The Caspian: challenges in environmental and energy governance

May 8, 2014 | 00:00

The Caspian: challenges in environmental and energy governance

While EU’s dependency on Russian energy resources has been in the spotlight of the political and media debates in Europe and across the Atlantic over the last months, the ‘New Great Game’ in the Caspian seems to have gone slightly out of sight. Simultaneously, against the backdrop of political tensions over Crimea, some experts bring Caspian hydrocarbon resources to the forefront of EU’s energy diversification strategy. At the same time, some serious environmental challenges in the area are yet to be addressed by the Caspian littoral countries.

Oil rig Caspian Sea - source Wikipedia
Caspian hydrocarbons and the EU’s energy imports

In the case of Azerbaijan, currently the EU’s key energy producing partner in diversification projects, 75% of the country’s total natural gas production comes from the offshore fields in the Caspian [note 1]. The second stage development of the Shah Deniz gas field, located in the southern part of the Caspian, is expected to provide Europe with 10-20 bcm through TAP (Trans Adriatic Pipeline), and 10 bcm through TANAP (Trans-Anatolian Gas Pipeline). Despite the vague prospects of the stillborn Nabucco project, TAP and TANAP constitute an important step towards the establishment of the Southern Gas Corridor, which is indeed the backbone of EU’s strategy in reducing the dependency on gas imports from Russia. In this context, the geopolitical set up of Baku-Tbilisi-Ceyhan oil pipeline project also reveals the strategic importance of the Caspian hydrocarbons supply for the EU.

The geostrategic importance of the region for the countries beyond the littoral countries is well captured in the concept of the ‘New Great Game’ [note 2] in the Caspian. The role of the US in the establishment of the Baku-Tbilisi-Ceyhan oil pipeline, as well as the backing of the Nabucco gas pipeline could serve as a good historical example. Another, perhaps even more prominent player in the region, is China. The new agreement between the governments of China and Tajikistan, opening the way for the fourth strand of the Central Asia-China Gas Pipeline mirrors the pivotal role of Central Asia’s resources in meeting the country’s growing energy demand. It is planned that Turkmenistan will supply 65 bcm of natural gas to China by 2020 [note 3].

As the political situation around Caspian resources remains to be very sensitive, and the legal status of the Caspian –unresolved-, the possible discovery of new oil and gas fields -that we will speak of later- situated on the borders of the countries in the Caspian, would undoubtedly provoke further political challenges in the region.

The Legal Status of the Caspian

At the centre of the over-a-decade long negotiation process between the Caspian littoral states (Russia, Azerbaijan, Iran, Kazakhstan and Turkmenistan) is the legal status of the Caspian. That is, whether the body of water should be defined as a ‘sea’ or a ‘lake’, and the implications that it would have on the delimitation of the water space and its resources. Consequently, the deadlock in discussions over this issue hinders the progress in resolving other questions related to the energy resources and environment of the Caspian.

Before the Fourth Caspian Summit that will be held in September 2014, a preparatory meeting on the ministerial level took place on 22 April 2014, while on 14 April the ‘International Economic Forum 'Caspian Dialogue' brought together Triple Helix stakeholders from the countries sharing the natural heritage of the Caspian sea.

International Economic Forum 'Caspian Dialogue'

The Forum was held in Moscow and gathered representatives from the ‘the Caspian five’ to discuss the energy, environmental, as well as legal issues of the Caspian. Oil and gas industry players in the region (LUKoil, SOCAR and Gazprom), deputy ministers and diplomats from the relevant states, as well as academics were participating in a series of panel sessions devoted to the above mentioned topics.

The enthusiasm over resolving the legal status of the Caspian was rather restrained, as some of the high-level speakers pointed to the fact that negotiations are yet again at a standstill.

The three key issues that experts called Heads of State to consider during the forthcoming Caspian Summit are as follows:

  1. Mutual economic interests of the Caspian littoral countries should constitute the foundation of the final decision on the legal status of the Caspian;
  2. There is a lack of effective political mechanisms and coherent governance that would allow for joint monitoring of the ecosystem and environment of the Caspian;
  3. Ecology of the Caspian has to be the top priority in the multilateral negotiations between Caspian littoral states.

Environmental and geological considerations were indeed the headliners of the event, particularly the ones related to the Kashagan oil field.

