By Sebastian Alison MOSCOW, March 15 (Reuters) - Getting oil out of the Caspian Sea, probably the largest untapped source of hydrocarbons in the world and a battleground for influence by some powerful neighbours and their backers, was never going to be easy. The sea is landlocked. The most realistic transit states -- Russia, Iran and Turkey, which has powerful backing from the United States -- all offer strong arguments for being chosen, and so developing immense regional influence. But before large-scale oil production starts, there is the small matter of deciding who owns what in the sea, and so who can exploit it. And Iran and Russia may have decided that it is in their best interests to stall on this, analysts say. The last two weeks have seen a rush of diplomatic activity from the key players in the Caspian's new "great game." Elizabeth Jones, U.S. special envoy on Caspian energy issues -- her title has been changed to "senior adviser" but her function and ambassadorial status remain the same -- kicked it off this month with a visit to Kazakhstan, Georgia and Russia. In Kazakhstan, one of five littoral states -- the others are Russia, Iran, Azerbaijan and Turkmenistan -- she said President Nursultan Nazarbayev assured her he saw the favoured U.S. route, across Turkey to the Mediterranean, as its own top priority. As Kazakhstan is potentially the Caspian's biggest producer, its support would boost the U.S. plan, aimed at creating multiple export routes but incidentally curtailing Russian and Iranian influence in the region. Nazarbayev's remarks also apparently overturned comments by his own Prime Minister, Kasymzhomart Tokayev, in January, when he said a route across Iran was the country's top priority. Jones left Astana in optimistic mood. But this week Iranian President Mohammad Khatami visited Moscow and reached a series of agreements apparently designed to pique the new U.S. administration and which drew a swift response from Washington. Russian President Vladimir Putin agreed to resume sales of defensive weapons to Iran, against which the U.S. imposes sanctions, arguing that it is a rogue state. The two presidents failed to find common ground on how to divide the Caspian, but all the same issued a statement saying that only the five littoral states could do this -- an implicit warning to the U.S. to keep out. PUTIN GETS TOUGH The weapons sale may indicate Putin's desire to act tough and demonstrate Russia's influence in the region right at the start of the new administration in Washington, James Henderson, head of research at Renaissance Capital in Moscow, said. But failing to agree on dividing the sea may be a deliberate ploy to thwart U.S. ambitions, he added. For the U.S.-backed pipeline across Turkey to succeed, he said, it would ideally involve a subsea pipeline under the Caspian carrying Kazakh crude to Baku in Azerbaijan before continuing across Georgia and Turkey. If Russia and Iran put off an agreement on how to divide the sea, Henderson said, it would make it less likely any company would invest in an underwater pipeline -- especially as the two separately registered opposition to any pipeline under the sea. "It's in the interests of Russia and Iran to keep an argument on division of the Caspian going into the indefinite future," he said. "In that case oil would go north through Russia and south through Iran," and not through Turkey. Russia has its own special presidential envoy on Caspian energy questions, former energy minister Viktor Kalyuzhny, and he was in the Kazakh capital Astana on Wednesday, fresh from meeting Khatami in Moscow. Although he said Russia was not opposed to the Baku-Ceyhan line, he also made clear that it would do everything possible to make the Russian route more attractive. "Where to export oil is Kazakhstan's right. Russia must just do everything so Kazakh oil goes through Russia. And for that Russia must establish all economic and political conditions and create a 'green channel' for Kazakh crude," he said. A pipeline from Kazakhstan across Russia to the Black Sea will open later this year, giving the northern power the early advantage as a transit route. Julian Lee, senior energy analyst at the Centre for Global Energy Studies in London, said this fact enabled Kazakhstan to be comparatively free with its affiliations now. "They want to get oil out. Now that they have this big pipeline across Russia they'd like the next line to be an alternative to that. Whether it goes through Iran or Turkey probably doesn't matter too much to them," he said. At Iran's request the littoral states have already put off a summit, scheduled for March 8-9, at which they were due to decide on how to divide the sea. Kalyuzhny said in Astana on Wednesday that he would visit all five states in the coming weeks and the summit would then be held in Turkmenistan in April. But with everything still to play for in the great oil diplomacy game, and with fundamental differences still seen on the sea's division between Iran and some other states, analysts believe this may be put off again. The game looks set to run. _______________________________________________ CrashList website: http://website.lineone.net/~resource_base
