The quiet waters of the Caspian reflect not only the shores of five nations but also their ambitions, hopes, and strategic calculations. 

This ancient basin, the largest lake on the planet, has become an arena for modern geopolitical games, where the interests of great powers, energy routes, and legal dilemmas intertwine.

More than semantics: Sea or lake?

Since the collapse of the Soviet Union in 1991, the five Caspian states—Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan—have failed to reach a consensus on the legal status of the Caspian. A seemingly simple question: Is it a sea or a lake? Yet this formulation determines the fate of trillions of cubic metres of gas, billions of barrels of oil, and strategic transport corridors.

If the Caspian is a lake, its surface and bed should be divided equally among all littoral states. If it's a sea, then the UN Convention on the Law of the Sea applies, according to which the division follows the principle of coastline length. 

In this case, Kazakhstan, with the longest coastline, receives the largest share, while Iran, with a short coastline, gets the smallest.

In this legal puzzle, each country defended the position most advantageous to its interests. Iran insisted that the Caspian be considered a lake, which would give it an equal 20 percent share of resources with other states. 

Azerbaijan, Kazakhstan, and Turkmenistan advocated for sea status, which would increase their shares in accordance with their coastline lengths. 

Russia took a special position, disagreeing with either definition, as recognising the Caspian as a sea would oblige it to grant foreign vessels access through the Volga River, contrary to its strategic interests.

Before the collapse of the Union of Soviet Socialist Republics (USSR), bilateral agreements between the Soviet Union and Iran defined navigation and trade rules on the Caspian, which was effectively closed to third countries. 

The emergence of new independent states completely transformed the geopolitical map of the region, turning the question of the Caspian's status into a multilateral dispute with high stakes.

An energy treasure

The stakes are indeed high. Estimates suggest the Caspian basin contains about 48 billion barrels of oil and 292 trillion cubic feet of natural gas. The region is also home to valuable sturgeon, which produce some of the world's most expensive caviar.

The undefined status of the Caspian created obstacles to developing these riches for decades. Particularly contentious were deposits in the southern Caspian claimed by Azerbaijan, Iran, and Turkmenistan. Two major territorial conflicts emerged: Disputes between Turkmenistan and Azerbaijan over the "Serdar-Kapaz" field, and between Azerbaijan and Iran regarding the "Araz-Alov-Sharg" field.

These disputes occasionally took dangerous turns. In the early 2000s, tensions between Iran and Azerbaijan over disputed Caspian territories peaked: Iran threatened two Azerbaijani vessels conducting field research for British Petroleum, forcing it to return to Baku, and demonstratively removed Azerbaijani maritime boundary markers. Prime Minister of Azerbaijan Artur Rasizade expressed official dissatisfaction to Iranian Ambassador Ahad Ghazai regarding the incident and demanded explanations.

The situation escalated further in the summer of 2001 when Iranian fighters violated Azerbaijani airspace at least eight times, penetrating deep (up to 100-180km from Baku) and conducting low-altitude flights over Azerbaijani settlements.

At this critical moment, Türkiye intervened in the dispute, providing Azerbaijan with military and political support. After Türkiye's show of force, including sending the "Turkish Falcons" aerobatic team to Baku on August 24, 2001, Iran's systematic border violations ceased. 

Tehran’s excuse for the behavior was its disagreement with the division of the Soviet portion of the Caspian among four post-Soviet states. Iran demanded 20 percent of the waters and seabed for itself, regardless of coastline length or historical rights.

The long road to convention

The Caspian states began discussing the legal status of the Caspian in 2002 at the first summit in Ashgabat. This was followed by meetings in Tehran in 2007, Baku in 2010, and Astrakhan in 2014. Each summit brought the countries closer to compromise, but the decisive breakthrough occurred only on August 12, 2018.

In the Kazakh city of Aktau, the leaders of the five Caspian states signed the Convention on the Legal Status of the Caspian Sea. Vladimir Putin called this meeting "epochal," while Kazakh President Nursultan Nazarbayev dubbed it "the Constitution of the Caspian."

The Convention represented a compromise solution, unique in international practice. The Caspian was defined neither as a sea nor a lake, but as "a body of water with a special legal status" (the document uses the term "Caspian Sea," but Article 1 describes it simply as a "body of water"). This conceptual decision effectively excluded the application of any international laws or instruments applicable to seas or lakes, enshrining legal uncertainty and preserving the status quo.

According to the document, the Caspian's surface is regulated as a sea: states receive jurisdiction over 15 nautical miles from their shores and fishing rights within an additional 10 miles. However, the seabed and its mineral resources were not precisely distributed—this was left for bilateral agreements between littoral states. In essence, the Convention offered no solution to the problem of seabed division, merely confirming the existing state of affairs.

The agreement established an important rule: military vessels of non-Caspian states cannot be present in Caspian waters. Additionally, convention parties cannot provide their territory to other states for aggression against any littoral state. These military aspects of the agreement fully align with the interests of Russia and Iran, concerned about potential NATO presence in the region.

From the perspective of Azerbaijan, Kazakhstan, and Turkmenistan, a demilitarised zone would be ideal, but Moscow long rejected this possibility. The fact that Russian warships in the Caspian Sea struck targets in Syria and Ukraine underscores the Caspian's military significance for Moscow.

