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Tuesday, 26 February, 2002, 15:48 GMT
Corruption 'deters Caspian investors'
Corruption and an inadequate legal framework are scaring investors away from the energy-rich Caspian Sea region, a conference of experts has heard.

The US envoy on Caspian energy, Steven Mann, told the conference in Moscow that the region's economic development had not made the progress expected since the collapse of the USSR.

Successful development of the Caspian basin is not something we can consider inevitable

Steven Mann
However he expressed optimism about two pipeline projects in the region taking oil and gas from Azerbaijan to Turkey.

The conference also heard a warning about the impact of the continuing uncertainty about the territorial division of the sea which is now shared by five nations.

Threat to stability

Mr Mann said a lack of legal guarantees had scared away investors in the region, and that companies had failed to invest sufficiently in their own infrastructure and other services.

He also insisted that the US wanted to co-operate in the region, not compete for influence.

"Our overall task is to assist the economic development of all states which appeared after the fall of the Soviet Union", he said.
Clusters of black sturgeon eggs
Sturgeon eggs are known as black gold in the region

The conference is examining the status of the world's largest inland sea which in Soviet times was divided between the USSR and Iran.

But territorial rights over the sea, its valuable oil reserves and sturgeon are now claimed by Azerbaijan, Kazakhstan and Turkmenistan - as well as Russia and Iran.

So far, they have been unable to agree on how to share them.

Russia's Caspian envoy Viktor Kalyuzhny said continuing uncertainty about the territorial division would hamper oil development and heighten instability in the region.

"Unless the legal status of the Caspian is resolved, the peace and stability of the region cannot be guaranteed", he said.

He added that Russia was determined to seek a compromise.

Ecological disaster

One proposed solution is to divide the Caspian Sea into five equal regions, while a more complex option involves each state being given an area of the sea in proportion to its coastline.

Even if the territorial question can be settled, the five states face urgent environmental problems.

Oil rigs in the Caspian off Baku
The Caspian's oil potential is vast
The Caspian Sea is home to most of the sturgeon which provide caviar. However only Iran is legally allowed to fish for them at present as it is the sole Caspian state to have implemented fishing controls.

Environmentalists are seriously concerned that, without proper controls, the Caspian could become an ecological disaster area.

The region as a whole has proven oil reserves of between 17 and 33 billion barrels - comparable to the US.

It is thought there could easily be another 200 billion barrels to be exploited.

See also:

15 Jan 02 | Europe
Caspian sturgeon stocks plummet
17 Nov 01 | Middle East
Huge illegal caviar trade in UAE
30 Sep 01 | Europe
Caspian pipeline deal signed
03 Aug 01 | Business
Firms settle Caspian pipeline row
22 Jun 01 | Europe
Caspian deal on caviar
21 Jun 01 | Business
BP backs Caspian pipeline
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