After lengthy planning to diversify its oil export routes away from Russian pathways, Kazakhstan’s authorities is trying to revive a pipeline venture that appeared to have been shelved. Subsequent 12 months, in reality, development might begin on the Yeskene-Kuryk pipeline, which might join oil producing areas within the west of the nation to the port of Kuryk, on the Caspian shore.
The concept to revive the Yeskene-Kuryk pipeline happened in July 2022, because the Caspian Pipeline Consortium (CPC) was struggling disruptions. The CPC transports round 80 % of Kazakhstan’s oil exports by way of Russia to the Black Sea port of Novorossiysk.
After Russia’s assault on Ukraine in February 2022, Kazakhstan-based producers, which embody a number of the world’s largest oil firms, feared that the CPC would change into a possible goal of Western sanctions aimed to hinder Russia’s conflict effort.
Plenty of disruptions, some weather-related, some court-ordered, and a few arguably politically-motivated, led Kazakhstan’s President Kassym-Jomart Tokayev to instruct state-owned oil firm Kazmunaigas to revamp the 739-km pipeline from Yeskene to Kuryk.
The aim is twofold. First, it will diversify export routes, permitting growing volumes of Kazakhstan’s crude to keep away from transiting by way of Russian territory. Second, it will spearhead the event of the Kuryk port, which had been within the playing cards for a minimum of a decade, however has not but seen the fast growth the authorities have been hoping for.
Kazmunaigas must make investments round $1.5 billion to construct the pipeline, a sum equal to two-thirds of final 12 months’s web revenue.
Yeskene is a small village close to Atyrau, the nation’s so-called oil capital. Within the mid-2000s, it was indicated as a possible hub for the development of a further oil and fuel processing facility, after the operators of the Kashagan offshore venture chosen the close by city of Karabatan to construct their large Bolashak plant.
On the time, nevertheless, media commentaries stated the selection of Yeskene would entail potential risks to the native wildlife, particularly within the occasion of business accidents or pipeline leakage. The proximity to the Bolashak plant would “improve the chance of damaging industrial affect on the encircling space,” a fairly impartial report on industrial plans stated.
In 2012, simply earlier than the North Caspian Working Consortium (NCOC) made its first try to kick-start manufacturing at Kashagan, then-Minister of Vitality Sauat Mynbayev said that “the implementation of the second part of Kashagan would require the development of the Yeskene-Kuryk pipeline.”
The identical 12 months, Kazmunaigas paid for the resettlement of dozens of households from the village of Yeskene to town of Atyrau as work on the close by oil fields wound down and native residents struggled to search out jobs.
In 2021, a number of the residents who remained in Yeskene demanded resettlement due to the damaging results the Bolashak plant on their well being. At a press conference, nevertheless, Makhambet Dosmukhambetov, the regional governor, stated a resettlement couldn’t be paid for by public funds.
Now, whereas the CPC continues to be thought of essentially the most dependable and cost-effective route for Kazakhstan’s oil exports, the Ministry of Vitality outlined outsized plans to diversify its overseas commerce technique.
“We’re understanding the difficulty of the development of the Yeskene-Kuryk oil pipeline. We estimate its capability at 20-30 million tons per 12 months,” Minister Almasadam Satkaliyev stated on November 25.
Satkaliyev additionally stated the federal government plans to beef up exports via the Druzhba pipeline (additionally by way of Russia) to Germany to 1.4 million tons per 12 months, a 40 % improve in comparison with final 12 months. Kazakhstan additionally plans to extend exports through the Baku-Tbilisi-Ceyhan (BTC) route.
“In 2024, we plan to produce 1.5 million tons of Kazakh oil by way of [the BTC]. We’re finding out the likelihood to extend provides alongside this route to twenty million tons per 12 months,” Satkaliyev said.
For reference, Kazakhstan pumps 55.4 million tons of oil yearly through the CPC, an quantity that dwarfs all different routes.
The one potential method for Kazakhstan to pump 13 instances extra oil through the BTC can be to each construct the Yeskene-Kuryk pipeline, primarily bringing Kashagan oil to the Caspian shore, after which to significantly grow its fleet of tankers, which might transfer oil to Azerbaijan’s capital after which onward to the Turkish port of Ceyhan.
But, as argued by vitality analyst Askar Ismailov in his Telegram channel, “Transporting such massive volumes of oil by tanker throughout the Caspian Sea doesn’t seem commercially viable.”
Moreover financial issues, Kazakhstan is balancing the potential political penalties of a chronic conflict in Ukraine on the standing of the CPC as a sanctions-exempt infrastructure.
