Page 7 - FSUOGM Week 27 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Russia cuts off CPC oil supply

RUSSIA A Russian court has ordered Kazakhstan’s larg- order to alleviate the situation.
est oil export pipeline, which traverses Russia, Kazakhstan’s alternative options for sending
Kazakhstan annually to close its operations for 30 days – a move that oil to European markets include sending tank-
supplies some 1.35mn comes two days after the Kazakh government ers across the Caspian Sea to Azerbaijan, where
barrels per day. pledged that it would support Europe’s oil sup- the supplies can be fed into the various oil pipe-
ply security. lines that run through Turkey. Around 2.1mn
Closures of the Novorossiysk oil terminal that tonnes of oil were delivered via this option last
receives Kazakh supplies from the Caspian Pipe- year, although officials have said this could be
line Consortium (CPC) and then ships them off increased to 5mn tonnes. According to Eura-
to international markets have been frequent this sianet, port managers say that capacities could
year. In March it was partially closed because of be expanded to 12.5mn tonnes per year (tpy) if
damage sustained during a storm, according to refurbishments are made.
port authorities, and in June, it was shut down Another option is reviving oil swaps with
due to World War II ordnance being discovered Iran, which were halted in 2011. This would
in the waters surrounding it. involve loading oil onto tankers at Aktau and
On July 4, Kazakh President Kassym-Jomart unloading them at Iran’s Caspian port of Neka.
Tokayev told European Council President Those shipments amounted to 3mn tpy at their
Charles Michel that his country was prepared height.
to send more oil to Europe to support its energy Kazakhstan could potentially send more oil to
security. On July 6, the Primorsky district court China as well, although constraints with internal
in Novorossiysk ruled that the terminal must be pipeline infrastructure could make it difficult to
closed for a month because of “environmental ramp up shipments in the short term.
concerns.” CPC is one of the largest oil pipelines in the
Kazakhstan annually supplies some 67mn world, handling approximately 1% of global oil
tonnes (1.35mn barrels per day) of oil to Europe supply. In its ruling, the court in Novorossiysk
via the CPC system. said that its decision related to oil spills occur-
Even a single month of lost export earnings ring along the pipeline. According to Reuters, the
from oil will deal a serious blow to the finances of CPC consortium has submitted an appeal to the
Kazakhstan, which has avoided expressing open court, requesting that the ruling be suspended in
support for Russia’s invasion of Ukraine. How- order to avoid “irrevocable consequences for the
ever, Tengizchevroil, the operator of Kazakh- pipeline equipment.”
stan’s largest oilfield Tengiz, told Reuters on July Following the recent seizure of the Sakhalin-2
6 that oil supplies via CPC had not been inter- project part-owned by Shell in the Russian Far
rupted. Half-owned by US major Chevron, the East, there is a heightened risk of Russia force-
consortium said it was seeking clarification from fully taking over Western-held oil and gas assets
CPC on details and the next steps following the in the country. This risk applies to CPC, where
court ruling. Chevron holds a 15% stake. Were this position
Kazakh Prime Minister Alikhan Smailov on to be expropriated, the share of Russia and Rus-
July 6 held an impromptu meeting of the cabinet sia-owned entities in the project would increase
to evaluate “measures to minimise the negative to over 50%, which in theory would give the
consequences” that have been caused by the Kremlin greater room to disrupt supply. But in
export restrictions, although the government has light of the court ruling, such drastic steps might
not disclosed what instructions Smailov gave in not be considered necessary. ™

Week 27 07•July•2022 www. NEWSBASE .com P7