The wellhead of the oil industry in 1900 was not the Middle East but the Caspian Sea. Half of the world’s oil came from Baku, Azerbaijan, where “liquid black gold” brought wealth in the 19th century and war in the 20th. In 1942, the German Army was lunging for Caspian oil when Hitler launched the Battle of Stalingrad, which cost as many as two million Soviet and German lives.
The area still contains one of the world’s largest reservoirs of oil and natural gas, most of it beneath the 640-mile-long Caspian seabed. About 90 feet below sea level and less than 16 feet deep in much of its northern basin, the Caspian is an icy, stormy body of water. Development has been hindered because the five riparian nations, Russia, Iran, Azerbaijan, Kazakhstan, and Turkmenistan, can’t agree, among other things, on whether it is a lake or a sea.
As a sea, it would be subject to the United Nations Convention on the Law of the Sea, which allows states to extend mineral claims to the edge of their continental shelves. If the Caspian were a lake, the seabed could be divided up, with Kazakhstan claiming the largest portion because of its longer coastline. Russia and Iran, whose predecessor states agreed that the Caspian would be a Soviet-Iranian sea, no longer share that view. Russia—worried about Western petroleum giants muscling in on its oil flanks—is looking out for itself and some of its former Soviet republics. Iran, with the shortest coastline, wants mineral resources to be prorated, like the costs in a condominium building, or doled out equally, 20 percent to each state.
The wellhead of the oil industry in 1900 was not the Middle East but the Caspian Sea.
Such differences are blocking the full development of oil resources just as potential returns are growing more lucrative. The region now produces roughly 2.3 million barrels of oil a day, and it has reserves that may be as great as 257 billion barrels. Development, however, will need unanimous consent, asserts Mahmoud Ghafouri, an assistant professor at Shahid Bahonar University in Kerman, Iran. And before the “Caspian five” nations can truly capitalize on their reserves, the poisonous relationship between Iran and the United States must be repaired. The “second oil rush in the Caspian” requires pipelines or other pathways to get the oil to market, and the Western firms with the easiest access to capital are denied some of the most viable routes—through Iran—by U.S.-Iranian enmity.
Iran’s loss has been Turkey’s gain. The Iraq war, instead of opening floodgates of Iraqi oil, initially did the opposite, providing an unforeseen boost to Caspian oil. Pipeline projects that skirt both Russia and Iran attracted more interest with each uptick in oil’s price. Turkish oil and gas transport projects that seemed far-fetched in the 1990s have proven successful, and new ones have gotten increased impetus, write Paul A. Williams and Ali Tekin, professors at Bilkent University in Ankara. As the three recently independent Caspian states stand poised to become major players in the world economy because of their energy reserves, Turkey, the area’s energy have-not nation, has already benefited from increased energy transit fees and better access to oil for its own economy.
Ghafouri concludes that the lure of oil wealth can go a long way toward promoting international cooperation in the Caspian. After years of rivalry in the Persian Gulf region, the joint development of offshore oil and natural gas resources is under way. And if the states in the volatile Persian Gulf can swallow their differences in the interest of making money, can the Caspian be far behind?
* * *
THE SOURCES: “The Caspian Sea: Rivalry and Cooperation” by Mahmoud Ghafouri, in Middle East Policy, Summer 2008.
“The Iraq War, Turkey, and Renewed Caspian Energy Prospects” by Paul A. Williams and Ali Tekin, in The Middle East Journal, Summer 2008.
Photo courtesy of Flickr/Pierre