Caspian: Energy, environment, expropriation
John CK Daly, a really good analyst on Former Soviet states and energy, has written a new article on the duality of Caspian oil negotiations, currently focused on the Kashagan field.
One duality is that of environmental concerns over energy extraction. In April, Antoine Blua at RFE/RL reported Caspian seals dying in great numbers from unknown causes–an immune deficiency–that may be related to oil exploration/water quality issues. Caspian sturgeon have been in some jeopardy from water quality and overfishing. The sturgeon represent an industry in themselves–and if decimated add to the overall reliance on oil and gas for income for Caspian states. This can feed continued abuse of the environment–and continued economic downturn despite the riches of oil.
It’s up to the state and its regulating bodies to oversee environmental conditions within its territory. This doesn’t always work so well, and the Caspian can be used as a hypothetical example. What if state A makes money on extraction, and states B,C, and D, are left with the mess? It is for this reason that the Caspian is regulated in condominium for environmental issues.
But what if the state uses environmental regulation for a purpose other than the environment? That’s what happened earlier this year, with the Sakhalin fields in Russia, where Royal Dutch Shell and partners lost a hefty part of their production share for environmental reasons–and the new environmental incursions have been worse. The question of environment becomes somewhat lost in the shuffle for the goods.
Every side has a point or two to make–and all of them are good ones.