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Home / News / Today's Headlines / Kazakhstan to export as much crude via Russia as the pipeline system can digest

24.01.2008

Kazakhstan to export as much crude via Russia as the pipeline system can digest

Kazakhstan plans to export as much crude through Russia as the Russian pipeline transportation system can take, with the remaining volumes to go through alternative routes, Kazakhstan's Prime Minister Karim Masimov said.

"We will export via Russia as much (crude) as the Russian pipeline system can digest," Masimov told the newspaper. "We will export the remaining (volumes) via other routes such as Baku-Tbilisi-Ceyhan, towards China."

Speaking about the planned Caspian gas pipeline, Karimov said that all the main issues regarding the construction of the pipeline had been resolved.  "I don't see any problems in the construction of the gas pipeline as all the principal issues have been resolved," he said. The agreement signed by Kazakhstan, Russia, and Turkmenistan includes the gas price formula. So "this issue is settled for the near future."

In the long-term, there would be a question of gas resources availability, rather than the price, Karimov said. "Whether Turkmenistan has this gas, I cannot confirm or deny," Masimov said. But he added that Kazakhstan takes decisions on the assumption that Turkmenistan has gas.
    
Russia already handles 100% of Kazakhstan's small, but rapidly developing exports of gas. The source of much of the existing and projected deliveries is Kazakhstan's giant oil and gas field Karachaganak. Turkmenistan claims it has enormous reserves of gas, but they are yet to be confirmed.

The three countries agreed to build the gas pipeline along the coast of the Caspian Sea from Turkmenistan through Kazakhstan to Russia in May, striking a serious blow to the US and EU, which had both backed an alternative route across the Caspian Sea bypassing Russia.

The new pipeline, expected to be commissioned by the end of 2010, along with the upgrading of the existing Central Asia-Center gas transportation system will expand total gas transportation capacity from Central Asian countries via Russia to some 80 billion cubic meters/year (2.82 trillion cubic feet/year), up from nearly 60 Bcm/year at present.

Separately, Masimov said that the new operating company to be set up to develop the giant Kashagan oil field in the Caspian Sea would take decisions on the basis of consensus in the consortium.

"It does not matter who leads the operating company as all the decisions will be made by consensus. The model has been changed completely, compared with the previous one. Previously, there was Eni, which managed the whole process," Masimov said.

Earlier this month, Kazakhstan reached an agreement with the Kashagan consortium on increasing its stake in the project to 16.81% from 8.33% , after months of disputes over the project development with then project operator Italy's Eni.

According to the latest agreement, the stakes of Eni, ExxonMobil, Shell and Total will be reduced to 16.81% each from 18.52%. ConocoPhillips' stake will be reduced to 8.39% from the current 9.26%, while Inpex Holding's 8.33% stake will be reduced to 7.56%.

The revised budget for the first stage of Kashagan is expected to be approved by March, with the start-up of oil production at the field likely to be postponed to late 2011.  

Kashagan was originally expected to come on stream in 2005, but numerous delays led to Eni most recently forecasting a late-2010 start-up.

After Eni officially requested another postponement for the start of commercial production and a budget increase in June 2007, the government then said it wanted to raise Kazakhstan's stake in the project and force Eni to give up its role as project operator.

Source: Platts  

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