Page 5 - FSUOGM Week 45 2022

FSUOGM COMMENTARY FSUOGM

Source: IEA.

to divert more oil exports to China, but pipe- political in nature. Kazakhstan has adopted a
line constraints could make it difficult to ramp largely neutral stance in the Ukrainian conflict,
up shipments in the short term. Some volumes despite being a member of the Russian-led Col-
could be put on trains and delivered from the lective Security Treaty Organisation (CSTO).
oil-rich Atyrau region to Uzbekistan and China. It has complied with sanctions against Rus-
“Work is now underway in all these areas sia, and sought to distance itself from Russia’s
to expand and increase the potential for oil aggressive actions.
exports,” Smailov said. First, a storm inflicted some damage to port
President Kassym-Jomart Tokayev stated his infrastructure, and later, Russia announced it
desire to ramp up oil shipments to China back in had to close the terminal after World War II ordi-
2019, but to date, the pipelines linking the two nance had been discovered in its vicinity. And in
countries have mostly managed Russian oil tran- July, a Russian court threatened to shut the CPC
sit volumes under long-term contracts. In con- conduit down completely, citing environmental
trast, they only handle 20,000 bpd of Kazakh oil, violations. That decision was ultimately reversed,
and even at their height in 2012, shipments only but analysts have linked it to heightened ten-
amounted to 240,000 bpd. The issue is that many sions between Moscow and Astana over the lat-
of the Kazakh oilfields that previously exported ter’s lack of support for the Russian position on
their production eastwards are now mature, Ukraine.
whereas the country’s main growth projects In particular, Moscow may be irked by
such as Tengiz, Karachaganak and Kashagan are Kazakh President Kassym-Jomart Tokayev’s
all geared to sending their oil westwards. What announcement on July 4 that his country was
is more, there is only limited upside in Chinese prepared to send more oil to Europe to support
demand for Kazakh oil, and Tengizchevroil and its energy security, at a time when the EU is pre-
other international consortia would sooner send paring to enforce an embargo on Russian oil
their oil westwards, because doing so will fetch a imports later this year.
higher export price. Kazakhstan’s desire to diversify its export
routes is rational, but will be a significant under-
CPC disruptions taking that will take years to have a significant
Deliveries of Kazakh oil via the CPC pipeline impact. And even if its reliance on the CPC sys-
to the Russian Black Sea port of Novorossiysk tem is reduced to 50% or even 40% of its total oil
have seen several disruptions this year, since exports, that still gives Moscow significant lev-
Moscow launched its invasion of Ukraine, and erage over Kazakhstan’s biggest source of export
at least some of these incidents appear to be revenues. ™

Week 45 14•November•2022 www. NEWSBASE .com P5