[Agema]

The water is far less unbalanced than you might think. At face value, Rlyeh is technically the only sea nation in LA at all. However...

Although LA Atlantis (which I'm playing elsewhere in MP) starts on land it is every bit as good underwater as EA and MA Atlantis. (And although slightly limited without missile troops or cavalry, very handy on land too.) Not only that, but it needs to get underwater to access half its magical firepower.

Secondly, LA Mictlan is present, which has a dose of Atlantean influence. Although Mictlan can't build castles or build national units underwater, it can recruit underwater PD. Furthermore it has the nature mages to search for magic site kelp fortresses, and can supply adequate amphibious mages and sacred troops from its capital. It's weaker underwater than Rlyeh or Atlantis, but not so badly it would be a walkover.

Finally, Ermor is also present. Although strictly not a water power in any way, all its units are undead therefore (poor) amphibious, and it can grab water provinces right from the start if it wishes.

Consequently I'd argue we've effectively got 2 water nations, one halfway water nation, and one ready-access if slightly incompetent water nation.