The Geopolitics of the Caspian Sea Region

Geology, Oil and Gas Potential, Pipelines, and the Geopolitics of the
Caspian Sea Region

Ocean Development & International Law
35:19-40, 2004

Department of Geology & Geophysics
Texas A & M University
College Station, Texas, USA


Legal Issues in the Caspian Sea

The exporting of fossil fuels from the Caspian region will require the
development of pipelines that traverse political boundaries. There are
many scenarios for pipeline routes, as discussed above, each having
both political and economic problems. What is discussed below are the
current legal status of the Caspian Sea and the regional conflicts
that pose political risks that must be taken into consideration before
decisions are made. Before the breakup of the Soviet Union, treaties
of 1921 and 1940 established an exclusive 10-mile fishing zone for the
Soviet Republics and Iran and referred to the Caspian Sea as the
Soviet-Iranian Sea. However, these treaties did not cover ownership of
seabed boundaries or which state had jurisdiction respecting oil and
gas exploration. In the post-Soviet era, conflicting approaches have
been proposed to dividing the offshore regions among the five
independent countries bordering the Caspian Sea. Some important
agreements have been reached, but there are still a number of
outstanding problems. The United Nations Convention on the Law of the
Sea (UNCLOS) provides that a state may claim a 12-nautical-mile (nm)
territorial sea and a 200 nm exclusive economic zone (EEZ). The
Caspian Sea is not wide enough to allow for the full extent of 200 nm
EEZs for states on opposing coasts. The threshold legal question is
how the Caspian Sea is to be classified. If the Caspian Sea is
classified as a sea, then UNCLOS is applicable; however, if it is
classified as a lake, then UNCLOS is not applicable and the Caspian
Sea is free of the international rules governing oceans (Oxman,1996;
Sciolino, 1998).

The initial Russian position, addressed to the UN General Assembly in
1994, was that international ocean law, particularly those pertaining
to territorial seas and EEZ, do not apply since the Caspian is a
landlocked body of water without natural links to the worlds’ oceans
(Gouliev, 1997). Their position was that there are no grounds for
unilateral claims to areas of the Caspian and that the entire sea is a
joint venture area (a “condominium” approach). The implications are
that any activity with respect to utilizing the seabed by one country
encroaches upon the interests of all the other bordering countries. In
1996 Russia softened their position by suggesting the establishment of
a 45 nm EEZ for all littoral states with joint ownership beyond the 45
nm limit.

The Azerbaijan position differed considerably from that of the initial
Russian position. Azerbaijan claimed that the Caspian Sea falls within
the jurisdiction of the international Law of the Sea. Using this
approach, a median line is drawn using the shores with the coastal
states having full sovereignty in their respective sectors. In 1997,
Azerbaijan and Kazakhstan, as between themselves, agreed to an
approach based on the median line principle. Russia and Kazakhstan in
1998, and Russia and Azerbaijan in 2001 also agreed to this approach
to delineate their respective offshore areas. Thus, Russia,
Azerbaijan and Kazakhstan have agreed to divide the seafloor into
sectors or zones between corresponding neighboring and oppositely
located states.

Turkmenistan agrees to this approach in principle, but not in method,
claiming that application of a median line does not take into account
the peculiarities of the shore line, in particular, the potentially
oil rich Absheron Peninsula that is presently claimed by
Azerbaijan. Iran, however, still disagrees with any division of the
Caspian using median lines. Iran originally favored the “condominium”
approach but later considered dividing the Caspian into five equal
areas with each state having sovereignty over 20% of the seabed
resources and water. Utilizing median lines, Iran’s sector of the
Caspian does not have the potential fossil fuel resources. Iran’s
method of dividing the Caspian gives them not only a larger share of
the Caspian Sea than the median line approach but as well would place
potential oil-rich seafloor regions claimed by Azerbaijan in their
sector (Croissant, 1998; U.S. Energy Information Administration,

Because of the above disagreements, there are conflicts between
Azerbaijan and Iran. In 1999, Azerbaijan accused Iran of licensing
Royal Dutch Shell to do seismic exploration in an area the Azeri
government claimed was in their sector. In July 2001, the Iranian Oil
Ministry issued a warning to foreign energy firms not to work with the
other four Caspian states in the disputed areas of the Caspian
Sea. The day after the warning was issued, Iranian ships intercepted a
British Petroleum (BP) seismic exploration ship (the Geofizik-3) that
was undertaking exploration in the Araz-Alov-Sarq fields in the South
Caspian Basin. These fields, located ~90 miles southeast of Baku,
Azerbaijan, were licensed by the Azeri government to a BP consortium
and are in a region over which Iran claims sovereignty. This incident
was the first overt military act in the Caspian Sea since the breakup
of the Soviet Union (U.S. Energy Information Administration, 2002).

According to Dr. Elmar Mamedyarov, Charge d’Affaires, Embassy of
Azerbaijan, the dispute between Iran and Azerbaijan regarding the
legal status of the Caspian is a “component of the tension that has
arisen in the area” (Calabrese, 2001). This tension includes the
Iranian support of Armenia in the conflict over Nagorno-Karakh, a
highly contentious region, and one that pits Armenia and Azerbaijan in
a state of “cold war.”

The U.S. presence and influence in Azerbaijan has also fueled tension
in the region, especially since Iranian companies are excluded from
U.S. energy projects in the Caspian. Conflicts regarding seabed
sovereignty also exist between Azerbaijan and Turkmenistan. Though as
noted earlier Turkmenistan has agreed in principle with Azerbaijan,
Russia, and Kazakhstan respecting use of a median line to divide up
the seabed, exactly where to draw this line has created a major
dispute with Azerbaijan. The Absheron Peninsula of Azerbaijan juts
into the Caspian Sea. Because of this coastline “anomaly,” strict
application of a median line gives Azerbaijan more of the mid-Caspian
than Turkmenistan would agree to cede. Turkmenistan claims the border
should lie on a line drawn using the shores of the two states lying
opposite. This would give Turkmenistan a larger share of the
mid-Caspian, an area where there is significant oil potential (the
Serdar/Kyapaz oil fields). Though considerable rhetoric has arisen
between the two countries, hostilities have thus far been

Copyright: Taylor & Francis Inc.