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Russia: Peace Making Or Oil Interests?

Russia's new representative for Caspian affairs, Viktor Kaluzhny, has proposed a settlement of the border dispute between Azerbaijan and Turkmenistan. But it is unclear whether Moscow now plans to be a peacemaker in the Caspian or whether it is only advancing its oil interests. RFE/RL correspondent Michael Lelyveld reports:

Boston, 17 July 2000 (RFE/RL) -- Russia's top official on Caspian Sea issues has urged Azerbaijan to end its border feud with Turkmenistan by allowing joint development of a disputed oilfield.

Speaking Friday in Baku, Russian Deputy Foreign Minister Viktor Kaluzhny proposed a settlement of the long standoff over the Kyapaz oilfield based on a principle that resources which straddle a Caspian border should be shared.

Kaluzhny aired the proposal after meeting with Natig Aliev, the president of Azerbaijan's state oil company SOCAR. He plans to pursue it with Azerbaijan President Heidar Aliyev and will also advance it in meetings with Turkmenistan officials in Ashgabat in the coming week, ANS News said.

Russia is taking the same position on sharing several border oilfields with Kazakhstan in the northern Caspian, according to Kaluzhny. The responses from Kazakhstan to the proposed settlement have reportedly been positive.

If Kaluzhny succeeds in establishing the principle for bilateral borders, it could help to solve the long-standing problem over a legal division of the Caspian Sea. The issue has clouded development since 1994, when Russia first raised objections to Azerbaijan's "deal of the century" offshore project, arguing that no pact existed among the Caspian's five littoral states.

Since then, Russia has largely ignored its own objections by negotiating bilateral oil agreements with Kazakhstan. Many other offshore contracts have also gone forward, despite the legal argument over division. But the dispute over the Kyapaz field, which Turkmenistan calls Serdar, has had more immediate and damaging effects.

The competing claims have largely ruined relations between Turkmenistan and Azerbaijan, making cooperation on any issue difficult.

The row erupted in 1997 after the Russian oil company Rosneft signed a 1,000 million dollar deal with Azerbaijan to develop the field in the center of the Caspian. Turkmenistan President Saparmurat Niyazov objected to Russian President Boris Yeltsin, laying claim to the deposit's estimated 50 million tons of oil reserves. The Russian Foreign Ministry quickly apologized and cancelled the agreement with Azerbaijan.

For good measure, Turkmenistan also claimed the oil fields that were being developed as part of the "deal of the century," although they were closer to Azerbaijan's shore. At first, Baku tried to settle the matter by offering Ashgabat a share of its big 8,000 million dollar venture. But Niyazov refused, and relations have been sour ever since.

Brief improvements have followed agreements to cooperate on a trans-Caspian gas pipeline. Both sides have stated publicly that the border dispute would not keep the pipeline from going ahead. But the agreements have had little lasting effect.

Last January, Azerbaijan claimed half the capacity of the trans-Caspian line to export its own gas to Turkey. The demand made the economics of the line less attractive to Turkmenistan. Some analysts saw the move as retaliation for claims to Kyapaz-Serdar.

Kaluzhny's solution offers promise, but there are at least three reasons to question whether it will succeed. Niyazov has previously rejected joint development, which was offered by Azerbaijan two years ago. Russia's interest in proposing the principle of sharing is also curious in this case, unless it is also seeking a share in the oilfield or reinstatement of contracts with Russian companies.

In the case of sharing fields in the northern Caspian, Kazakhstan may have no choice but to accede to Russian demands. Nearly all of Kazakhstan's oil is transported through Russia. It must also defend against further claims to its rich Caspian offshore shelf. Any agreement with Kazakhstan may have far less to do with the sharing principle than with Russia's power.

Lastly, it is unclear whether Kaluzhny speaks for the Russian government at the highest level. Kaluzhny, who failed to win reappointment as Russia's energy minister, has been given a new but less powerful post in Caspian affairs. So far, there seems to be no assurance that the sharing principle represents a policy that would be applied to an overall settlement of the Caspian division issue. It is also unknown whether the idea has been raised with Iran, which has sought an equal share in Caspian oil.

Kaluzhny's proposal may be the start of a serious effort to solve the Caspian legal problems that Russia has helped to create, or it may simply be a ploy. In coming weeks, it may become easier to tell.