Autumn 2000 (8.3)
Page 93

The Status of the Caspian Sea
Dividing Natural Resources Between Five Countries

by Khoshbakht B.Yusifzade - Vice President of SOCAR



Negotiations related to the demarcation of the Caspian Sea have been going on for nearly a decade now among the littoral states bordering the Caspian - Azerbaijan, Russia, Kazakhstan, Turkmenistan and Iran.

We should note, however, that all activities carried out by the State Oil Company of the Azerbaijan Republic (SOCAR) that relate to the exploration and the development of deposits in the Caspian Sea have always been based on the sectorial division of the Caspian as determined in 1970 by the Ministry of Oil Industry of the former USSR. SOCAR has never overstepped the sectorial boundaries that were determined for Azerbaijan at that time.

After the collapse of the Soviet Union when the Republics gained their independence in late 1991, discussions were initiated to determine the status of the Caspian Sea among the Caspian littoral states. In Azerbaijan, a working group was organized under the directive of the President. When those early negotiations began, Azerbaijan was the only country advocating the sectorial division of the Caspian. However, today all the other littoral Caspian states have agreed with the division of the Caspian Sea via the median line method. The one exception is Iran.

Iran's Proposals
Azerbaijan has based its sea boundaries with Iran on the Astara-Hasangulu line, which was accepted as the boundary line separating the former Soviet Union and the Islamic Republic of Iran. After the collapse of the Soviet Union, the Iranian side did not accept this borderline and set forth various proposals, especially as it relates to the exploration of the hydrocarbon resources of the Caspian Sea.
One such proposal was that any exploration that takes place anywhere in the Caspian Sea should be jointly owned by all five littoral states. When this proposal was not accepted, Iran suggested that the territory be equally divided so that each State would receive 20 percent of the sea territory regardless of how each state actually borders on the sea. This proposal has neither legal nor scientific basis, and thus, it goes without saying, it cannot be accepted by the Azerbaijani side.

Reserves on the Median Line
There are still some unresolved problems, especially in regard to hydrocarbon resources that overlap the median line between the two countries. For example, Azerbaijan and Turkmenistan are still working out differences related to such a problem. Turkmenistan has suggested a different method of determining the division line than we have. However, we do not perceive that our differences are so serious that they cannot be resolved in the foreseeable future.

Although this controversy affects Azerbaijan and Turkmenistan in relation to the Kapaz deposit, such potential problems may arise in the future between other Caspian states as well.

Numerous proposals have been set forth to resolve such problems. Viktor Kolyuzhny, Russia's Deputy Minister of Foreign Affairs, who was recently appointed Plenipotentiary Representative for issues regarding Russia's status in the Caspian, has made several official visits to the Caspian littoral states as well as to Baku to carry out discussions regarding this issue.

Kolyuzhny generally supports the division of the Caspian into sectors using the median line method as it relates to the seabed. He has proposed that the development of all the deposits and structures that fall on the median line should be considered as belonging equally to both countries; that is, 50 percent each, regardless of whether the deposit falls more on one side or the other. Presently, Azerbaijan and the other Caspian littoral states are discussing such a solution.

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From Azerbaijan International (8.3) Autumn 2000.
© Azerbaijan International 2000. All rights reserved.

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