Azerbaijan Invites Kazakhstan to Use Oil Pipeline to Georgia

Azerbaijan and Kazakhstan are discussing the use of the Baku-Supsa pipeline to carry Kazakh crude, media reported, citing a statement by the Kazakh embassy in Baku.

"Currently, the parties are exploring the possibilities of further increasing volumes. Kazakhstan is also studying Azerbaijan's proposal to use the Baku-Supsa oil pipeline. Supplies in this direction will depend on commercial conditions," the embassy said, as quoted by Interfax.

Kazakhstan currently ships its crude via the Baku-Tbilisi-Ceyhan pipeline that terminates in Turkey. The oil comes on tankers across the Caspian Sea and gets loaded into the BTC pipeline in Baku. The shipments began last year and the total shipped stood at 2.057 million tons.

The Baku-Supsa pipeline, on the other hand, terminates in Georgia and so far has transported only Azeri crude from the Azeri-Chirag-Guneshli offshore field in the Caspian Sea. The infrastructure is operated by BP.

Kazakhstan said earlier this year it planned to expand its crude oil production to make up for lower revenues resulting from lower benchmark prices. As part of these plans, the Kazakh government eyed boosting shipments via the Baku-Tbilisi-Ceyhan pipeline to 1.5 million tons.

Another 1.2 million tons of Kazakh oil have been approved for transit through Russia for this year as well, and there are shipments to China, too. Last year, Kazakhstan exported some 1.2 million tons of crude to China, per energy ministry data. Kazakhstan’s total oil exports last year came in at over 70 million tons, which was a 10% increase in 2022.

This year, Germany has emerged as a big buyer of Kazakh oil after it took over Rosneft’s Schwedt refinery. Over the first four months of the year, Kazakhstan exported 420,000 tons of crude to Germany, using the Russian Druzhba pipeline. Last month, the deal between the Kazakh state oil and gas company, KazMunayGaz, and the Schwedt refinery was extended until the end of the year.

By Charles Kennedy for Oilprice.com

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