Analysis: Caspian ecology
Published: Dec. 21, 2007 at 11:23 AM

By JOHN C.K. DALY
UPI International Correspondent

For the past year, U.S. television viewers have been bombarded by oil
companies’ advertisements, proclaiming how they are good environmental
stewards, with pictures of wildlife gamboling among energy projects as
a voiceover proclaims their overriding interest is careful
consideration of the environment in the areas being developed.

It would seem that in the Caspian basin, the world’s current last
major untapped oil reserve, that rhetoric is confronting
reality. While all Caspian littoral states proclaim a sincere
commitment to environmental concerns, Western energy companies are
darkly muttering that the former Soviet states’ newfound interest in
ecology masks a larger agenda intended unilaterally to rewrite the
lopsided agreements signed in the heady days following the Soviet
collapse of 1991. Both sides have compelling arguments unlikely to be
resolved anytime soon. Meanwhile, the Caspian’s freshwater seals and
its sturgeon population seem to have been granted a temporary
reprieve.

Since the Soviet collapse, the Caspian’s importance has dramatically
increased even as the states that surround it exploit its
riches. Azerbaijan and Kazakhstan have increased their output in the
last 15 years by 70 percent, while Russia is now vying with Saudi
Arabia for the title of the world’s leading energy producer, producing
roughly 10 million barrels per day.

The Caspian is believed to contain some 12 percent of the world’s oil
reserves plus huge reserves of natural gas. Sturgeon, best known for
their caviar roe, have been decimated by pollution, their estimated
population declining by 90 percent since 1991. The Caspian’s
freshwater seals have suffered a similar ecological implosion, with
some estimates putting their numbers at fewer than 100,000. The
Caspian is also home to 500 unique plant and 854 fish species.

Even the legal status of the sea is a bone of contention: The 1982
U.N. Convention on the Law of the Sea has yet to decide definitively
whether the international law of the sea or the law of inland lakes
applies to the Caspian. Adding to the confusion is the fact that the
Caspian’s legal status remains determined by the 1921 and 1940
treaties signed by the Soviet Union and Iran, with no definitive
post-Soviet agreement in sight.

Environmental degradation in the Caspian, the world’s largest enclosed
body of water, dates back to Soviet times. Its major tributary, the
Volga, which accounts for 80 percent of the Caspian’s inflow and the
bulk of its pollutants, traverses Russia’s European heartland.

The Caspian’s real prize is Kazakhstan’s offshore Kashagan
field. Discovered in 2000, it is the largest "super-field" discovery
of the past three decades, with an estimated future production
potential of more than 500,000 bpd. Estimates put Kashagan’s
recoverable reserves at up to 25 billion barrels.

Kashagan, however, represents the riskiest environmental frontier of
new Caspian exploration. The North Caspian is extremely shallow,
bottoming out at about 10 feet in spots above Kashagan, raising the
risk of winter mobile-ice formations destroying offshore
facilities. Equally worrying to ecologists is that farther south Azeri
offshore concessions are located in seismically active zones.

In what many regard as the opening shot in the Caspian’s environmental
wars, the Kazakh government on Aug. 27 suspended Italy’s Eni SpA-led
Kashagan consortium’s development license; project estimates had
ballooned from $57 billion to an estimated $136 billion.

Talks are ongoing about the status of Kashagan’s foreign
concessions. Many cynical analysts have suggested a possible
additional underlying factor is a desire on Astana’s part to rewrite
the percentages of the North Caspian Sea Production Sharing Agreement
to favor the Kazakh state energy company KazMunayGaz.

The possible development of a trans-Caspian underwater natural gas
pipeline from Turkmenistan to Baku, strongly promoted by Western
interests, has only added to environmentalists’ fears. The project has
united Russia and Iran in opposition despite political differences
between Moscow and Tehran on the final delineation of the Caspian
seabed. Iran wants the Caspian treated as a single unit jointly
managed, developed and defended by the five littoral states.

A joint consensus of the five Caspian states seems to be slowly
emerging. Two months ago, Azerbaijan, Kazakhstan, Iran, Russia and
Turkmenistan issued a 25-point declaration that stated in Point 11,
"Recognizing their responsibility to the present and future
generations for the preservation of the Caspian Sea and the integrity
of its ecosystem, the parties stress the importance of expanding
cooperation in solving environmental problems, including coordination
of national environmental actions and cooperation with international
environmental organizations in order to form a regional system of
protecting and preserving biological variety, rational use and
replenishment of its biological resources."

Two main points seem to emerge from this growing commonality of
concerns. First, that Western energy companies interested in
exploiting the Caspian’s energy resources will be forced to pony up
money for locally defined environmental concerns; and second, that
Caspian seals and sturgeon have won another day to frolic in the sun
until Caspian Western-financed environmentally friendly projects come
online.

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(e-mail: energy@upi.com)