Russia may suspend the pumping of oil from Kazakhstan. Is there an oil shortage in Europe and why did this happen after the transfer of Tokayev from the EU
In the past few days, a conflict has been developing in the oil market, which could intensify the energy crisis in the EU. Kazakhstan, which is one of the five major oil associations in Europe, recently concluded a member of the Council of Europe, Charles Michel, who is ready to help them with energy supplies. The next day, Russia threatened to temporarily stop the export of Kazakh oil through the port in Novorossiysk, citing problems with the documentation at the enterprise. Whether the shortage of oil in the EU will provoke the situation, whether Kazakhstan can find an alternative route for exports and how all this will affect its relations with Russia – in the RTVI material.
What happens to oil exports from Kazakhstan?
4 July Kazakhstan is determined help Europe intercepted the shortage of oil and gas. President of the country Kassym-Jomart Tokayev, in a telephone conversation with EU President Charles Michel, said that Kazakhstan “gis ready to use its hydrocarbon potential to monitor the situation in European and European markets.”
Kazakhstan is one of the five largest European countries, most dependent on the economy of Southern Europe. To a lesser extent, it sends oil to India and China. About 80% of Kazakhstan’s oil exports go through the Caspian Pipeline Consortium (CPC). He connects Kazakhstani fields with the port in the city of Novorossiysk, from where oil is loaded onto tankers for delivery to the southern countries of Europe and the USA. Thus, Kazakhstani oil exports, in fact, “dependent from one pipe.
The capacity of the CPC is 67 million tons of oil per year. Main shareholders of the pipeline: Russia represented by the Federal Property Management Agency (31%), the national Kazakh company KazMunayGas (20.75%), Chevron (15%), Lukoil (12.5%), Exxon (7.5%), Rosneft-Shell Caspian Ventures Limited (7.5%). The project has 11 shareholders in total.
The day after Tokayev’s conversation with the head of the EU oil deliveries from Kazakhstan through the CPC came under threat. On July 5, the Primorsky District Court of Novorossiysk, at the request of Rostransnadzor, decided to block the sea terminal for 30 days due to environmental conditions. The state commission said it had found “several documented cases of accidental oil spills.” The CPC has discussed this decision, and while this is happening, the flow of oil continuehowever, the threat of temporary blocking still haunts the enterprise.
Interruptions in the supply of oil from Kazakhstan through Novorossiysk have already happened. In March, due to the breakdown of two of the three offloading devices as a result of a storm, oil pumping through the CPC was first completely stopped, and then went on in a reduced mode for a month. Exports are repeatedly suspended in order to clear the waters of Novorossiysk from a bombing temporary war.
This requirement did not end with the pumping of oil through the CPC. On July 6, an accident occurred at the birthplace of Tengiz, not far from those that are being delivered through CPC. Due to pipe explosion tragedy two and occupied three workers. The Tengiz-Novorossiysk pipeline, 1,511 km long, produces more than two-thirds of Kazakhstan’s total export oil. However, the Tengizchevroil company assured that there was no accident on production.
Against the backdrop of all the problems that hit the CPC in just a couple of days, the President of Kazakhstan worked out an alternative route for oil exports and named the Trans-Caspian route, which bypasses Russia, as a priority. It passes through China, Kazakhstan, the Caspian Sea, Azerbaijan, Georgia and from Europe. Its minimum throughput is 4.5-5 million tons, the maximum is 27 million tons per year. Tokaev instructed national oil and gas company “KazMunayGas”work on an observable implementation this project Tengiz project – they are the American companies Chevron and ExxonMobil.
In addition, the Kazakh oil and gas company CNPC-Aktobemunaigas on July 4 changed the name of the brand of oil supplied for export through Russian seaports to KEBCO (Kazakhstan export blend of crude oil). The company said that this was done in order to separate it from Russian-produced oil “due to recent emissions and geopolitical changes.”
What will be the consequences of problems with oil exports?
Probable the suspension of shipments of Kazakh oil could “aggravate problems with the availability of fuel in the world, especially in European countries,” Igor Galaktionov, an expert on the commodity market at BCS World of Investments, told RTVI. Last year, Kazakhstan’s supply through Novorossiysk was about 1.2 million barrels per day, and only a fraction of that could be handled by alternative routes, he says.
Largest deficit Southern Europe and Mediterranean, Japan Head of the Institute for Energy and Finance and Director of the HSE Center for Economic Expertise Marcel Salikhov. “Order 1.3 million barrels, excluding a few days of downtime, is a very large volume, about 1% of the total international traffic,” he said.
During the suspension of the CPC in the spring The Ministry of Energy of Kazakhstan estimated absorption oil in 300-350 thousand tons, which, however, could be screwed up for the remaining time this year. Damage was estimated at about $220-330 million. In January-May Kazakhstan exported 27 million tons of oil for $10.5 billion.
At the same time, the suspension of oil pumping in Kazakhstan will cause an increase in demand for Russian oil, Salikhov oil. The countries of Southern Europe actively continue to import Russian oil.
Oil prices have not yet reacted to these developments, as supplies through the CPC are still ongoing. The consortium appealed against the decision of the court, the parties can still agree. In the event of a suspension of pumping, oil prices will rise, exports of Salikhov. While macro, they have more risks of a global recession and other economic factors that are not directly related to the oil market.
Why did problems with the CPC arise after Tokayev’s conversation with the EU?
