Kazakhstan Seeking Alternative Pipeline Export Options

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Kazakhstan Seeking Alternative Pipeline Export Options

Tue, 08/16/2022 - 11:06
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Kazakhstan with flag embedded on the surface of the earth (© Shutterstock/Harvepino)
Kazakhstan with flag embedded on the surface of the earth (© Shutterstock/Harvepino)

Given the vagaries of transporting hydrocarbons through Russia nowadays, Kazakhstan is expected to sell some of its crude oil through Azerbaijan's pipeline that delivers oil to Turkey's Mediterranean port of Ceyhan.

For 20 years, they have been shipped through the CPC pipeline to Russia's Black Sea port of Novorossiisk, which provides access to the global market.

But in the wake of the Russian war in Ukraine a Russian court threatened to shut the Caspian Pipeline Consortium (CPC) pipeline,  prompting the Kazakh government and major foreign producers to set up contracts for other outlets as a precaution.

According to Reuters, a source with direct knowledge of the matter said Kazakhstan's state oil firm Kazmunaigaz (KMG) was in advanced discussions with the trading arm of Azerbaijan's state firm SOCAR to allow 1.5 million tonnes per year of Kazakh crude to be sold through the Azeri pipeline that delivers oil to Turkey's Mediterranean port of Ceyhan.

At just over 30,000 barrels per day (bbl/d), the volume is a mere trickle compared to the usual 1.3-1.4 million bbl/d that flows through the CPC pipeline.

Quality is another factor impeding a quick agreement. Kazakhstan's main grade CPC Blend is a light, sour crude sold at a significant discount to Azerbaijan's flagship BTC grade that is an easier-to-refine medium, sweet grade.

Both Kazmunaigaz (KMG) and the The State Oil Company of Azerbaijan (SOCAR) declined to comment on the specific deal.

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