Kazaks Seek Capacity Boost for CPC Pipeline

Russia has yet to agree to increasing the capacity of a major Caspian oil pipeline, but NBCentralAsia analysts say it is only a matter of time before Moscow gives in, to prevent Kazak oil being exported via other routes.



During a meeting in Astana with Russia’s Vladimir Putin on May 10, Kazak president Nursultan Nazarbaev said his country planned to export most of its oil through Russia.



Nazarbaev said that if talks with Russia to increase capacity on the route owned by the Caspian Pipeline Consortium from 23 to 40 million tons per year are successful, the increased volume will include a guaranteed 17 million tons annually to feed a Russian-sponsored pipeline on the other side of the Black Sea. That project, for a route running from the Bulgarian port of Burgas to Alexandroupolis on the Mediterranean, is still at that planning stage.



The debate over widening the CPC pipeline has been raging for the past 11 years, but analysts predict that an agreement will be reached soon.



CPC shareholders – chief among which are the Kazak government and the United States oil company Chevron - have been lobbying for an expansion in capacity from 23 to 67 million tons a year. The CPC pipeline runs from the Tengiz onshore field in western Kazakstan to the Russian Black Sea port of Novorossiysk.



The Russian government owns 24 per cent of the shares in the consortium, and has so far blocked the plan, saying such an expansion would not be economically viable, while at the same time demanding an increase in the transit fees that CPC pays for crossing Russian territory.



Analysts have suggested that Moscow might change its mind if it means the oil can be directed to the Burgas-Alexandropoulis pipeline, thus preventing Tengiz oil going into the rival Baku-Tbilisi-Ceyhan pipeline, which is backed by the United States.



Russia also needs to secure oil before building the pipeline through Bulgaria and Greece, which would have a capacity of 35 million rising to 50 tons a year.



Kazakstan plans to almost double its oil production from the current 68 to 120 million tons by 2015.



According to Berik Barlybaev, an expert at the Alternativa think tank, “Moscow realises that once more oil is being extracted, either Kazakstan will have to look for alternative transport routes, or Russia must make it possible to increase the volumes of Kazak oil going through its pipelines.”



Askar Nursha, head of foreign policy studies at the Kazakstan Institute for Strategic Studies, said the debate on expanding CPC’s capacity should be seen in the context of recent gas agreements reached in Ashgabat, which could oblige Russia to make concessions over the CPC.



On May 12, Nazarbaev signed an agreement to construct a new Caspian gas pipeline from Turkmenistan to Russia through Kazakstan. He did not attend an informal energy summit in Krakow, organised by Poland and Ukraine, which discussed ways of overcoming regional countries’ dependence on Russia for energy exports.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)