ASTANA – On August 12, the heads of the five Caspian states will meet in Aktau, Kazakhstan, for years-long discussions on determining the status of the Caspian Sea.

The Caspian saga among the littoral states dates back to 1992, when the dissolution of the Soviet Union resulted in the formation of four independent countries – Azerbaijan, Kazakhstan, Russia, and Turkmenistan.

Throughout these years, the five countries, including Iran, have been discussing very important issues of the shared use of the Caspian Sea and of all that is hidden in its depths.

In addition to its rich flora and fauna, the Caspian Sea boasts major reserves of oil and gas that are among the most sought-after commodities in the world. It was in the Caspian shelf that Kashagan – the world’s largest field in recent history – was discovered. That discovery a quarter of a century ago had brought the largest oil business majors into the then little known Kazakhstan: Chevron, ConocoPhillips, Shell, AGIP, CNPC, Inpex, and others.

Kazakhstan’s oilmen like to say that one needs not look far and wide for the world’s oil market – it is right here, in western Kazakhstan, on the Caspian shore. It is in this country of scorching summers and salty winds that hundreds of billions of US dollars have been invested, and it is from here that the “black gold” flows through the thousands-of-kilometres-long pipelines to the world markets.

What’s more, the Caspian Sea is also home to the famous sturgeon and beluga. Add to that the famous Caspian caviar, and we can see big profits here. That is why the littoral states have sat down at a negotiation table to discuss how to peacefully and without conflicts use this generous gift from the Mother Nature.

Is it a sea or a lake?

The very first question that the negotiators faced was the delimitation of the surface and underwater parts of the Caspian Sea. Two options were put on the table. The first: to divide it into 5 equal parts, 20% to each country. That’s what the official Teheran insisted on. But the other four would not agree to it.

The second option was to divide the water surface and the sea floor in accordance with the coastline mainland portion of each country. With its smallest inland area among the neighbours, this option hurt Iran the most.

The Caspian Sea is a unique water body in that it is land-locked inside the Eurasian continent. As such, it cannot be considered a sea, but it’s hardly a lake, either. In short, it’s all about the status of the Caspian Sea. If it is a sea, then the rules of the international law would apply unequivocally.

Without going too much into the legal details of the proposed options that the five littoral countries have been discussing for the past twenty years, let’s focus on the forthcoming Aktau summit. It is expected that the fifth Caspian Littoral Summit will see, at last, the signing of a Caspian Sea status convention.

In the lead-up to the summit, an ambassador-at-large of the Ministry of Foreign Affairs of Kazakhstan, Zulfia Amanzholova, told a news briefing that Astana believed that the water area of the sea should be divided into territorial waters and national fishing areas of an agreed width. “The remaining part of the sea would be open for free navigation under the flags of the littoral states. The bio-resource harvesting operations would be carried out in the defined fishing areas and in the common water areas in accordance with the established quotas and licences,” Amanzholova said.

The airspace over the sea would also be open for flying on agreed-upon ways. The Midland states would have the right of free transit to access the other seas or the World Ocean.

Kazakhstan’s stand had been published as an official UN document back in October 1997.

The forthcoming fifth Caspian summit is a scheduled event. The expected signing of a final convention on the status of the Caspian Sea would be of a paramount importance not just to the littoral states themselves, but also to the rest of the world.

“The signing of the Caspian Sea Status Convention would mean that the “big Caspian deal” is finally concluded. Most importantly, this document will formulate an agreement of the states of the region on how to use the natural resources of the Caspian Sea and on which conditions,” a Russian expert on the Caspian Sea region, Igor Ivahnenko, told New Europe.

In its proposed version, the Convention provides for the division of the sea into national sectors based on the current dryland borders.

“This is a compromise decision considering that the official Teheran had earlier insisted on an equal division of the water area among the five countries. Such approach would have increased the area of the Iranian sector but decreased that of Kazakhstan. Today, clearly, those disputes are over, and Iran has made concessions. One can say that, conceptually, the Caspian agreement has been reached,” Ivahnenko said.

