Kazakh Energy and Mineral Resources
Minister Sauat Mynbayev and Russian Industry and Energy Minister Viktor
Khristenko have said they have reached a common position on the issue of
expanding the Caspian Pipeline Consortium (CPC) pipeline.
The expansion of the CPC pipeline, which
links the Kazakh Tengiz field with the Russian Black Sea
port of
Novorossiysk,
is expected to take place in two stages by 2012, when the final capacity of the
CPC will be increased to 67m tonnes of oil.
Kazakhstan has pledged that some of the increase in oil supplies – 17m tonnes,
which will be transported through the CPC will be pumped further through the
projected Burgas-Alexandroupolis pipeline. However, the conditions of the
consensus were not made public and it is not clear that this consensus is
final.
In May 2007 Kazakh President Nursultan Nazarbayev
announced that former Russian President Vladimir Putin and he had agreed to
increase of the CPC capacity to 40m tonnes; however, Mr Putin said that
Russia was only
studying this possibility.
Russia is
reluctant to expand the CPC because it believes that it was not economically
feasible unless tariffs were raised. There is no consensus on the issue of
raising tariffs among CPC shareholders. However, the true reason for
Russia’s reluctance to expand the capacity is
that it is worried about competition from extra Kazakh oil for crossing through
the straights in
Turkey,
which claims that the Bosphorus and the Dardanelles have already exhausted
their capacities and that any more oil poses a threat of environmental disaster
for the country’s largest city,
Istanbul.
At the same time, the CPC has exhausted its
current capacity of 30m tonnes of oil per year. Last year, it transported 32.6m
tonnes. Tengizchevroil, the main supplier of oil into the CPC, announced that
it expected to increase its oil output to 18.7m tonnes this year and to 25m tonnes
in the near future. Chevron, a 50% shareholder in Tengizchevroil, has said that
it would support alternative oil export routes, including Baku-Tbilisi-Ceyhan
pipeline.
