Page 4 - FSUOGM Week 27 2019

FSUOGM COMMENTARY FSUOGM
Kazakhstan aims to ramp up oil sales to China
Kazakhstan is looking to reverse a decline in oil exports to China, one of its main trading partners
KAZAKHSTAN
WHAT:
Kazakhstan wants to raise exports to China to 140,000 bpd from 26,000 bpd in 2018.
WHY:
The country wants to reduce its dependence on European markets.
WHAT NEXT:
China’s appetite for crude will soak up whatever supplies Kazakhstan sends its way.
KAZAKHSTAN is aiming to signi cantly ramp up its crude oil exports to China, a er sales to its eastern neighbour slumped to a record low in 2018.
The Central Asian producer’s exports to China have declined sharply from almost 240,000 barrels per day (bpd) six years ago to just 26,000 bpd in 2018.
Speaking to Reuters last week, Kazakh Dep- uty Energy Minister Aset Magauov announced plans to turn this trend around and ramp up Chinese shipments to 120,000-140,000 bpd by diverting supplies from Europe. Kazakhstan sells the bulk of its output to markets in Europe, with much of its infrastructure geared towards exporting crude westwards.
According to Magauov, the main factor behind falling Chinese volumes has been declin- ing production at maturing elds in northwest- ern and southern Kazakhstan – many of which are run by Chinese operators. ese elds also serve domestic re neries, limiting oil available for export.
Overall production in Kazakhstan has climbed steadily in recent years, reaching a new height of 1.93mn bpd in 2018. But this growth
has almost exclusively come from the country’s three biggest projects – Kashagan, Karacha- ganak and Tengiz – which are mainly operated by Western investors and sell their oil primarily in Europe.
Reversing the ow
Kazakhstan will increase shipments to China by reversing the ow of its Kenkiyak-Atyrau pipe- line, Magauov said. Operated by a joint venture between state-owned China National Petroleum Corp. (CNPC) and Kazakhstan’s KazTransOil (KTO), Kenkiyak-Atyrau currently flows oil westwards, but was built with eventual Chinese exports in mind. It is linked with the Kenki- yak-Kumkol pipeline, which together with the Atasu-Alashankou pipeline forms the 400,000 bpd Kazakhstan-China Pipeline (KCP) system. KCP is also managed jointly by KTO and CNPC.
“ e oil pumped in the other direction will be heavier. is will require upgrades in the form of building extra pumping stations,” he said, with- out specifying the project’s cost.
e pipeline’s reversal, which should be com- pleted in the second half of 2020, will connect more oil elds in western Kazakhstan with local
P4
w w w . N E W S B A S E . c o m Week 27 09•July•2019