Page 4 - FSUOGM Week 32 2019

FSUOGM COMMENTARY FSUOGM
Caspian talks unlikely to
yield oil and gas gains
Even with rati cation of the Caspian convention, disputed resources are set to remain under the seabed for some time
CASPIAN
WHAT:
Of cials from the Caspian Sea’s ve littoral states have held talks in Turkmenistan.
WHY:
Russia and Iran need
to ratify last year’s convention, while the remaining states resolve disputes over resources.
WHAT NEXT:
Iran’s sanctioned state and Turkmenistan’s poor investment climate create obstacles to the development of disputed resources.
THE five countries surrounding the oil and gas-rich Caspian Sea convened at an economic forum in Turkmenistan on August 11-12, to discuss how to divide the area’s resources. As of press time, no breakthroughs in negotiations have been announced, although it is worth tak- ing a look at what is at stake in the talks.
Carving up resources
e heads of Azerbaijan, Iran, Kazakhstan, Rus- sia and Turkmenistan signed a convention last summer on the Caspian’s legal status. ough a landmark deal in its own right, establishing zones of jurisdiction and shing rights, as well as prohibiting foreign military in the region, it did little to resolve the decades-long dispute over how the Caspian’s 48bn barrels of oil and 8tn cubic metres of gas are to be carved up among its littoral states. e division of these spoils has instead been le to the countries involved to decide on a bilateral basis.
Azerbaijan, Kazakhstan and Russia have already divided up the northern Caspian among themselves through bilateral agreements based on median lines, allowing them to advance a
number of major projects. Turkmenistan too has brought on stream several oil and gas elds by acting unilaterally. But at stake in the cur- rent negotiations are two projects that remain effectively frozen because their ownership is contested.
Turkmenistan awarded a production-sharing agreement (PSA) in 2007 to Cyprus-registered Buried Hill to develop Block 3, containing the Serdar oil eld. According to a 2012 company presentation, Serdar contains 1.4bn barrels of oil in 2C contingent resources. But Buried Hill has been unable to proceed with drilling, as Ser- dar is also claimed by Azerbaijan, which refers to the eld as Kapaz. Another disputed area is the Alov exploration block, awarded by Azerbaijan to a BP-led group in 1998. BP attempted to sur- vey the area in 2001 but its vessels were forced to withdraw a er being approached by gunships from Iran, which also lays claim to the area, and the project’s PSA was eventually terminated in 2016. Several Turkmen exploration blocks are also contested by Azerbaijan and Iran.
Serdar/Kapaz is the largest discovered resource in the disputed areas. According to
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w w w . N E W S B A S E . c o m Week 32 14•August•2019