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Caspian states make little energy headway

Russian President Putin recognizes there are "serious and interesting tasks" ahead for littoral states.

By Daniel J. Graeber
Caspian states make little energy headway
Russian President Vladimir Putin (L) meets with Iranian President Hassan Rouhani on the sidelines of a Caspian Sea summit. Littoral states made little headway in resolving energy disputes. Photo courtesy of the office of the Russian president

Aug. 13 (UPI) -- Parties to a summit of energy-rich countries bordering the Caspian Sea did little to settle simmering disputes over oil and gas fields, analysts said.

Caspian littoral states -- Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan -- met during the weekend in Kazakhstan for a summit aimed at settling simmering disputes over maritime boundaries. A declaration more than a decade old stated that "only Caspian Sea littoral countries are allowed to use the resources of the sea."

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Russian President Vladimir Putin said from the summit that littoral states formulated a modern legal foundation outlining the rules and obligations for the Caspian Sea.

"We are facing serious and interesting tasks," he said. "And we are intent on consistently solving them."

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Camilla Hagelund, a regional analyst for Verisk Maplecroft, said littoral states might not want to accommodate competition from other producers, so the impact of any meaningful concessions on borders may be limited. Signing a formal declaration would be a landmark event given the history, but the immediate impact on energy would be muted.

Addressing questions posed by UPI, Hagelund said the weekend summit failed to address demarcation of the sea bed, something she said would require extensive bilateral efforts. The convention also didn't do anything to settle disputes about oil fields in the Caspian Sea.

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"As regards to the prospects for laying trans-Caspian pipeline infrastructure, the exact implications of the agreements are also unclear," she added. "It remains uncertain whether, for example, Russia and Iran can veto a trans-Caspian pipeline on environmental grounds."

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Speaking from the sidelines of the summit, Iranian President Hassan Rouhani said his government was committed to the elimination of "any hurdles" though comprehensive dialogue.

From the Baku-Tbilisi-Ceyhan pipeline, one of the longest in the world, to the Shah Deniz natural gas field off the coast of Azerbaijan, Caspian disputes have global implications.

Heralded as BP's largest gas discovery when it was announced in 1999, the next phase of Shah Deniz development will diversify a European energy sector dependent on Russia. Settling the decades-old disputes could facilitate further pipeline construction, though some of the area's bloodiest post-Soviet conflicts, like the fight over Azerbaijan's Karabakh region, remain unresolved.

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Will Scargill, a senior analyst for analytics company GlobalData, said Caspian production is on pace to increase by about 500,000 barrels per day over the next five years, but most of that comes from undisputed waters.

"The text fails to resolve disputed boundaries for subsoil resources, merely stating that they will be the subject of further agreements," he said in a statement emailed to UPI.

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