27.06.12 Caspian Focus Iran's Caspian energy find may provoke border confrontation

Iran's recent discovery of a large oil and gas field in the Caspian Sea has attracted some media interest, but there has been very little attention paid to the location of the claim. If the field is where Iran says it is, the scene could be set for a serious confrontation with Azerbaijan.

Iran claimed to have discovered the Sardar Jangal gasfield in December 2011, and the Sardar Milli oilfield in the same structure in May 2012. Iranian officials have claimed that the find is extremely significant: around 50 trillion cubic feet of gas and 10 billion barrels. If true this would make Iran a major Caspian energy player. There is some scepticism over the scale of the find, but it seems likely that the company's North Drilling Company has indeed discovered something.

To date, Iran has not given a precise set of coordinates for the field, but officials have said that it lies 188km north of Rousdar in Gilan province, and 250km northwest of the port of Neka. A rough triangulation of those coordinates produces a location within what is usually considered to be Azerbaijan's territorial waters. This assessment was confirmed by a subsequent Iranian statement that Sardar Jangal is in the Alborz block – a disputed area which Azerbaijan calls Alov.

The field therefore seems to lie in disputed waters. There are no agreed maritime boundaries in the Caspian Sea, the product of twenty years of negotiation over how much each of the five littoral states (Russia, Kazakhstan, Turkmenistan, Iran and Azerbaijan) should receive.

Russia, Kazakhstan, and Azerbaijan – increasingly joined by Turkmenistan – have agreed on a median-line division, under which each state receives a proportion of Caspian waters based on the length of their coastline. Iran has held out for a common-use solution under which all states would receive 20%, since it would only receive 14% under a median-line division.

In the northern Caspian Russia and Kazakhstan have cooperated on joint development of fields, working together on an ad hoc basis. But in the southern Caspian Iran's attempts to secure a larger share of the territorial waters, and longstanding tensions between Azerbaijan and Turkmenistan, have meant that several fields have remained untouched.

The Iranian claim has raised a number of questions, notably: why is Iran drilling in a disputed area? Why has Baku not responded? And does Iran have the will and the capability to develop such a complex field?

These all remain unclear but given the current tensions between Iran and Azerbaijan and the pace of militarisation in the Caspian, the scene could be set for a maritime confrontation.

A presentation on this subject was recently made by Caspian Focus editor Alex Jackson at the second Caspian Offshore Summit in Astana. The presentation can be accessed here.