either.
Each country has 15 miles of territorial waters, and 10 miles of exclusive economic zone after that, followed by common waters.

This was undeniably a historic deal, where states agreed on a legal frame based on principles of equality, sovereignty and territorial integrity.
Now it is clear that the waters of the Caspian belong solely to the five littoral countries, and their armed forces are the only ones allowed in the basin, leaving NATO countries excluded.
This was a strong signal of closure towards the international powers interested in the region – notably the US, China and the EU.

However, some essential areas remain gray.
The management and definition of the single areas has been left to bilateral agreements and it is not known at what point the negotiations for these agreements are or even if they have been initiated.
Plus, nothing has been decided regarding the exploitation of the seabed and the common waters. The energy issues have been left out of the agreement for now.

The First Step

To make the most of the potential of the Caspian basin, many aspects still have to be decided and the energy dimension cannot be left aside.
Only through authentic cooperation the five states involved can decide how to manage the energy resources in the Caspian and how to use the basin to best serve their present and future interest.
This agreement was a first step.

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