Experts interviewed by RTVI say that problems with pumping oil through the CPC are caused by “political” choices. “This is an absurd reason. there was no oil spill. Ecology is used as a pretext for committing crimes,” economist Almas Chukin told RTVI. In his opinion, the wording of the decision of the court of Novorossiysk “discredits itself.”
It is possible to eliminate defects in documents without stopping, the most optimal industrial punishment would be a fine, the economist is sure. “The oil terminal is not a toy that can be turned off and on. A complete stop of a sustainable cycle is impossible without serious consequences, ”also Chukin.
Kazakhstan is now in a developing situation – the state is opposed to the balance with Russia and does not spoil relations with the West. Yes, Kazakhstan does not intend The victims of Russia were accused of extradition, Timur Suleimenov, deputy head of the presidential administration of Kazakhstan, said in an interview with the European portal Euractiv: “The last thing we want is for secondary portals to be presented to Kazakhstan.” Draft order of the Ministry of Finance of Kazakhstan, which will soon prohibit the imposition of sanctions in Russia.
Tokayev, in Vladimir Putin’s closest Vladimir, called the Donetsk and Luhansk People’s Republics “quasi-private entities” and said that Kazakhstan did not intend to recognize them. He also stressed that not Russia, but Collective Security Treaty Organization (CSTO) Congress of peacekeepers during mass protests and this congress in Kazakhstan in January of the year. “Nwho misinterpret this situation, claiming that Russia saved Kazakhstan, and Kazakhstan should now forever serve and bow at the feet of Russia. I believe that this is completely unjustified reasoning, far from reality, ” declared Tokaev.
At the same time, Kazakhstan, among 35 states, spoke out during the voting of the UN General Assembly upon detection of suspicious activity against Russia in Ukraine. Kazakhstan was also against the exclusion of Russia from the UN Council on Human Change. President Tokayev has visited Russia since the beginning of the year, at the CSTO summit in May and the St. Petersburg (SPIEF) summit in June.
Russia is the main trading partner of Kazakhstan
According to the Bureau of National Statistics of Kazakhstan, in 2021 Russia received 23.9% ($24.2 billion) of total trade and 42.1% ($17.3 billion) of imports. China accounted for 17.9% of trade turnover and 20.2% of imports, 27 appliance countries accounted for 29.6% of trade turnover and 14.5% of imports. From Russia, Kazakhstan buys, among other things, industrial and household equipment, industrial fuel and land transport.
The main export markets of Kazakhstan are the EU states (40% of imports), China (16.4%) and Russia (11.5%). The country exports raw materials – oil, as well as copper and gas.
Political scientist Talgat Kaliev, what happened with the withdrawal of Kazakh exports of increased craving for the country’s membership in the Eurasian Economic Union (EAEU). With a critical drop in Kazakh imports through Russia, the CPC requires the use of arguments in the use of one membership in the EAEU, wrote he is in his telegram channel. At the same time, the expert clarified that the revision within the framework of the EAEU covers “a large-scale change in the sources of imports in other markets.”
How else can Kazakhstan supply oil to Europe?
The loss of the terminal suspension at Novorossiysk is forcing Kazakhstan to reorient supply. But in fact, while there is no alternative to CPC in Kazakhstan, it is impossible to urgently reorient the supply, Marcel Salikhov stated. CPC is the shortest and cheapest way to transport oil from Kazakhstan to Europe, save political scientist Olzhas Baidildinov. Other options:
- The Atasu-Alashankal oil pipeline, it drives 12 million tons per year, of which 10 million tons are Russian oil;
- Hoil pipeline Uzen – Atyrau – Samara,and further through the operation of “Transneft” to the Baltic terminal of Ust-Luga.
Along this path Kazakhstan already exports 15% of oil. However, its capacity will not allow increasing the supply by more than 500 thousand tons, the export of Salikhov. In addition, if discovered along this route, oil will be sold cheaper. “In system „Transneft will accidentally mix with Volga sour oil, and as a result, Kazakh oil will be labeled as Russian Urals and sold at a discount,” Salikhov added.
- Pipeline Baku-Tbilisi-Ceyhan
Azerbaijan already exports more than 20 million tons of oil via this route. “Kazakhstan can increase the supply through this channel, but this will close the problem of stopping the CPC by only 30%,” says Almas Chukin. It will take a lot of investment: it is necessary to equip ports in the Caspian, charter tankers, build additional tanks in Azerbaijan, he lists.
- Trans-Caspian route, which is assigned as a priority by Kassym-Jomart Tokayev.
Through it, Kazakhstan could supply oil to Europe bypassing Russia, but for this it is necessary to negotiate with Azerbaijan and charter tankers for search in the Caspian Sea in the conditions of their shortage. “It is impossible to do all this in a month,” Salikhov said. A lot of investments will be required: ports in the Caspian Sea need to be equipped, additional tanks built in Azerbaijan, Chukin added. At best, if the process takes two years, the experts stated.
The situation is complicated by the fact that Kazakhstan has a large investment program related to oil production. “Companies can put plans on pause. “What is the point of investing in oil when it is impossible to grow if the issue of transportation is not resolved,” Chukin said. “It is possible to increase oil supplies from Kazakhstan to China, but this still does not solve the problem of CPC’s loss of 50 million tons of capacity.”
Political scientist Olzhas Baidildinov admitteda decision was made that regarding the work of the CPC, after all, they were found, because the creation of routes bypassing Russia takes a lot of money and time.
Olga Ageeva, Evgeny Pudovkin