3 Aug 2022 10:40

Kazakhstan will have to resolve issue of diversifying oil exports due to growing output - minister

ALMATY. Aug 3 (Interfax) - Kazakhstan will inevitably have to resolve issues related to diversifying its oil exports due to growing production, and it is considering routes to China and across the Caspian Sea to Iran, Energy Minister Bolat Akchulakov said on Wednesday.

"Oil production is expected to grow to 100 million tonnes by the middle of 2024. Therefore, we will inevitably have to resolve issues with increasing our transportation possibilities," Akchulakov said at a briefing in Nur-Sultan.

Although the Caspian Pipeline Consortium (CPC) route is the most cost effective for exporting Kazakh oil, growing volumes need to be diversified and other routes need to be used, he said.

"We have two main routes: to the east, China, and across the Caspian, if our partners agree to buy oil volumes. There are also possibilities for shipping by sea to Iran, but these are small transactions that have historically taken place in Kazakhstan, up to 5 million tonnes," Akchulakov said.

Kazakhstan is holding talks about new oil export routes with the foreign companies producing hydrocarbons in the republic, Akchulakov said.

"With all our colleagues, companies and partners, we all get together very often to discuss thoroughly all technical details," Akchulakov said.

The minister also explained why the Kazakh president had ordered the government to focus on the Trans-Caspian route involving the partners in the Tengiz project.

"As I mentioned earlier we expect an increase in oil production to 100 million tonnes per year by mid-2024, just after the Future Growth Project is completed in Tengiz, which will add 12 million tonnes to oil production. This additional volume was not taken into account earlier," he said.

Shell Chief Financial Officer Sinead Gorman said earlier that Shell was working with partners on alternative routes for oil exports from Kazakhstan.

Kazakh President Kassym-Jomart Tokayev in early July instructed KazMunayGas to work out the best options for implementing the Trans-Caspian International Transport Route (TITR) in order to diversify supplies of Kazakh oil.

TITR is an international transport corridor that runs through China, Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and further to Turkey and European countries. The commissioned Baku-Tbilisi-Kars railway is part of the corridor.

The current main export route for Kazakh oil is the CPC system which accounts for more than 80% of the volumes pumped through the pipeline. The pipeline has a capacity of 67 million tonnes of oil per year.

The need to develop an alternative route for oil exports in Kazakhstan was discussed after reports of a possible suspension in operations at the CPC marine terminal as per the recent court decision on eliminating violations of environmental legislation. This was preceded by restrictions on the operation of the single point moorings (SPM) in connection with the survey of the water area for the presence of explosive devices, though the measures did not affect fulfilling the unloading schedule at the CPC. There was also a halt in shipments for nearly a month from the CPC's SPM in March owing to the consequences of a storm.