The neighbouring states have been at odds since 1997 when they first verbally fought over the Kyapaz field, which the Turkmen call Serdar.

Turkmen television reported late last night that a little-known Canadian company was in talks with the Turkmen government on developing the field.

"The president of Turkmenistan has approved of our talks on two deposits. The first one is the Serdar field in the Turkmen sector of the Caspian," Roger Haynes, head of Canadian company Buried Hill Energy, told Reuters.

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