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The Caspian Sea is located in northwest Asia, landlocked between Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan.Since the breakup of the Soviet Union in 1991, the Caspian Sea--as well as the region surrounding it--has became the focus of much international attention due to its huge oil and natural gas reserves.

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The potential oil and natural gas wealth, along with the corresponding environmental risks of resource development in the Caspian, have heightened the stakes for each country.

In July 1998, Kazakhstan signed a bilateral agreement with Russia dividing the northern Caspian seabed only along median lines between the two countries, with the waters (covering issues such as shipping, fishing, and environment) remaining under joint ownership.

In addition, Turkmenistan and Azerbaijan remain locked in a dispute over the Serdar/Kyapaz field, while Turkmenistan claims that portions of Azerbaijan's Azeri and Chirag fields--which Ashgabat calls Khazar and Osman, respectively--lie within its territorial waters.

Thus, the unresolved status of the Caspian Sea has hindered further development of the Sea's oil and natural gas resources, as well as the construction of potential export pipelines from the region.

Possible natural gas reserves in the Caspian region are even larger than the region's proven natural gas reserves, and could yield another 293 trillion cubic feet (Tcf) of natural gas if proven.

Turkmenistan (101 Tcf) and Kazakhstan (65 to 70 Tcf) are among the top 20 countries in the world in terms of proven natural gas reserves.The Sea, which is 700 miles long, contains six separate hydrocarbon basins, although most of its oil and natural gas reserves have not been developed yet.Although the littoral states of the Caspian Sea already are major energy producers, many areas of the Sea and the surrounding area remain unexplored.Azerbaijan and Russia are also finalizing a bilateral agreement on the Caspian Sea.As a result, several conflicts have arisen over mutual claims to different regions of the Sea, especially in its southern waters.In addition, the region's possible oil reserves (defined as 50% probable) could yield another 233 billion barrels of oil.

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