The Caspian is the world’s most easily accessible major oil region yet to be fully developed. Both Western nations and former Soviet republics are rushing to exploit its vast hydrocarbon wealth.
Environmental issues are increasingly moving to the forefront of this exploitation. While nations bordering the Caspian piously insist that environmental worries top their list of concerns, cynics maintain that environmental issues are a facade for the nations to rewrite what they have come to regard as increasingly exploitative production-sharing agreements signed in the heady days following the implosion of the Soviet empire. The truth is probably somewhere in between.
The Caspian is the world’s largest enclosed body of water, with a surface area of 143,244 square miles. Its pollution comes from three sources: inflowing rivers bringing contaminants from their watershed area, offshore oil production platforms and the rising Caspian tanker trade.
As for riverine pollutants, the bulk comes from Russia. As the Volga flows through Russia’s European heartland, and 11 of Russia’s 20 largest cities are along its bank and watershed, the river is the major source of the Caspian’s pollution from aging Soviet industrial complexes.
Before the collapse of the Soviet Union in December 1991, the Caspian was divided between the Soviet Union and Iran; now Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan share its waters, and have yet to agree to a definitive division of its offshore waters. The two most prominent rising Caspian petro-states are Azerbaijan and Kazakhstan, which have increased their output in the last 15 years by 70 percent.
All five nations now operate tankers on the Caspian that pollute by discharging bilge water and sloppy loading techniques. The largest tanker trader is the Caspian Shipping Co. of the Azerbaijani Republic, or CASPAR. But other states are developing tanker capabilities, most notably Kazakhstan’s Kazmortransflot, which in August 2005 launched its first tanker, the $18.75 million Astana. In 2001 Turkmenistan received its first 5,000-ton tanker, built in Turkey, for transiting oil through its Caspian ports of Turkmenbashi, Alaja and Ekerem.
While both Russia and Iran maintain modest Caspian tankers fleets, they remain relatively insignificant, as most of their oil exports move via pipelines to the Black Sea and Persian Gulf respectively for export. A year ago, however, the head of Iran’s National Iranian Tanker Co. said his company ordered six oil tankers to carry oil from Caspian Sea littoral states to Iran’s Caspian Neka port.
The U.S. administration has belatedly realized that a “green” environmental policy could prove popular in allied Caspian riverine nations. On Sept. 12, U.S. Ambassador to Azerbaijan Ann Derse met with ecological non-governmental organization heads in Sumgayit. She told reporters, “Sumgayit residents … face ecological problems. We also carried out debates on eliminating ecological problems existing since Soviet period. I will discuss this issue with Sumgayit city leadership.” At the same briefing, Sumgayit Ecological Rehabilitation Center Arif Director Islamzada said, “Representatives of NGOs gave thorough information to ambassador about the ecological condition of Sumgayit.”
Other Caspian nations are also playing the environmental card, most notably Kazakhstan, which on Aug. 27 suspended the Eni SpA-led consortium’s license, which has ballooned from an initial estimate of $57 billion development cost to an estimated $136 billion, a move many analysts attribute to an effort to influence negotiations to increase Kazakhstan’s share of the development contract amid reports that Almaty is seeking at least $10 billion in compensation for production delays and cost overruns.
The environmental impact of increased oil drilling in the Caspian has been well documented, however, with pollution hurting sturgeon stocks and the freshwater Caspian seal population. Nor are the former Soviet states the only Caspian nations to notice environmental degradation. On Sept. 16, Iran’s Press TV reported that Mohammad-Reza Qaderi, director of Iran’s Ports and Shipping Organization Marine Protection unit, said oil pollution tar balls had washed ashore at Iran’s Caspian Anzali’s port shoreline, telling journalists, “Our experts have discovered semisolid oil lumps otherwise known as tar balls. These tar balls polluted coastal areas near Anzali following a Caspian storm last month,” adding that cleanup efforts were under way.
Despite solemn commitments to environment issues, the short-term situation for the Caspian’s ecological health remains grim, as all nations there have announced major development projects. In February, Kazakhstan’s Transportation Minister announced that over the next five years it intends to spend more than $860 million to develop its merchant marine, ports and infrastructure and that "by 2012 the merchant fleet will consists of 20 tankers and five dry cargo ships as well as 150 service ships,” while Azeri Energy Minister Natiq Aliyev announced Azerbaijan plans to double its oil output, reaching 65 million tons annually by 2010. Given that more than 80 percent of Azerbaijan’s oil is produced from offshore Caspian fields, the environmental implications are ominous. Even Russia, the Commonwealth of Independent States’ oil superpower, is expanding its maritime activities. Last November Russian President Vladimir Putin told a meeting devoted to shipbuilding industry issues that his administration prioritized the construction of oil platforms and tankers.
The lack of a coordinated international policy on environmental issues, combined with a decaying infrastructure, corruption and massive investment all seem destined in the short term to create more environmental problems than might be solved by rampant development schemes.
Enthusiasts of the Caspian’s other "black gold,” caviar, should take note: Earlier this year the five main caviar exporters -- Azerbaijan, Russia, Iran, Kazakhstan and Turkmenistan -- agreed to reduce the catch quota for beluga sturgeon, setting a limit on export of 3,761 kg of beluga, the world's most valuable caviar. As Kashagan is in a nature reserve and a breeding ground for beluga sturgeon, caviar, already more than $800 per 100 grams, is likely soon to be out of the reach of all except oil company executives.
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