Why the Legal Status of the Caspian Sea Matters for Europe’s Energy Security

By Monika Ertl – For years, the delimitation of the Caspian Sea has been subject to disputes between the littoral states. A planned convention on the Sea’s legal status would not only serve to settle this issue once and for all, it could also clear the way for exports of Central Asian gas to Europe.

The Convention on the Legal Status of the Caspian Sea is practically ready and will be signed at the Fifth Caspian Summit, to be held in Kazakhstan in the first half of 2018, according to a declaration made by Russia's Foreign Minister Lavrov in December [1]. Such an agreement might have far-reaching consequences for Europe's energy security. A settlement of the Caspian issue could open up the way for gas imports from Turkmenistan and Central Asia, lessening the Union’s dependency on Russian energy in the process.

The legal status of the Caspian Sea has been hotly debated ever since the dissolution of the Soviet Union. The main dispute concerns whether the Caspian is truly a sea or rather the world's largest lake, and consequently how it should be divided between the littoral states. What may seem like a rather esoteric problem at first has serious economic consequences, as the depths of the Caspian hide vast oil and gas resources waiting to be tapped by their rightful owners. Lavrov's recent statement therefore raised hopes that the issue of the Caspian's delimitation might finally be settled once and for all.

Why the legal status of the Caspian matters to Europe

The current developments are being watched closely in Brussels as well. In 2020, the first natural gas from Azerbaijan's Caspian Shah Deniz II field is expected to reach Europe through the newly build Southern Gas Corridor (SGC), a 3'167 km pipeline corridor running from Azerbaijan to the Italian region of Apulia. The EU views the completion of the SGC as an important step towards lessening its energy dependency on Russia, which currently accounts for over 40% of the Union's gas imports.

But further prospects of the corridor remain uncertain. At the initial stage, the SGC will transport 10 billion cubic metres (bcm) of gas annually, covering only about 2% of the EU’s annual gas needs, and Azerbaijan's gas reserves alone are not sufficient to allow for an expansion beyond the current capacity. The initial project therefore foresaw extending the corridor further east by building a Trans-Caspian Pipeline (TCP) to Turkmenistan across the bottom of the Caspian Sea. Turkmenistan sits on top of the world's fourth largest reserves of natural gas (after Russia, Iran and Qatar) and is looking to diversify its exports to ward off a worsening economic crisis. But attempts to build the necessary pipeline have failed so far due to opposition from Russia and Iran. The two countries, which view Turkmenistan as a rival for their own exports, have repeatedly cited the unsolved legal status of the Caspian as major argument against the TCP’s construction.

Should the legal status of the Caspian truly be resolved at the planned Astana summit, this might provide new impetus to the TCP and to the idea of gas imports from Turkmenistan and Central Asia. Yet experts so far have been cautious to make predictions, as no details of the alleged agreement have been made public and the reaction from the other littoral states has been rather muted. Further, it is quite possible that Russia would find ways to put pressure on Turkmenistan, even with the legal issues around Caspian settled.

Caspian Gas for Switzerland?

Nevertheless, it might be worth to keep a close eye on further developments, not only in Brussels but also in Bern. The Southern Gas Corridor is set to end in Italy and it is planned to export some of the gas further north by allowing for reverse flow through the Transitgas pipeline, cutting 293 km across Switzerland. This pipeline currently transports gas from Germany and France south to Switzerland and Italy and it will be able to do so in the opposite direction starting in Summer 2018.

Switzerland's gas demand is rather low (around 3 bcm per year, compared to 80.5 in Germany, 64.5 in Italy or 8.7 in Austria), but the country has no gas reserves of its own and therefore is fully dependent on imports. While gas from the Southern Gas Corridor is currently not earmarked for the Swiss market, it cannot be excluded that Swiss households will be heated with Caspian gas in the medium term, especially if a decision on the legal status of the Caspian Sea clears the way for a pipeline across it's seabed.

Monika Ertl is a Masters student of European Global Studies at the University of Basel. Last year she spend ten months on the Caspian’s shores as academic intern at the Swiss embassy in Baku, Azerbaijan.

Image: https://goo.gl/rBVrVh

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Monika Ertl

Vorstandsmitglied foraus Basel & Master of European Global Studies, Uni Basel

monika.ertl@gmail.com