Russian Parliament Ratifies Caspian Sea Treaty with Kazakhstan

The State Duma has ratified an agreement between Russia and Kazakhstan on dividing the northern part of the Caspian Sea in order to exert sovereign rights to exploit undersea reserves. The agreement was signed in Moscow on July 6, 1998.

The agreement sets out the main guidelines for Russian-Kazakh cooperation in exploiting the Caspian's hydrocarbon resources. According to the agreement, the northern part of the Caspian Sea is divided along a modified central line. The exact coordinates and map of this modified line are detailed in a separate protocol forming an addendum to the agreement. According to this protocol (dated May 13, 2002), Russia gains the right to develop the Khvalynskoye deposit as well as the Central structure. Kazakhstan gains the right to develop the Kurmangazy structure. According to the terms of the agreement, hydrocarbon reserves in these deposits and structures will be exploited on a joint basis. The Kurmangazy and Central structures are to be split 50-50, although 25% of the Russian share at Kurmangazy and 25% of the Kazakh share at Central are to be reserved as an option that will be exploited by companies from the two states on a commercial basis after the fields have been opened. The division of the Khvalynskoye deposit will be determined at a later date by the two parties.

According to the Russian Foreign Ministry and Environment Ministry, implementation of the agreement will provide Russian companies with favourable conditions for exploiting oil and gas reserves in the northern Caspian, which will increase employment, raise oil and gas production levels, and increase tax returns to the federal budget. In addition, ratification of the document will enable Russian and Kazakhstan to step up collaboration in environmental protection and fishing.