Lake or sea? A tricky question for the Caspian

Frank Kane

November 25, 2014

 

Is the Caspian a sea or a lake? Maybe a rather metaphysical question for the business section but the answer could have profound results for the central Asian energy industry. Underneath the Caspian, or within easy reach of its shores, are locked some 79 billion barrels of oil and 7 trillion cubic meters of natural gas. Now you begin to understand why the five countries with Caspian shorelines are so interested in its status.

The status of the Caspian only emerged as an issue in 1991 with the collapse of communism. Until then, when the Caspian was virtually a Soviet lake. But when Azerbaijan, Turkmenistan, and Kazakhstan emerged as sovereign states, they each laid claim to the Caspian and its potential energy resources. The first Caspian summit took place in 2002, when the extent of the energy reserves was becoming apparent, but a meeting in Baku between the heads of the Caspian states in 2014 was the latest to fail to come to an agreement.

You can understand the dilemma. The Caspian has been called a sea since time immemorial, mainly because of its sheer size. The Caspian is far bigger than many other stretches of water that are indisputably called "seas", such as the North Sea or the Baltic Sea. If you've had the pleasure of swimming in it certainly feels like a sea. It is salty and has big waves. Stretches of the Absheron peninsula, on which Baku stands, are developed as areas you could only call seaside resorts.

On the other hand, the Caspian also has the defining characteristics of a lake: it is land-locked and has no outflowing rivers. It is the largest enclosed body of water on the planet. In the north, where the mighty river Volga washes into it, it is virtually fresh water (salinity increases the further south you go).

If the Caspian is seen as a lake, leaders would have to carve up its resources and the revenue they produce equally, each getting one fifth of its bounty. If the Caspian is seen as a sea, each nation could lay claim to areas according to the length of their coastlines.

As the Caspian country with the shortest coastline, Iran’s position is straightforward. It considers the Caspian to be a lake. With only 13 per cent of the total Caspian shoreline, and the least promising so far in terms of proven hydrocarbon resources, it would lose out to its neighbors with longer coastlines should the Caspian be considered a sea.

Azerbaijan and Kazakhstan want to delineate the seabed based on the law of the sea. This is not surprising because the two countries would be the biggest winners under this scenario.

Russia’s complicated position has evolved into one that is best described as “common waters, divided bottom.” With this policy, Russia wants to maintain surface navigational rights (and therefore naval supremacy) in the Caspian while taking a more pragmatic approach to oil and gas exploration and ownership. Generally speaking, Azerbaijan and Kazakhstan have at least implicitly agreed to Russia’s “common waters, divided bottom” approach.

Even though Russia has delineated its maritime borders with both neighboring countries, it is still in Moscow’s interests that the southern section of the Caspian remains disputed among Azerbaijan, Iran, and Turkmenistan. An ongoing dispute will help Russia to maintain its control over the transit of gas from Central Asia to Europe.

The outcome of the “lake or sea” debate will greatly affect future pipelines transporting oil and gas from Central Asia to Europe. At the moment, Europe is dependent on oil and natural gas coming out of Russia from the east. However, the construction of a Trans-Caspian Gas Pipeline would create a new route, known as the Southern Corridor, that would bypass Russia entirely by creating a pipeline that would connect Turkmenistan, Azerbaijan, Turkey, and Italy and thus create an alternate sources of energy for most of Europe. This could have serious implications for energy policy and geopolitics.

The lack of clear delineation of the waters has led to multiple disputes over oil and gas ownership and the risk of military confrontation. Until there is agreement on Caspian Sea ownership, the possibility for armed conflict in the region remains real.