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Kazakhstan Looks To Diversify Oil Export Routes Away From Russia

  • Kazakhstan is seeking help from the United States to diversify oil exports away from Russia.
  • President Kassym-Jomart Tokayev made the appeal two days after a court in Russia ruled to suspend operations on a key export pipeline. 
  • Tokayev said he sees the transportation of oil across the Caspian Sea as the most promising alternative.

Kazakhstan’s president has pleaded for assistance from U.S. companies in developing his country’s energy resources to help consolidate oil export routes circumventing Russia. Kassym-Jomart Tokayev made the appeal on July 7, two days after a court in Russia ruled to suspend operations on a pipeline that Kazakhstan uses to export the bulk of its oil. That pipeline rises in western Kazakhstan and runs to a Black Sea terminal inside Russia.

Tokayev said he sees the transportation of oil across the Caspian Sea as the most promising alternative.

"I instruct [state-owned oil and gas company] KazMunaiGaz to work out the best option for implementing this, including through the involvement of investors at the Tengiz project," he told officials.

Tengiz, a field located in western Kazakhstan, is being developed by Tengizchevroil, a joint venture 50 percent controlled by U.S. major Chevron and 25 percent owned by its U.S. peer ExxonMobil. KazMunaiGaz owns another 20 percent.

Tokayev did not specifically mention Russia in his remarks, although the timing of this fresh order for Caspian export routes to be enhanced are an unambiguous allusion to recent developments with the CPC pipeline.

In a July 5 ruling, the Primorsky district court in the southern Russian city of Novorossiysk found that the CPC, which is jointly owned by a large assortment of international companies, had allegedly committed environmental violations. It ordered that the pipeline should remain idle for one month. The CPC route last year carried around 53-54 million tons of oil toward Novorossiysk.

Some analysts have interpreted this ruling as an attempt by Moscow to put pressure Nur-Sultan into providing Russia with relief from Western sanctions. Kazakhstan has instead been acting in ways that Russia might perceive as low-key hostile.

Related: Boris Johnson Resigns As Energy Crisis Worsens And Scandals Mount

In a telephone conversation with EU Council President Charles Michel on July 4, Tokayev pledged to make Kazakhstan’s “hydrocarbon potential available in order to stabilize the situation on global and European [energy] markets.” The need for that kind of help has become particularly acute since late May, when European Union nations agreed to “effectively cut around 90 percent of oil imports from Russia to the EU by the end of the year.”

Tokayev on July 7 also instructed the government to take measures to increase the capacity of the Atyrau-Kenkiyak and Kenkiyak-Kumkol oil pipelines. Those routes are designed to carry crude from fields in the west of the country eastward, in the direction of China.

During the last extended period in which the CPC was unavailable – in April, following a period in which oil loading facilities at Novorossiysk were allegedly rendered inoperable by storm damage – substantial amounts of crude were redirected eastward. Prime Minister Alikhan Smailov has revealed that 561,000 tons of oil that should have been transported through the CPC pipeline were sent along alternative routes in April.

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By Eurasianet.org

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Leave a comment
  • Mamdouh Salameh on July 09 2022 said:
    If Kazakhstan wants to ensure regular and uninterrupted shipments of its crude oil exports via the CPC oil pipeline which connects oilfields in western Kazakhstan with Russia’s port of Novorossiysk on the Black Sea, it should totally maintain its neutrality in the Ukraine conflict or at least refrain from actions perceived as hostile to Russia.

    Kazakhstan may have been angered by the decision by a Russian court ruling on 5 July ordering that the CPC must remain idle for one month for allegedly having committed environmental violations. The CPC last year carried just over 1.0 million barrels a day (mbd) of crude oil toward Novorossiysk.

    Now Kazakhstan is asking US oil companies to help find alternative export routes that circumvent Russia. But it is well advised to heed the lessons of the Ukraine conflict. Russia is Kazakhstan’s largest trade partner and furthermore, Russia isn’t inclined to allow another Ukraine on its border.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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