Caspian Energy and Legal Disputes: Prospects for Settlement

Summary:

In the past decade, the Caspian Sea has become one of the world's most promising new regions for petroleum investment and development, as well as the focus of intense international competition for access and pipeline routes. The problems of ethnic tension, instability, slow democratisation, and geopolitical contest in the region are of great concern to neighbouring countries, major external powers and investors. Border disputes and conflicting legal claims to offshore oilfields of the littoral nations of Azerbaijan, Iran, Kazakhstan, Russia, Turkmenistan are among serious risk factors for investors engaged in the development and export of hydrocarbons from the Caspian Sea.

Disputes over the legal status remain an omnipotent barrier for a resolution of the political and economic problems among the littoral states. The present situation, despite serious political and legal quarrels, is fortunately calm. However, the absence of conflict or visible confrontation does not mean that unexpected tensions are ruled out. On the contrary, there are causes for predictions and anxiety, which have to be detected and resolved. Whether to consider the legal status of the Caspian Sea as "closed" or "opened" has direct implication towards the exploitation of the sea-bed or continental shelf zones under the principles of "common ownership" or "separate ownership".

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