Page 7 - FSUOGM Week 29 2022

FSUOGM COMMENTARY FSUOGM

Kremlin reminds Nur-Sultan who’s

boss over Kazakh oil exports

KAZAKHSTAN WHEN it comes to the shipping viability of its them "quasi-states."
indispensable oil exports, Kazakhstan is not in Tokayev’s remarks, awkward for Moscow at
And there’s not much a happy place. Nur-Sultan knows it, but more such a high-profile economic event, provoked
the Kazakhs can do to the point, so does the Kremlin. Around four- some provocative statements from various
about it. fifths of the oil exported by Central Asia’s larg- revanchist Russian critics. The suspension of the
est economy only makes it on to world markets CPC pipeline followed shortly after.
thanks to the Novorossijsk oil terminal located However, this was not the first suspension of
on Russia’s Black Sea coast. What’s more, there Kazakh oil exports at the mercy of Russia since
are no obvious alternatives should the Kazakhs the Ukraine conflict began in late February. In
need to replace much or all of that capacity. March, Russia temporarily froze oil exports via
With Russia in the mood to pull multiple the CPC infrastructure claiming storm damage
levers on world oil and gas supplies as it strives to to the shipments facility, while in June it did so
battle back against the heavy sanctions imposed again after citing potentially hazardous items
by the West in response to its war in Ukraine, allegedly discovered in Black Sea waters, namely
the vulnerability of Kazakh oil consignments has what Moscow officials said were possible WWII
already been amply demonstrated. Let’s delve mines.
into events so far. According to reports, the long-term halting
The CPC pipeline transits Kazakh oil around of CPC’s operations would remove as much
the Caspian Sea to a Black Sea export terminal as 1.5mn barrels a day of much-needed crude
in Novorossijsk, Russia (Guido Grassow, wiki, from the global oil market, whereas for Russia,
GNU general public licence). it would have virtually no impact as Russian oil
On July 5, a Russian court in Novorossi- makes up only 10% of CPC volumes. With share-
ysk ordered the Caspian Pipeline Consortium holders like Shell, ExxonMobil, and Chevron, the
(CPC) that transits Kazakh oil to the port’s oil CPC carries up to 1.4mn barrels/day of Kazakh
export terminal to halt shipments for 30 days, oil to the European market, which is already con-
allegedly due to oil spill concerns. The terminal strained partly due to a supply cut from Libya
handles around 1% of global oil, thus the move amid political unrest. Of all stakeholders, Chev-
was far from unnoticed on energy exchanges. ron is exposed the more as it accounts for 12% of
Analysts also sat up as they assessed the latest the total output of the CPC.
development in relations between Moscow Cuts to CPC pipeline flows have cost
and ex-Soviet state Kazakhstan. Nur-Sultan has Kazakhstan hundreds of millions of dollars in
offered next to no backing for Russia’s decision lost revenue. With alarm bells ringing loudly in
to invade Ukraine, and some observers see the Kazakhstan over oil export dependence on Rus-
Kremlin pulling the strings on Kazakhstan’s oil sian infrastructure and territory, Tokayev turned
exports as a method of reminding the country’s to US companies invested in drilling for Kazakh
Tokayev administration exactly who’s in charge oil to help diversify oil exports away from Rus-
in the ex-USSR space. sia. Tokayev suggested that oil transportation
across the Caspian Sea was “the most promising
Tense appearance with Putin alternative”.
Kazakhstan, which has provided 82 tonnes of Prior to the outbreak of tensions with Rus-
humanitarian aid to the people of Ukraine, expe- sia over the Ukraine situation, there were plans
rienced tensions with Russia when the country’s to increase the volume of oil exports flowing
President Kassym-Jomart Tokayev attended through the CPC pipeline to up to 5.114mn
the 25th St Petersburg International Economic tonnes this month, but that idea no longer looks
Forum (SPIEF) in June. Tokayev made it clear realistic. Interestingly, the most recent CPC dis-
during an appearance with Russian President ruption came just one day after Tokayev held a
Vladimir Putin that Kazakhstan did not recog- phone conversation with EU Council President
nise the so-called Luhansk and Donetsk “peo- Charles Michel. During their conversation,
ple’s republics” in occupied Ukraine, labelled Tokayev assured Michel that "Kazakhstan's

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