Successful development of the Caspian basin is not something we can consider inevitable

Steven Mann

However he expressed optimism about two pipeline projects in the region taking oil and gas from Azerbaijan to Turkey.

The conference also heard a warning about the impact of the continuing uncertainty about the territorial division of the sea which is now shared by five nations.

Threat to stability

Mr Mann said a lack of legal guarantees had scared away investors in the region, and that companies had failed to invest sufficiently in their own infrastructure and other services.

He also insisted that the US wanted to co-operate in the region, not compete for influence.

"Our overall task is to assist the economic development of all states which appeared after the fall of the Soviet Union", he said.

Sturgeon eggs are known as black gold in the region

The conference is examining the status of the world's largest inland sea which in Soviet times was divided between the USSR and Iran.

But territorial rights over the sea, its valuable oil reserves and sturgeon are now claimed by Azerbaijan, Kazakhstan and Turkmenistan - as well as Russia and Iran.

So far, they have been unable to agree on how to share them.

Russia's Caspian envoy Viktor Kalyuzhny said continuing uncertainty about the territorial division would hamper oil development and heighten instability in the region.

"Unless the legal status of the Caspian is resolved, the peace and stability of the region cannot be guaranteed", he said.

He added that Russia was determined to seek a compromise.

Ecological disaster

One proposed solution is to divide the Caspian Sea into five equal regions, while a more complex option involves each state being given an area of the sea in proportion to its coastline.

Even if the territorial question can be settled, the five states face urgent environmental problems.

The Caspian's oil potential is vast

The Caspian Sea is home to most of the sturgeon which provide caviar. However only Iran is legally allowed to fish for them at present as it is the sole Caspian state to have implemented fishing controls.

Environmentalists are seriously concerned that, without proper controls, the Caspian could become an ecological disaster area.

The region as a whole has proven oil reserves of between 17 and 33 billion barrels - comparable to the US.

It is thought there could easily be another 200 billion barrels to be exploited.