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Foreign ministers from the five Caspian littoral states achieved "significant progress" towards an agreement on dividing up the sea at a meeting in Moscow on April 22. There are now hopes that a deal could be struck later this year - paving the way for construction of a sub-sea pipeline to carry gas from Turkmenistan to Azerbaijan.

"We have reviewed the course of the work of the convention on the legal status of the Caspian Sea, and we have noted significant progress including the progress reached during our talks today," Russian Foreign Minister Sergey Lavrov was quoted as saying after the talks by RIA Novosti.

"We paid special attention to the fulfilment of those tasks that were adopted at the summit in Baku in the fall of 2010 and first of all, the issues of differentiation of marine territories, and we have a significant rapprochement on this matter," he added.

The rights of use of sea has been a bone of contention amongst the five littoral states - Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan - since the breakup of the Soviet Union in 1991. Its strategic position in the midst of an energy rich region makes it a lynchpin in the gas trade with Europe. 

The EU has been promoting plans for a trans-Caspian gas pipeline from Turkmenistan to Azerbaijan, where it would connect to planned pipelines to Europe via Turkey, in a bid to reduce European dependence on Russian gas. Moscow is opposed to the plan, citing the unresolved legal status of the sea. 

The lack agreement has prevented projects to ship hydrocarbons from Central Asia to the west, allowing Russia to maintain control of gas headed to Europe. It has also eased China's push to dominate the region's markets. 

However, there are now hopes of a breakthrough at an upcoming summit in September, when heads of state from all five countries are due to meet in the Russian city of Astrakhan. A treaty on the legal status of the sea and the delineation of maritime borders in the southern Caspian would also help Baku and Ashgabat solve the problem of the disputed Kyapaz (Serdar) oil field.

Turkmenistan and Azerbaijan have renewed talks on the trans-Caspian gas pipeline in recent weeks as plans for Western sanctions against Russia over the Ukrainian crisis are putting Russian gas supplies to the EU at risk. Turkmenistan, which sits on the world's fourth largest gas reserves, has shown interest in diversifying export routes: it is already pumping gas to China via Uzbekistan and Kazakhstan and is in talks with Pakistan and India on building the TAPI pipeline via Afghanistan.