The military aspects of the convention have far-reaching consequences for the region's balance of power. The ban on foreign military presence and using territory for aggression against Caspian states effectively cements Russia's military advantage, as it possesses the largest fleet on the Caspian. As a result, Azerbaijan, Kazakhstan, and Turkmenistan lose the ability to attract allies for military cooperation in the region.

This directly weakens their negotiating positions on trans-Caspian pipeline construction and seabed division, as they face militarily stronger neighbors without external support when disputes arise. Thus, the military provisions of the convention become an instrument of indirect pressure in resolving economic and territorial issues.

Trans-Caspian pipeline: Dream or reality?

One of the most controversial issues related to the Caspian remains the possibility of constructing a Trans-Caspian pipeline connecting Turkmenistan and Azerbaijan. This project, first proposed in the 1990s, would allow Turkmenistan, with the world's fourth-largest gas reserves, to supply its energy resources to Europe bypassing Russia—a goal eagerly pursued by European countries attempting to wean themselves off Russian gas.

The 2018 Convention theoretically permitted underwater pipeline construction, requiring approval only from countries through whose seabed sections they pass. However, the document also contains environmental safety provisions that could be used to block such projects.

Russia, interested in maintaining its dominance in the European gas market, long opposed the Trans-Caspian pipeline, citing environmental risks.

New routes and new realities

On March 1, 2025, a landmark event occurred: Turkmen gas began flowing to Türkiye via Iran through a SWAP replacement scheme. The agreement provides for annual deliveries of up to two billion cubic meters of gas, with the prospect of increasing volumes to 15 billion. This resulted from intensive negotiations between Turkmenistan, Iran, and Türkiye.

The SWAP replacement scheme works as follows: Turkmen gas enters Iran, and Iran sends an equivalent volume of its gas to Türkiye. Legally, this is considered Turkmen gas, circumventing international sanctions against Iran.

However, Türkiye is also interested in receiving Turkmen gas via Azerbaijan and Georgia. Turkish President Recep Tayyip Erdogan stated that gas delivery from Turkmenistan to Turkey and Europe, along with expanding the Trans-Anatolian Pipeline (TANAP) capacity, is "just a matter of time."

Implementing this route requires building a Trans-Caspian pipeline under the Caspian Sea. And here we return to the problem of the Caspian's status.

Current state of the dispute

Despite signing the 2018 convention, some issues remain unresolved. The convention established general principles, but details of seabed division still require bilateral agreements.

The northern Caspian was already fully demarcated between Russia, Kazakhstan, and Azerbaijan according to agreements in 2001 and 2003 using the median line principle. But territorial disputes between Azerbaijan, Iran, and Turkmenistan continue in the southern Caspian.

After the convention was signed, many Iranian citizens accused their government of "selling" the Caspian, as Iran's share was smaller than under equal division. Then Iranian President Hassan Rouhani emphasised that additional agreements would be needed for seabed division.

The Caspian basin and global geopolitics

The dispute over the Caspian's status extends far beyond regional interests. It affects global energy security, competition between Russia and the West, and China's growing influence in Central Asia.

The United States and European Union support diversifying energy routes and reducing dependence on Russian gas. Therefore, they are interested in implementing the Trans-Caspian pipeline and other projects that could deliver Central Asian energy resources to Western markets bypassing Russia.

China, meanwhile, has already become the largest importer of Turkmen gas through the Central Asia-China pipeline. Beijing seeks to strengthen its position in the region as part of the "Belt and Road Initiative."

Russia and Iran, facing Western sanctions, are strengthening their strategic partnership and striving to maintain influence in the Caspian. The 2018 Convention, prohibiting military presence of non-regional powers, aligns with their interests.

The future of the Caspian

Strengthening of the Caspian states and the changing geopolitical environment may lead to new agreements on disputed Caspian issues. It's quite possible that the 2018 Convention, while not a comprehensive regulatory framework, creates a foundation for further negotiations.

The Trans-Caspian pipeline project remains a real possibility, especially in light of European aspirations for energy diversification and Turkmenistan's interests in expanding export routes. However, its implementation still depends on a complex interweaving of economic interests, environmental considerations, and geopolitical calculations.

Turkmen gas supplies to Türkiye via Iran demonstrate that pragmatic solutions are possible even amid sanctions and regional tensions. This model could serve as an example for other projects in the region.

In any case, the fate of the Caspian and its riches will be determined not only by legal formulations but also by the ability of littoral states to find mutually beneficial compromises in the turbulent 21st century.

As aptly noted by Kazakhstan's president, the Convention on the Legal Status of the Caspian became a kind of "Constitution of the Caspian." And like any constitution, it creates a framework within which further relations must develop. Perhaps not all parties' ambitions are satisfied, but a foundation has been laid for peaceful coexistence and joint use of this unique basin's riches.

Meanwhile, as great powers continue their game, the Caspian, as it has for thousands of years, carries its waters between Europe and Asia, harbouring in its depths not only energy treasures but also stories of ancient civilisations that flourished on its shores long before oil and gas began determining the fate of nations.