EurasiaNet Eurasia Insight - Russia: On the Look-Out for Ways to Increase its Caspian Basin Energy Position

EURASIA INSIGHT

RUSSIA: ON THE LOOK-OUT FOR WAYS TO INCREASE ITS CASPIAN BASIN ENERGY POSITION
Sergei Blagov 10/08/08

Russia is pressing for the creation of a new organization, dubbed the Caspian Economic Cooperation Organization, in an apparent bid to increase its influence over the region’s vast energy resources.

The Kremlin threw its support behind the Caspian group, or CECO, during a meeting of regional officials, held in the Russian city of Astrakhan on October 3. The idea was first aired at the 2007 Caspian summit held in the Iranian capital of Tehran. Russian officials are expected to keep on promoting their vision for regional energy development at the upcoming Commonwealth of Independent States summit in Bishkek on October 9-10.

CECO is seen as a vehicle for enhancing economic coordination among Caspian Basin states - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan. "Such an organization would promote unity among the five Caspian states and help reach a new level of economic development on the basis of multilateral projects," Russian First Deputy Prime Minister Viktor Zubkov said during the conference, according to a report distributed by the official RIA-Novosti news agency.

Despite Russia’s declaration of support, major obstacles remain in the way of CECO’s creation. First and foremost is the matter of the Caspian territorial pact, or the lack thereof. [For background see the Eurasia Insight archive]. During the Astrakhan meeting, Kazakhstani officials reportedly stated that the sea’s legal status had to be settled before CECO would stand a chance of becoming a reality. Russian officials countered that cooperation in at least some areas had to proceed even in the absence of a comprehensive territorial treaty. Moscow is professing to be especially concerned about environmental issues, and in Astrakhan, Russian officials urged the creation of a joint fishery resources protection agency.

Russia is also a proponent of an intergovernmental agreement designed to save the Caspian’s sturgeon population from collapse. A protection pact was first drafted back in 1992, but negotiations have yet to produce a final document. Moscow now wants a 10-year moratorium on fishing sturgeon and a ban on oil and gas extraction near sturgeon spawning grounds.

Russian media outlets cast the Astrakhan conference as falling short of Kremlin expectations. The conference was expected to endorse a moratorium on sturgeon fishing, for example, but that did not happen, the Vremya Novostei daily commented on October 6.

The drilling moratorium idea also seems to have fallen flat. On October 6, Russia’s Caspian Energy firm announced plans to start offshore development in July 2009. A leading Russian oil company, LUKoil, is projecting its Caspian shelf operations to pump up to 30 million tons of oil per year and 20 billion cubic meters of gas annually by 2020.

On broader energy matters, Russia pledged to ratify the Prikaspiisky pipeline agreement. The State Duma, the lower house of Russian parliament, should ratify the pact later this year, Russia’s deputy Energy Minister Anatoly Yanovsky said on October 3. Insisting that the project was proceeding according to plan, he insisted that the pipeline’s construction would start in the second half of 2009. [For background see the Eurasia Insight archive]. Experts have noted that the pipeline expansion project seems to have stalled after it created great fanfare when first announced in May 2007. [For background see the Eurasia Insight archive].

Russia and other littoral states squabbled over Caspian energy transit rights. Kazakhstani officials advocated freedom of transit for all means of transportation, including a potential undersea pipeline. Russia opposes such a concept, insisting that all major energy projects with environmental risks should require the approval of all littoral states.

Perhaps the most notable development during the Astrakhan gathering was the evident strengthening of ties between Moscow and Tehran. Russian and Iranian officials expressed a mutual desire during the conference to boost cooperation in a wide variety of economic sectors. As a headline in the Izvestiya daily put it on October 6: "Against the backdrop of conflict with the West, Russia is building an alliance with its Caspian neighbors."

Editor's Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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