MONTREAL - Iran expects to deploy its first deepwater semi-submersible drilling
rig in the Caspian Sea next month, following the conclusion that the country's
shallow-water sector has no exploitable resources, according to hydrocarbon
energy industry sources.
The rig, named the "Iran-Alborz", was domestically constructed following a
Swedish design. Its operation will be managed in the first instance by an
unnamed foreign-owned drilling contractor (possibly Brazil's Petrobras), with
Iran’s North Drilling Company set to take over after its personnel gain
sufficient practical experience. Further seismic operations may be conducted
with the assistance of Malaysia's Petronas.
The name of the rig is significant: "Alborz" is the Persian name for
Azerbaijan's "Alov" (actually Araz-Sharg-Alov) deposit, believed to contain 4
billion barrels of oil, which Iran has disputed with the threat of using force.
In July 2001, in an incident causing much ink to spilt but only by good luck no
blood, an Iranian boat forced two survey vessels from the British-based energy
giant BP (operator of the Alov Joint Venture) to return to port in Azerbaijan.
BP subsequently decided to suspend work on the block until the dispute was
resolved; it has not yet been resumed.
Tehran's only possible claim to the Araz-Sharg-Alov block would be its
assertion that every Caspian Sea littoral state (comprising itself, Azerbaijan,
Kazakhstan, Turkmenistan and Russia) should have a 20% share of the seabed.
The Caspian Sea legal regime was regulated through 1991 by two Soviet-Iranian
treaties signed in 1935 and 1940, and one Russian-Iranian treaty signed in 1921
by the Russian Soviet Federated Socialist Republic (before the USSR was created
in 1922).
Since the disintegration of the Soviet Union, the status of the sea under
international law has been discussed at numerous ministerial and
sub-ministerial meetings of the five countries, without resolution. In April
2008, the head of the Russian delegation to the Caspian working group, special
envoy Aleksandr Golovin, stated that Russia considered that the two main
agreements, those of 1921 and 1940, remained in force. (There is an expert
consensus that the 1940 treaty prohibits Iran from deploying naval vessels in
the sea.)
Those agreements, however, neither established national sectors of the sea or
seabed nor addressed energy development questions in any way, addressing only
fishing and shipping issues. Moreover, Golovin's diplomatic language does not
exclude respect for other agreements that have come into force since 1991.
Indeed, the Russian Federation has demarcated sub-sea sectors (with the right
to exploit sub-sea resources) with Kazakhstan (in 1998) and with Azerbaijan (in
2001), following the established principle in international law of the
"modified median line".
Also called the "equidistance method", this involves drawing a line equidistant
from the closest mainland points of each of two adjacent countries, then
adjusting ("modifying") the result either to take de facto boundaries into
account or to avoid such problems as would result from dividing a single oil
field between two states.
The implementation of the agreement between Russia and Kazakhstan, for example,
has been exemplary, and the two countries have even devised administrative
methods for joint development of "shared" fields in the north Caspian.
Kazakhstan and Azerbaijan have also agreed demarcation of their sub-sea sectors
according to the modified median line principle. This leaves the
Azerbaijan-Iran, Azerbaijan-Turkmenistan and Turkmenistan-Iran boundaries
unsettled: thus the political naming of the Iranian drilling rig as
"Iran-Alborz", even though it is not drilling in the Alov ("Alborz") block.
It is understandable that Iran should seek to increase its oil-drilling
capability in the Caspian Sea, insofar as it looks to be increasingly squeezed
out of the gas network expected to feed the Nabucco pipeline. Four days after
the signing in Ankara this month of the inter-governmental framework accord
that provides the stable business environment necessary for work on Nabucco,
(see Nabucco ink
starts to flow, Asia Times Online, July 16, 2009), it was announced
that Turkey had reached agreement with Iraq for the import of 10-15 billion
cubic meters per year (bcm/y), as from 2014-15.
Specifically, Bulgaria's then-prime minister, Sergei Stanishev - his successor,
Boiko Borisov, was elected into office by a vote in parliament this week - told
the Kuwait News Agency in Sofia that as part of that agreement the project
would begin with Iraq supplying to Bulgaria up to 1 billion cubic meters per
year (bcm/y) as from next year through an existing gas pipeline that ends near
the eastern Turkey gas hub of Erzerum, to where the South Caucasus pipeline
from Azerbaijan likewise runs. A 20-kilometer pipeline would connect the
existing Iraq-Turkey gas pipeline to the evolving Nabucco network.
This report also qualifies the Bulgarian accord not as a "memorandum of
understanding" (MoU), which would not be legally binding, but rather as an
"inter-governmental agreement" signed not only by Stanishev and his Iraqi
counterpart, Nuri al-Maliki, but also by the prime ministers of Romania,
Hungary and Austria, and in the presence of the European Union's energy
commissioner Andris Piebalgs and the European Commission president Jose Manuel
Barroso.
