Page 11 - FSUOGM Week 28 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Russian court reverses ruling impeding Kazakh

oil exports but situation remains tense

A regional appeal court in Russia on July 11 heard the arguments of the parties, the appellate
RUSSIA reversed an earlier environmentally-based dis- court modified the decision of the district court
trict court ruling suspending the operations and handed [Russian CPC sub-division] CPC-R
Russia had blocked of the Caspian Pipeline Consortium (CPC) a penalty in the form of an administrative fine
transit, citing that exports most of Kazakhstan’s oil, issuing a of 200,000 rubles," the appeal court's ruling said.
environmental issues. RUB200,000 ($3,300) fine instead. The court ruling was not the first hindrance
Analysts are trying to ascertain whether there to CPC operations caused by Russia since the
is a genuine falling out between Moscow and invasion of Ukraine began in late February—
Nur-Sultan over the post-Soviet latter’s marked Moscow in March claimed storm damage as a
lack of support for Russia’s decision to invade reason to interrupt operations, while an appar-
Ukraine. ent search for mines announced in late June
Quite apart from the fact that the CPC pipe- triggered further difficulties—and Kazakhstan’s
line—running from landlocked Kazakhstan President Kassym-Jomart Tokayev knows full
to the Russian Black Sea oil export terminal of well that his country is far too reliant on the CPC
Novorossijsk—is important in that it handles pipeline to export its oil. He last week appealed
around 1% of global oil, a full blockade of the for assistance from US companies developing
infrastructure would cause huge damage to the the giant Tengiz oil and gas field for help consol-
Kazakh economy, not to mention massive losses idating oil export routes circumventing Russia.
for Western oil companies, including Chevron One option being looked at is a major increase
and Exxon, invested in Kazakhstan’s oil fields. in how much crude is carried on tankers across
Ahead of the court overturning the sus- the Caspian Sea from Kazakhstan to Azerbaijan.
pension of the pipeline, Kazakhstan’s finance However, tanker shortages could hit any planned
ministry let it be known that the Tokayev admin- hike.
istration was considering banning shipments The pipeline and Novorossijsk terminus
of EU and US-sanctioned goods to Russia and exported up to 54mn tonnes, or 1.2mn barrels
Belarus through its territory. The proposed ban per day, of Kazakhstan's main crude grade, light
was put up for public discussion until July 22 and sour CPC Blend, last year.
was widely seen as a response to Russia’s halting Amid the Kremlin’s seizing of Western oil
of the CPC oil shipments. companies’ assets in Russia, there has to be con-
Under the original court order, CPC was cern that Western stakes in CPC could be under
ordered to suspend its activities for 30 days threat.
over alleged oil spill concerns. The move raised With a 24% stake, the Russian govern-
concerns expressed by the consortium that oil ment-owned pipeline company Transneft is the
shipments via the pipeline—accounting for main shareholder in CPC. Russian oil major
around 80% of Kazakhstan’s oil exports—could LUKoil owns 12.5% and 7.5% is held by a joint
come to a permanent halt due to "irreversible venture between Russian state-owned Rosneft
consequences" caused by flow disruption to and UK-headquartered major Shell. The Kazakh
functionality. government holds 20.75%, while US oil com-
Kazakh oil continued to be shipped undis- panies Chevron and Exxon own 15% and 7%,
rupted via the pipeline while the order was still respectively. Smaller stakes are owned either by
in place. other international companies and consortia or
"Having considered the materials, having the Russian government via other vehicles. ™

Week 28 13•July•2022 www. NEWSBASE .com P11