Bahgat, Gawdat. "Central Asia and Energy Security". Asian Affairs, Vol.37, No.1 (2006): 1-16.

Bahgat, Gawdat. "Central Asia and Energy Security". Asian Affairs, Vol.37, No.1 (2006): 1-16.

• A useful definition of energy security and source mine on those opinions, a concept dating from the OPEC embargo following the Arab-Israeli War, is provided from page 1 to page 3.
• Energy security depends on the availability of goods at affordable prices as much as it does on the supply of oil, gas, or coal. These prices can be manipulated, but also reflect levels of demand and investment. For example, the low prices of the 1990s led to a shortage in investment which directly contributed to high prices in the early 2000s (2).
• The author suggests that stability is commonly linked within policy communities with pluralization of resources and suppliers, a perspective which makes development of Caspian energy resources relevant considering potential political turmoil in the Middle East; this would mark the first major turn towards Caspian oil since the Second World War (3).
• Stability remains a concern in this area too, however. Many gas and oil companies are concerned about business risks brought on by shaky legal codes and generally corrupt business practices in the littoral states (3).
• The legal status of the Caspian Sea first appeared in law during the early 20th Century, when Iran and the Soviet Union signed several treaties formalizing their traditional agreements over naval vessels in the Caspian. These two treaties, signed in 1921 and 1940, agreed to a 12-mile exclusive fishing zone along their coasts and that it should be closed to ships that were not Soviet or Iranian. It did not clarify littoral boundaries nor discuss mineral deposits (4).
• The contemporary issue of the delineation of the Caspian Sea depends on the classification of the body of water as a 'sea' or a 'lake'. If it is a 'sea', then the body of water is divided up according to equidistance at the discretion of UNLOSC. However, the five littoral states cannot agree on this issue (4).
• The Russian position on the status of the Caspian has developed over time. Originally, Russia claimed that the 1921 and 1940 treaties which would have excluded Kazakhstan, Azerbaijan and Turkmenistan from the sea were still valid, however by 1996 it changed this position to propose a 45-mile zone of sovereignty, with the central area of the Caspian being developed by a joint-stock company of all the states (4); his proposition was rejected by Kazakhstan, Azerbaijan, and Turkmenistan (5).
• When Putin took control of Russia, he adopted a new policy towards the Caspian. Through bilateral agreements, Russia has divided the seabed up between median lines, in a matter such that fishing resources remain under joint ownership. Any gas or oil deposits cross the median lines are to be developed jointly. Agreements like this have been concluded with Kazakhstan and Azerbaijan (5).
• Iran has consistently rejected any attempts to divide the Caspian along national lines. Iran -- largely influenced by the lack of oil and gas reserves along its coast -- has argued that either the Caspian be divided equally or remain common property (5). Iran proposes a condominium where littoral states would jointly develop all resources. It has also been open to national division, so long as each littoral state receives 1/5 of the sea and the sea bed; it has entirely rejected the legality of all other agreements (6).
• Iran strongly objects to the militarization of the Caspian Sea, as it cannot afford another escalation to the degree of the Persian Gulf. It is now the least powerful of the littoral states, as Russia and Turkmenistan have been transferring equipment, while the Kazakhstani and Azerbaijani navies have received American training (6).
• Since 2003, in response to the unilateral development of Caspian resources by all other littoral states, Iran has accepted the failure of its policy position and begun allowing developers to explore and exploit oil and gas resources in its sector of the Caspian. Controversially, it has also allowed exploration into Azerbaijani waters (6).
• Azerbaijan has explicitly called for Caspian to be declared a ''sea' for legal purposes and for the UN Law of the Sea to be applied to it. It subscribes to the median lines and maritime boundaries which would result from this system, while also asserting that these would be the same as the maritime boundaries existing between Soviet republics under the USSR (7).
• Kazakhstan's position on the actual division of the Caspian Sea and its seabed mirrors that of Azerbaijan, although it has taken more proactive steps towards settling the issue. Whereas Baku has insisted on the legal status of the body of water, Kazakhstan has signed treaties creating administrative boundaries for the seabed with Azerbaijan, Russia, and Turkmenistan from the mid-1990s onward (7).