Moreover, the new Bulgarian knock-on agreement to the Nabucco transit signing
ceremony would trump the July 2007 trilateral Turkey-Iran-Turkmenistan MoU that
foresaw as much as 30 bcm/y of gas entering Turkey from Iran, including from
Turkmenistan with Iran as transit country.
Previous reports, sourced to a March 2008 press release from the Italian gas
equipment company BRC, had suggested that the Iraqi gas could be conducted not
through Erzurum to Europe but through Diyabakir to Yumurtalik, in south central
Turkey on the Mediterranean coast not far from Syria. Yumurtalik is near the
Ceyhan end point of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline.
From Yumurtalk, liquefied natural gas (LNG) could be shipped to world markets.
While this might seem to exclude destinations served by Nabucco, it could still
include such European markets as Poland, which has begun lately to increase its
imports of LNG from Qatar. Both alternatives are possible.
To be sure, the Iraq-Turkey agreement is a signal to Iran that it is not the
only country other than Azerbaijan and Turkmenistan that is a candidate for
supply throughput to Nabucco. Indeed, the existing 20-bcm/y gas pipeline to
Erzurum from Tabriz in northwest Iran has for years caused problems for Ankara
and has recently been supplying only one-quarter of design capacity. The
arithmetic is therefore instructive. The 15 bcm/y planned from Iraq, joining
the Erzurum-Tabriz pipeline to the east of Erzurum, plus the 5 bcm/y currently
received from Iran would fill Erzurum's 20-bcm/y capacity, obviating the need
for any more Iranian gas to feed Europe.
As recently as last month, according to United Press International, the
managing director at Iran Natural Gas Transmission Company, Reza Almasi, was
still lobbying Turkmenistan to choose Iran over other transit partners, in
particular Azerbaijan. This fact indicates that the trilateral MoU has not yet
seen any concrete realizations. But it is increasingly clear, that however
strongly Turkey's Prime Minister Recep Tayyip Erdogan insists that Iranian gas
should contribute to Nabucco, this is not viewed as necessary to the success of
the pipeline as a whole. That is the case even if differences between
Azerbaijan and Turkmenistan preclude quick progress on an undersea
Trans-Caspian Gas Pipeline (TCGP).
Even Tehran Times, an English-language Iranian newspaper targeted at an
international readership and the domestic intellectual elite, reported this
week that Austrian Chancellor Werner Faymann believes the first candidates for
supplying gas into the Nabucco pipeline to be Azerbaijan, Egypt, Iraq and
Turkmenistan: but not Iran.
Faymann was one of the few observers not to be misled by poor information into
believing that the widely-hyped Turkmenistani declaration, that it would take
its Caspian Sea demarcation dispute with Azerbaijan over the Kyapaz/Serdar
field to "the International Court of Arbitration", was something significant.
(See New chance
for the Trans-Caspian pipeline, Asia Times Online, February 28, 2007,
and Another
trans-Caspian pipe dream, Asia Times Online, October 24, 2007)
There is no "International Court of Arbitration". The two best-known juridical
forums that could possibly be relevant here are the London Court of
International Arbitration and the Stockholm International Arbitration Court,
the latter of which specializes in energy issues.
The competence of these courts is limited to questions of contract fulfillment,
to which territoriality issues are foreign and extraneous. The only
international judicial forum competent to treat territorial disagreements,
including jurisdictional issues over the continental shelf (which is what these
matters are, given the present legal status of the Caspian Sea), is the
International Court of Justice (ICJ, also World Court, not to be confused with
the recently better-known International Criminal Court) in The Hague.
For the ICJ to have authority, both Azerbaijan and Turkmenistan would have to
accept its jurisdiction in the particular case to hand and neither at present
does. It is worth recalling that in 1999, during the last flare-up of
disagreement between the two countries over sectoral demarcation in the Caspian
Sea, Turkmenistan's then-president Saparmurad Niyazov declared that he would
take the case to the ICJ, but no case was ever submitted, undoubtedly for the
reasons just given if not others in addition.
So the recent reported declaration by Turkmenistan's President Gurbanguly
Berdimuhamedow that he would take the case to the ICJ is either a misreporting
of his actual remarks or a political negotiating ploy indicating
dissatisfaction with how the new talks with Azerbaijan have been going.
Unfortunately, Iran has not even shown any inclination to sit down with
Azerbaijan to discuss the Alov/Alborz field. The naming of its new deepwater
drilling rig suggests that that is not about to change.
Dr Robert M Cutler (http://www.robertcutler.org), educated at the
Massachusetts Institute of Technology and The University of Michigan, has
researched and taught at universities in the United States, Canada, France,
Switzerland, and Russia. Now senior research fellow in the Institute of
European, Russian and Eurasian Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
(Copyright 2009 Asia Times Online (Holdings) Ltd. All rights reserved. Please
contact us about
sales, syndication and
republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