”Oil was, is and will always be there. Ecology, however, is the real issue”

Viktor Kalyuzhny [note 4]
Chairman
Supervisory Board of ‘National Oil Institute’ Foundation

An important step forward was taken by the Caspian littoral states in 2003, when the Framework Convention for the Protection of Marine Environment of the Caspian Sea (Tehran Convention) was signed. Acknowledging the importance of the Tehran Convention, Viktor Kalyuzhny stated at the same time, that the agreements, which address the environmental issues of the Caspian, are insufficient. Simply put, they are not explicit enough in placing the duty to ensure the ecological security in the Caspian Sea aquatoria on all the five Caspian littoral states. According to the Russian official, the idea of creating a Caspian Ecological Centre was voiced already back in 2003 and 2004, however no practical steps towards its implementation have been taken so far.

Geodynamic monitoring in the Caspian: Geological risks and previously unknown oil and gas deposits.

Such accidents as the one of Tengiz (the blowout of a well at this Kazakh oil field in the Caspian), when “the well was ablaze for more than a year” [note 5] causing enormous environmental damage to the region, point to the necessity of implementing a system of continuous geodynamic monitoring. Such a system would be able to identify the natural, as well as technogenic factors that have an impact on the geodynamic activity in the Caspian.

New findings on the basis of the geodynamic monitoring of the Caspian were presented on the Forum by Boris Golybov, Senior Researcher in Institute of Oceanology of the Russian Academy of Sciences.

A new tectonic depression in the Caspian.

The study identified a new tectonic depression in the Caspian, which means that we are currently dealing with new tectonic movements. Hence, the subsoil sectors, where the largest sedimentary basins in Caspian host oil and gas, are in constant tension. With the tension resulting from tectonic activity, technological interventions from the oil and gas industries’ side could trigger imbalances in best case scenario or lead to accidents in the worst.

Kashagan – the twin brother of the Mexican Gulf.

Another important highlight of the findings is that the structure of the sedimentary basin of the Kazakh Kashagan oil field resembles the one in the Mexican Gulf. The Caspian scientists distinguish two types of local oil and gas structures with different types of fluidodynamics. The characteristics of the first group are common for a normal artesian basin. The second type is characterized by abnormally high pressure, as well as high levels of hydrogen sulphide. The Kashagan oil field, as well as the one in the Mexican Gulf belong to the second type. Needless to say, in both cases high levels of hydrogen sulphide could present not only production problems, but also significant environmental dangers.

Satellite monitoring: discovering previously unknown oil and gas deposits in the Caspian.

Satellite monitoring allows for registering oil slicks in the Caspian, which can indicate new oil and gas deposits. In 2003-2004 some oil slicks were registered in Southern Caspian, and then became more explicit after the earthquakes in Iran. When the same area was monitored in 2011, the oil slicks were much more condensed, so one could easily identify four extensive zones of oil slicks. That area could reveal previously unknown oil and gas deposits in the Caspian right on the border of Azerbaijan and Iran.

Similarly, the system registered significant oil slicks in the areas of the North/Middle Caspian where LUKoil abandoned some wells, considering the exploration process unsuccessful. The experts in geodynamics thus suggest that the decision might have been premature, and the drilling might have failed due to a technological error rather than actual absence of hydrocarbons.

With the above mentioned findings in mind, the key recommendation of experts for the event of the Fourth Caspian Summit in September 2014 are the following:

The requirement to establish Joint Monitoring of the state of subsoil of the Caspian, as well as a Joint Rescue Service that would be able to respond to potential oil spills, have to be included in the protocols of the Tehran Convention.

“The human factor is always there, regardless of the type of technology that we use. However, a human mistake in Kashgan might have ‘dead Caspian’ as its consequence” – stated Viktor Kalyuzhny – “we haven’t learned yet to adhere to the documents that we sign up to , but we need to make sure that environmental issues in the Caspian will be on top of the political agenda during the Caspian Summit of the Heads of State in autumn”.

 

Notes

  1. EIA, Caspian Sea Region, Analysis Brief, last updated: 26 August, 2013, available at http://www.eia.gov/countries/regions-topics.cfm?fips=csr
  2. M. Edwards, ‘The New Great Game and the new great gamers: disciples of Kipling and Mackinder’, Central Asian Survey, 2003, No. 22 (1), p.83
  3. Platts, ‘Ashgabat, Beijing sign deals to expand Turkmen gas exports to China’, 4 Septmber 2013, available at http://www.platts.com/latest-news/natural-gas/moscow/ashgabat-beijing-sign-deals-to-expand-turkmen-27370637
  4. Ex-Deputy Foreign Minister of Russia and Caspian special envoy
  5. ‘The New Great Game: Blood and Oil in Central Asia’, Lutz Kleveman, 2003, Kindle Edition

 

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