Caspian Sea

The Caspian Sea or Mazandaran Sea is a landlocked sea between Asia and Europe (European Russia). It is the world's largest inland body of water, with a surface area of 371,000 km² (143,000 sq. mi.), and therefore has characteristics common to both seas and lakes. It is often listed as the world's largest lake, though it is not a freshwater one.

Oil

The area is rich in energy wealth. As well as recently discovered oil fields, large natural gas supplies are also in evidence, though further exploration is needed to define their full potential. Geopolitical jockeying is taking place amongst Caspian-bordering countries, especially in the light of Middle East instability and the subsequent recasting of many Western countries' energy policies. Another factor influencing this is the new US military deployment to the Central Asian region.

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A key problem is the status of the Caspian Sea and the establishment of the water boundaries between the five littoral countries. Russia, Azerbaijan and Kazahkstan signed an agreement in 2003 to divide the northern 64% of the sea between themselves, although the other two bordering countries, Iran and Turkmenistan, did not agree to this. This is likely to result in the three agreeing nations proceeding with oil development regardless; Iranian and Turkmen development is likely to stall.

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At present, Azerbaijan and Kazahkstan have seen the biggest increase in oil production - an increase of 70% since 1992. Despite this, the region is still achieving less than potential output, with total regional production 1.6 million barrels (250,000 m³) per day - roughly equal to Brazil's production. This is expected to triple by 2010.

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