Kazakhstan, Russia look to remove legal hurdles for Caspian investment
By OGJ editors
WASHINGTON, DC, May 15 -- In a move expected to encourage more foreign investment in the region, Russia and Kazakhstan agreed on a joint boundary dividing their interests in the northern Caspian Sea, Russian officials said May 13.
The agreement "is a real breakthrough in bilateral cooperation in the development of the Caspian Sea," Russian President Vladimir Putin said, according to the Interfax news agency. Putin added the accord was "a serious positive impact on our partners in Europe and North America."
As part of the deal, the two countries agreed to equally develop petroleum reserves, in areas previously disputed, in Kurmangazi, Tsentralniye, and Khvalinskoye fields.
In addition, a joint state-controlled company owned by the two nations will build ships, barges, and offshore drilling rigs to serve foreign oil companies that explore and produce in the Caspian Sea.
Border challenges remain
Investors, however, are still waiting on other Caspian nations to reach a consensus on how the sea will be divided; a summit this spring failed to resolve the issue.
US officials are meeting with top leaders of Azerbaijan this week to help facilitate negotiations. US envoy Steven Mann, the former ambassador to Turkmenistan, arrived May 15 in Baku; Azerbaijani President Heydar Aliyev also is planning to meet his Iranian counterpart, President Mohammad Khatami, May 18 on trade issues that are expected to include a discussion over Caspian Sea boundaries.
Instead of a universal agreement, the five nations with Caspian coastlines (Russia, Kazakhstan, Turkmenistan, Azerbaijan, and Iran) may instead resort to bilateral agreement to determine ownership of the mineral rights to the seabed or demarcation of surface waters.
Kazakh updates
In other Caspian news, Kazakhstan President Nursultan Nazarbayev predicted talks between his country and Russia would yield another Caspian agreement next month, this time on the transportation of Kazakh oil through Russia. He predicted a long-term contract of 5-10 years that would involve the movement of 15 million tonnes/year, Interfax said.
Kazakhstan officials said they are hopeful that resolving various legal bottlenecks in the region will help spur more interest in their oil-rich region. Kazakh diplomats recently met with the Overseas Private Investment Corp., an independent US government agency that offers loan guarantees and other financial instruments to US companies seeking to expand foreign investment. OPIC officials said they will soon visit the country to investigate new investment opportunities. Since 1992 OPIC has invested about $98 million in Kazakhstan, according to Kazakh officials.
Meanwhile, the World Bank plans to expand its presence in Kazakhstan as part of an overall effort to increase its activities in Central Asia. Border issues such as water supply, regional trade, drug trafficking, and health care will be emphasized.