• The Turkmen position on the Caspian has changed. Initially, Turkmenistan supported the Russian proposal to divide the Caspian into coastal zones of sovereignty with the center in common, but after this plan fell through in 1998 the Turkmen government has accepted proposals by Kazakhstan and Azerbaijan to create administrative boundaries. The Azerbaijani line is still under dispute when this paper was written (7).
• The gas and oil infrastructure, especially pipelines, inherited by the post-Soviet states from the USSR is designed to feed internal consumption and is directed towards Russia. Any export opportunities are through Russian pipelines, or the Russian port of Novorosiisk on the Black Sea. This has left the other Caspian states dependent on Russia as an export route, a situation they have attempted to change (8).
• Since Azerbaijani independence, the United States has been in favour of a pipeline from Baku through Tbilisi to Ceyhan [BTC pipeline] as a way to bypass Russian and Iran. It was completed in 2005, with an operational capacity of 1 million barrels a day. There are plans to link this route to larger Turkish gas infrastructure connected to the European market, which would hopefully secure European energy security, provide additional buyers for Caspian oil, and promote Turkish status as an energy hub (8).
• Russia has focused its efforts on upgrading and improving its old pipeline infrastructure through the creation of the Caspian Pipeline Consortium [CPC], which would connect Kazakhstani oil fields to the port of Novorosiisk through the Caspian Sea (8). It was completed in 2001, with assistance from Russian and American firms (9).
• Despite attempts at upgrades, the capacity of the CPC is still limited and will likely be unable to keep up with expansion in the oil production capacity of Kazakhstan. This has encouraged Kazakhstan to move actively invest in other export options, especially to Chinese markets (9).
• There have been numerous suggestions for a pipeline through Iran, but consistent American opposition to any more concentration of oil sales from Iran has prevent any headway on the project. In lieu of pipeline projects, Azerbaijan, Turkmenistan and other oil and gas produces have engaged in swaps with Iran, where they provide oil and gas to feed Iranian demand in the North in return for profits from equal sales of oil from Iranian ports in the South (9),
• Unlike the other littoral states, Turkmenistan is heavily dependent on gas rather than oil, and thus requires pipeline infrastructure for diversification. Turkmenistan has explored possible export routes through Afghanistan and Pakistan, but security issues have made this unfeasible. At the time this paper was published, almost all Turkmen gas went to Russia through Russian pipelines, with the countries locked into an agreement very much in Russia's favor (10).
• The United State has a number of interests in Central Asia, including: security of nuclear materials, diversifying energy resources, fighting terrorism, and preventing Iranian influence. They have tried to do all of this without pissing off Russia, mainly accomplished through expanding economic ties in energy industries and provide military assistance when requested through the Partnership for Peace structure (12).
• The Russian government has remained extremely interested in the republics of the former Soviet Union, attempting to retain both economic and political ties to the region. Situations of energy dependence, like that of contemporary Turkmenistan, are encouraged, while Russia has also strengthened its military in the Caspian and tried to involve the Central Asian republics into Russian-led organizations like the CIS and CTSO (13).
• The primary motivation of Chinese involvement in the Caspian has been economic necessity driven by a need to increase sources of oil and natural gas as it transitions from a coal-based energy economy. It is most interested in Kazakhstan for this purpose because of its large supply. This relationship is bolstered by security cooperation through the SCO (14).
• Turkey's original interest in Central Asia has promoting cultural and historical ties with fellow Turkic groups in the former Soviet Union, but these initiatives also indicate economic and strategic interests. Turkey needs more energy resources to meet growing demands, and hopes that the development of Caspian resources will also turn it into an 'energy bridge' between Europe and Asia (14). Turkish firms are also heavily involved in the Central Asian economies and the exploitation of oil and gas reserves in the region (15).
• Iran has sought to benefit from its well developed infrastructure to promote economic ties with fellow littoral states, and provide them with ports for goods transport. It has also been heavily opposed to American, and initially Turkish, influence in the region and sought to torpedo many projects. However, this has calmed in recent years as companies from all over realize how much money is to be made (15).
• While the Caspian Sea is certainly a strategic and important area of energy production, it falls far short of some early expectations. Even with full production, it may reach 6 million barrels of oil a day by 2025, an eighth of the expected production from the Persian Gulf at that time (16).
• "The investment climate and the development of energy resources have been negatively affected by the lack of consensus on how to set boundaries in the Caspian Sea and on the choice of pipeline routes. The region also faces many other serious challenges including domestic corruption and ethnic divisions" (16).