Page 5 - FSUOGM Week 33 2022

FSUOGM COMMENTARY FSUOGM

The Novorossiysk oil
terminal on the Black
Sea.

of Kazakh exports could be shipped from 2023 previously traded under Russia’s Urals and Sibe-
through another Azeri pipeline that runs to rian Light blends, but is now distinguished as
Georgia’s Black Sea port of Supsa, sources told Kazakhstan Export Blend Crude Oil (KEBCO).
Reuters. Around 40,000 bpd of Kazakh oil was Another option for Kazakhstan would be
already shipped via Azerbaijan last year. reviving oil swaps with Iran, which were halted in
These moves would enable Kazakhstan to 2011. This would involve loading oil onto tank-
divert some of its oil exports away from Russia, ers at Aktau and unloading them at Iran’s Cas-
but it would also mean the country relying on a pian port of Neka. Those shipments amounted
small fleet of tankers to ship the volumes across to 3mn tpy (60,000 bpd) at their height.
the Caspian Sea. A further increase in supplies Kazakhstan could also potentially send more
would likely require improvements to port infra- oil to China as well, although constraints with
structure on either side of the Caspian Sea, how- internal pipeline infrastructure could make
ever, along with an expansion in the tanker fleet. it difficult to ramp up shipments in the short
Given that the Caspian Sea is landlocked, obtain- term. Tokayev stated his desire to ramp up oil
ing these tankers would not be an easy feat, espe- shipments to China back in 2019, but to date,
cially given that the main rivers that flow into the the pipelines linking the two countries have
sea run through Russia. mostly managed Russian oil transit volumes
Meanwhile Tengizchevroil, the consortium under long-term contracts. In contrast, they
led by US major Chevron that is developing only handle 20,000 bpd of Kazakh oil, and even
Kazakhstan’s largest oilfield Tengiz, has its own at the height in 2012, shipments only amounted
marketing arm and is in separate talks on using to 240,000 bpd. The issue is that many of the
alternative routes for export via pipeline and rail, Kazakh oilfields that previously exported their
Reuters said. BTC could be used for Tengiz’s out- production eastwards are now mature, whereas
put, but only after six months, according to the the country’s main growth projects such as Ten-
news agency. giz, Karachaganak and Kashagan are all geared
The move to divert Kazakh oil supply away to sending their oil westwards. What is more,
from Russia also comes after Kazakhstan there is only limited upside in Chinese demand
renamed its oil export brand in June in order to for Kazakh oil, and Tengizchevroil and other
differentiate it from Russian supplies, which are international consortia would sooner send
trading at a hefty discount to Brent due to West- their oil westwards, because doing so will fetch
ern buyers shunning them. Kazakh crude was a higher export price.™

Week 33 17•August•2022 www. NEWSBASE .com P5