Russia is pressing its Caspian Sea neighbors to accept a treaty that would give all five Caspian nations common jurisdiction over much of the subsea oil and gas reserves.
Those reserves, believed to be huge despite still incomplete exploration, are concentrated in areas claimed by Azerbaijan, Kazakhstan, and Turkmenistan.
Until recently, Russia had refused to recognize any national division of the sea. However, at a Nov. 12 meeting of the five Caspian countries' foreign ministers, it proposed a 45-mile offshore economic zone for each nation, beyond which there would be a large zone of common jurisdiction. Russia was supported by Iran, the fifth Caspian country.
Russia offered to negotiate on cases where exploration is in progress beyond the 45-mile limit.
It insisted all other reserves be "commonly owned" through joint-stock companies of the five Caspian nations and proposed a "double-tender system" giving the five nations first claim, ahead of non-Caspian bidders, in any future oil and gas contracts.
As a sweetener, Russia offered to recognize 10-20-mile national fishing zones if the minerals deal goes through.
Talks are continuing on the Russian proposal. It cannot be taken lightly, because Russia is still the major power in the region.
Huge stakes
Common jurisdiction would allow Russia to share in the other nations' mineral resources, secure a substantial cut in Western companies' development projects, require export pipelines be routed through Russia, and push its own interests in the production and marketing of Caspian oil and gas.
The double-tender rule would give Russian oil firms preemptive rights over foreign companies in exploring for and developing new reserves.
The three former Soviet republics around the Caspian Sea well understand that their independence and development are at stake.
Azerbaijan and Kazakhstan have opposed common jurisdiction.
Turkmenistan has avoided taking a clear-cut position, but until now has followed the national approach.
The stakes are huge. Kazakhstan recently said a study of potential reserves on its Caspian shelf indicated at least 40 billion bbl of crude and 58 tcf of gas.
Offshore drilling is due to start in 1998-99.
By 2004, Kazakh officials said, a $23 billion investment would result in 100,000 b/d of oil. By 2013, they said, output could rise to 1.2 million b/d after total development costs of $150 billion.
U.S. concerned
James Collins, U.S. Special Ambassador to the Newly Independent States, met recently with Azerbaijani officials and U.S. oil executives in Baku to discuss Caspian resources.
He said the U.S. supports the current division of the Caspian and expressed concern that the Russian proposals could limit the participation of foreign oil companies.
Azerbaijan President Geidar Aliyev told Collins that he expects three contracts to be signed with international oil companies to develop reserves on the Caspian shelf, involving $15 billion worth of investment.
And he said a new group, led by Amoco Corp. and Unocal Corp., will develop the Dan Ulduzu and Ashrafi prospects in the Caspian.
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