Monday, 9 June 2008
Construction of the pipeline between Yeskene and Kuryk, part of the Kazakh Caspian System, is scheduled to begin in the near future. Observers have said they believe the project will be built and operated by Kazmunaigaz and the Azerbaijani State Oil Company (GNKAR). The American oil producer, Chevron, is reportedly interested in the project, also. Analysts point out that Kazakhstan is seeking to increase oil production through the development of new fields and, therefore, needs more oil export routes than are currently available.
The pipeline between Yeskene and Kuryk is to be part of the Kazakh Caspian System developed by Astana, according to a memorandum signed in early 2007. The Kazakh Caspian System is to include the Yeskene-Kuryk pipeline and the Trans-Caspian framework, made up of terminals on the Kazakh coast of the Caspian Sea, oil tankers, terminals on the Azerbaijani coast and a connection to the Baku-Tbilisi-Ceyhan pipeline.
"Chevron views construction of a pipeline from Yeskene as quite an interesting option," according to company Executive Director David O'Reilly. (Chevron is the main shareholder in Tengizchevroil LLP, the largest oil company in Kazakhstan). Construction of the pipeline, from Yeskene to Kuruk, some 750 kilometers away, is to begin in the near future and scheduled to be completed within two years. The initial oil capacity is expected to be 23 million tons per annum, to be boosted to 38 million tons, eventually. With the Kashagan field soon to begin producing, it will increase oil output to 56 million tons per annum. The cost of the pipeline project is estimated at $1.5 billion. Oil from Kashagan and Tengiz is to be pumped to Kuryk, prior to crossing the Caspian Sea to Azerbaijan, in oil tankers.
Arjan Takachakov of Kazmunaigaz claims that negotiations over the pipeline with GNKAR have already begun. According to the executive, Chevron did display interest in the pipeline but has not yet committed itself to participate in the project. Takachakov added that, so far, the figures and specifications released to the general public remain preliminary and are liable to be changed. "We are working on the technical and economic assessment for the time being. It is to be discussed and agreed on in 2009," Takachakov said. Representatives of Chevron were unavailable for comment yesterday.
Analysts believe that Astana's policy to increase export routes is quite logical since Kashagan and Tengiz are to begin oil production soon. Valery Nesterov of Troika Dialog is convinced that Kazakhstan will have oil for Russian pipelines, too. The negotiations over expansion of the Caspian Pipeline Consortium are proceeding based upon the assumption that Tengiz oil is to be available for export.
Anna Annenkova of Barrel Investments agreed with Nesterov. "Boosting production through deployment of new oil fields, Kazakhstan will have enough oil for both pipelines," she said. "In fact, everything will depend on the pipelines' running capacities."
Vitaly Gromadin of Arbat Kapital, on the other hand, suggested that construction of the new Kazakh pipeline might adversely affect the pipeline running from Burgas to Alexandrupolis . He said development of the Kazakh Caspian System ran counter to plans to extend the Caspian pipeline, now terminating in Novorossiisk. The Kazakh Caspian System is to end in the Turkish Ceyhan.
