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Kazakhstan/Russia: Caspian Sea Problems Remain Unresolved

By Edige Magauin

Prague, 28 January 1998 (RFE/RL) -- Caspian oil, and problem associated with it, have been the main topic of international oil discussions in recent years. Apart from the extraction of oil and probing resources, there are two problems, which have both economic and political overtones. One of these is the status of the Caspian Sea itself, and another is about how this oil will flow to the West. Not only the regional, but the global political situation, influences any decision of these two problems.

Kazakhstan's President Nursultan Nazarbayev says, "If we recall history, the small geographic territory of the Balkans was the bone of contention between nations and two World Wars resulted. These same interests of world governments converge in the Caspian," he says. Nazarbayev adds, "whether the region becomes a benefit for our peoples or a bone of contention depends on us, the politicians." Nazarbayev made his comments after talks in Moscow last week with Russia's President Boris Yeltsin.

According to latest data, the Caspian region has 7,000-million (billion) tons of oil, and five-million-million (trillion) cubic meters of natural gas. This is about 15 percent of the known global resources of oil and gas. It's clear now that this is one of the main sources of hydrocarbons in the next century. And it's clear, too, that the situation in Caspian region will influence prices in world trade. The American "Oil and Gas Journal" wrote recently about Kazakhstan: "Kazakhstan is not the main oil resource for the U.S. government, but Kazakh oil (Caspian oil) could influence prices in world trade."

The first main problem associated with the Caspian is its official status: is it a sea or a lake? A decision in favor of one or another will influence how the Caspian 'pie' will be divided among the five coastal (littoral) states: Russia, Iran, Kazakhstan, Azerbaijan and Turkmenistan. On one side, are Russia and Iran, with their "condominium" proposal. They want the Caspian to be accepted as a lake, so its oil-and-gas resources would belong to all coastal states jointly. On the other side, are Kazakhstan and Azerbaijan with a proposal on dividing the sea bottom in proportion to each country's length of shore. That is what would happen if the Caspian is accepted as a sea, not a lake. The fifth coastal state, Turkmenistan, has advocated different positions at different times.

If the Caspian is a lake, only zones to 12 miles off-shore would be designated as belonging to each state. Outside this 12-mile limit, there would be common ownership. Kazakhstan would have 2,000-million (billion) tons of oil and 1.3-million-million (trillion) cubic meters of natural gas in its 12-mile, off-shore area. A further estimate puts its share from a common area as 500-million tons of oil and 0.1-million-million (trillion) cubic meters of gas.

If the Caspian is identified as a sea, Kazakhstan could has 3,000-million (billion) tons of oil and 1.5-million-million (trillion) cubic meters of gas.

The apportionment for Azerbaijan is almost the same.

As for Moscow and Teheran - who clearly remember when only the USSR and Iran shared the Caspian - they would stand to profit most from common ownership.

Turkmenistan, which would seem to profit most from a 'sea' interpretation, at one time supported Kazakhstan and Azerbaijan. But, last year, Ashgabat announced claims on two oil deposits in Azerbaijan's area, and, the situation remains unresolved, despite pledges from Ashgabat and Baku to settle the dispute.

Other, non-Caspian states also involved. And, not surprisingly, the position of each on the status of Caspian depends on its strategic interest.

The U.S., for example, opposes the "condominium" approach. In this case, investments by American companies would be limited, because of Iran's share in the Caspian "condominium."

Kazakhstan's Nazarbayev and Russia's Yeltsin said in a joint statement last week: "The absence of a common solution puts brakes on exploration of its (Caspian) mineral resources, breeds discord and stands in the way of solving economic and urgent ecological tasks."

The two Presidents, agreed the Kazakh and Russian governments will draft a convention on the legal status of the Caspian Sea by March 15, for review by the heads of all five bordering nations. But, experts say deciding the legal status of the Caspian is so complicated, that nobody expects acceptance of their proposal.