Russia's recent effort to claim unilaterally its northern seabed to the North Pole has highlighted the race to divide the globe's remaining waters for nation's benefits. Besides the Arctic, these include Antarctica and the Caspian. Of the three, the Caspian is the most hotly contested, as extraction efforts are already under way, and the battle involves not only the riverain powers Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan, but behind them, massive Western investment thirsty for access to the region's hydrocarbons.

Some experts estimate the Caspian could hold possible reserves of up to 250 billion barrels of oil, along with more than 200 billion barrels of potential reserves. The Caspian may also contain up to 325 trillion cubic feet of natural gas. The Caspian is the world's largest enclosed body of water, with a surface area of 143,244 square miles, and is uniquely defined under international law as an inland sea.

The Caspian is already under intensive development, with Kazakhstan already exporting about 1.1 million barrels per day, primarily via the Caspian Pipeline Consortium, while Azerbaijan is pumping more than 800,000 bpd through both the Baku-Supsa and Baku-Tbilisi-Ceyhan pipelines; BTC is designed to handle up to 1 million bpd, and Baku is aiming to increase exports up to 1.2 million bpd next year. While Kazakhstan is a newcomer to the petrochemical market, by the beginning of the 20th century Azerbaijan was supplying almost half of the world's oil, producing 212,000 bpd by 1901. Azerbaijan and Kazakhstan alone have increased their oil production by 70 percent since 1992.

The biggest issue stymieing further development is an unresolved legacy from the Soviet era -- a final division of Caspian waters and the seabed. In the absence of such an agreement, such favored Western projects as undersea natural gas pipelines for exporting Turkmen natural gas westward remain for present on the drawing table. Furthermore, 16 years after the collapse of the Soviet Union, a final solution to the issue seems as far away as ever.

The issue takes on added importance because of the seabed's potential, which the Soviet Union was largely unable to exploit. During the Soviet era, less than 2 percent of the country's oil was produced offshore, most of it from the shallow 32- to 82-foot-deep Neft Dashlari (oily rocks) complex off Baku. More than 80 percent of Azerbaijan's oil is now produced from offshore Caspian fields, including Azerbaijan's shallow-water Caspian Gunashli field, located 60 miles off the Azeri coast.

The heart of the issue since 1991 can be simply stated: In a division of offshore waters, is a national sector to be determined by length of coastline or a proportional sharing of 20 percent among the five new nations that in 1991 replaced the Soviet Union and Iran?

The last document to delineate the Caspian's legal status, the 1940 Soviet-Iranian treaty, awarded each signatory an "exclusive right of fishing in its coastal waters up to a limit of 10 nautical miles. The treaty further declared that the "parties hold the Caspian to belong to Iran and to the Soviet Union."

Since the 1991 collapse of the Soviet Union, the legal issues reflect Caspian politics arising because the 1982 U.N. Convention on the Law of the Sea defines it as "a special inner sea."
Of the five Caspian states, Iran, with occasional support from Turkmenistan, has been pressing for an equity agreement of 20 percent, a formula opposed by Russia, Kazakhstan and Azerbaijan. Tehran's promotion of this argument is based on the fact that should the coastline argument be adopted, Iran could be left with as little as only 13 percent of the seabed.

Both Iran and Russia hold "trump cards" in the ongoing debate. For Russia, its advantages are that it controls the bulk of existing pipelines that allow Russian, Kazakh and Turkmen hydrocarbons to be exported westward. A second advantage the Kremlin possesses is sole ownership of the Volga-Don Canal. The canal provides the only maritime link between the Caspian and the oceans, as it connects the Volga, which empties into the Caspian, and the Don, which flows into the Black Sea's Sea of Azov, allowing shipping using the Turkish Straits to reach the Mediterranean and the ocean. Western companies seeking to exploit Caspian offshore deposits have all been forced to use the canal to ship in their massive equipment.