The Trans Caspian Pipeline

The second and no less important, aspect of the future Convention concerns the issue of trans-Caspian pipelines. As is known, Russia and Iran were categorically opposed to that idea, while Turkmenistan insisted on it, wishing to build a Trans-Caspian gas pipeline.

In this regard, the Protocol on Environmental Impact Assessment (EIA) signed by the five littoral countries earlier stipulates that, before any such project can be implemented, the associated ecological risks should be collectively discussed by all the states, and that no project can be implemented without an environmental permit from each of the five states.

“But it all depends on whether there is a clause (in the Convention) on the right of the adjacent countries to build, in a manner of speaking, gas pipelines/oil pipelines. If it is allowed, then it is a big victory for Turkmenistan who has wanted to build a Trans-Caspian gas pipeline for a long time now. If there is no such clause in the Convention, then Ashkhabad has suffered a political defeat,” Ivahnenko said.

As far as Kazakhstan is concerned, the Convention is not so critical to it, the Russian expert opined. For the past decade, there has been an active agreement in place between Russia and Kazakhstan on joint development of trans-border fields. There are no such agreements, though, between Kazakhstan, Azerbaijan and Turkmenistan. Whether Kazakhstan needs to build pipelines through the Caspian Sea is a big question.

“For sure, a gas pipeline is out of the question – it makes no economic sense. For an oil pipeline, the cost of Kashagan oil and of Kalamkas West oil is awfully high. The investors would not want to further increase the cost by building a Trans-Caspian oil pipeline and by then integrating it into the Baku-Tbilisi-Ceyhan pipeline using this very expensive route. Kazakhstan already has the CPC, the pipeline to China, and the Russian Atyrau-Samara pipeline. In addition, Kazakhstan needs to increase feed supply to its own refineries. Therefore, in the industry sense, the Convention is not so important to Kazakhstan,” Ivahnenko said.

Geopolitics and oil

Considering the current political situation in the world, however, the forthcoming signing of the Caspian Sea Status Convention has a geopolitical importance. Undoubtedly, the settlement of the “Caspian problem” means that at least one region of the world has become safer and more peaceful than before.

The growing instability around that region – the Islamic wars in Syria, Iraq, and Afghanistan, the Russia-Ukraine conflict, and the proposed new US sanctions against Iran – has likely expedited the decision by the leaders of the littoral states to find a compromise.

Amanzholova said peace and quiet in the region have become the priority for all the littoral states. The signing of the Convention will guarantee the absence of mutual political claims or conflicts, which means that the Caspian Five have strengthened their strategic positions.

From this point of view, for example, the United States and Israel will now have less opportunity to employ the Caspian differences to exert pressure on Iran. Also, US and European Union will now find it more difficult to involve the other Caspian countries in their energy policy against Russia, as the Convention and the EAI Protocol have established a balance between the organization of national pipeline projects and the collective approval for their implementation.

“Also important is the current political reality in which the Caspian integration is developing. Its major participant in all senses is Russia. At the same time, US, EU and their allies are trying to paint Russia as a rogue state with whom nobody wants to deal. The diplomatic events in the Caspian region have shown that the different kinds of sanctions against Russia are not working there at all,” Ivahnenko said.

As a matter of fact, Azerbaijan is increasing its import of Russian gas, Kazakhstan is increasing the transit of its oil through the Russian Federation, Turkmenistan is expanding its food product purchases from Russia, and Teheran is trying to be Russia’s ally in all international affairs.

“Using the terminology of the 19th century, Russia has won this round of the “Great Game”. However, the history knows a lot of precedents where the practical politics subverted the most important diplomatic agreements. It cannot be ruled out, therefore, that, given a radical change in the position or politics of the Caspian states or a sharp increase of external pressure on them, the signed agreements could be revised or cancelled,” the Russian expert concluded.