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Kazakhstan Temporarily Reduces Oil Exports Through Russia

By Aygerim Sarymbetova August 4, 2022

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The Tengiz –Novorossiysk pipeline spans 1,511 km. This route is used to transport two-thirds of Kazakhstan's oil exports, along with crude from Russian fields including those in the Caspian region. / Tengrinews.kz

Oil supply from Kazakhstan to Russia's Novorossiysk Black Sea port has significantly decreased due to repairs and a production suspension at the country's two major oilfields.

"Due to repairs at the Tengiz field of Kazakhstan, the head section of the CPC pipeline (Tengiz pump station) is receiving oil from the field in a reduced mode. Also, due to the stoppage of oil production at the Kashagan field, the volume of oil intake into the CPC pipeline was reduced. These factors led to a significant decrease in the total volume of oil pumped through the Tengiz-Novorossiysk pipeline system," the Kazakh-Russian Caspian Pipeline Consortium (CPC) said in a statement on August 4, which was carried by Tengrinews.

"A separate announcement will be made [later] on the resumption of regular volumes of [oil] transport," the report added.

Meanwhile, Kazakh Energy Minister Bolat Akchulakov said that his country is holding talks with Russia to supply gas to Kazakhstan's northern and eastern regions

"If we want to start this work today, then the most optimal option is to supply gas from Russia. This is the most economically optimal option and sustainable in terms of gas supply. We are conducting such negotiations with Gazprom at the level of the QazaqGaz [Kazakh Gas] company," the minister said on August 3.

"As for the volume, the first stage will be nearly 4 billion cubic meters of gas with the possibility of increasing it to nearly 7 billion cubic meters. Let us round it up to 10 billion cubic meters because many coal-fired stations located there will, most likely, have to be converted to gas," he added.

He also said that Kazakhstan was not considering Turkmenistan as a supplier of gas to its northern and eastern regions since there was no gas pipeline there. "Therefore, it will be easier today to construct a pipeline from Russia [to Kazakhstan], and then connect it to our energy system. However, this will take time," the minister added.

The Tengiz –Novorossiysk pipeline spans 1,511 km. This route is used to transport two-thirds of Kazakhstan's oil exports, along with crude from Russian fields including those in the Caspian region. CPC Marine Terminal is equipped with three Single Point Moorings (SPM), allowing tankers to be loaded safely at a significant distance offshore, including in poor weather conditions.

Kazakhstan exports more than two-thirds of its oil via the CPC pipeline. The country's oil exports through this route have already been disrupted several times this year for various reasons.

In early July, Rostekhnadzor inspected the Caspian Pipeline Consortium's facilities and identified some "documentary violations" in its Oil Spill Response Plan. The regulator then asked the court to suspend the consortium's work in Russia for 90 days.

On 5 July, a Russian court issued an order suspending the operation of the Caspian Pipeline Consortium (CPC), which exports most of the Kazakh oil through the Russian Black Sea port of Novorossiysk, for a month over alleged "environmental violations". However, Kazakhstan's Ministry of Energy stated on July 7 that Kazakh oil was being exported via the CPC's Black Sea facility in Russia as usual.

Some experts suggest that the reason for the suspension of CPC's operation was Tokayev's remarks during the recent St Petersburg International Economic Forum on June 17 where he said that Kazakhstan would not recognise the self-proclaimed Luhansk and Donetsk people's republics in Ukraine.

The Russian court’s order on the temporary closure came two days after President Tokayev told European Council President Charles Michel that his country is ready to send more oil to the EU.

Kazakhstan doesn’t have a pipeline to export Kazakh gas to the EU, but there is scope to increase Kazakhstan’s oil exports to mitigate the reduced supply of Russian oil due to EU sanctions. Kazakhstan annually supplies 67 million tons of oil through Russia to Europe.