ASTANA, BAKU ENERGY COOPERATION

DMITRY VERKHOTUROV,
Independent journalist, Moscow
The agreement on strategic oil and gas cooperation signed by Azerbaijan and Kazakhstan during the two-day visit of Azerbaijani President Ilham Aliyev to Kazakhstan continues development of the Baku-Ceyhan pipeline project.
Kazakhstan is the main supplier for the Baku-Ceyhan oil-pipeline, its contribution is about 25 million tonnes. But before the Kazakh oil is pumped into the pipeline, it has to be transported via other means. In 2006 10 million tonnes of oil were transported via the port of Aktau, its greater part went through the Baku-Ceyhan oil-pipeline.
The transportation problem can be solved by constructing a submarine branch of oil-pipeline between Kazakhstan and Azerbaijan. About 30 million tonnes of oil are most likely to be run through it, thus covering the demands of the Baku-Ceyhan oil-pipeline. The agreement on oil transportation provides for gradual supply growth from 3 to 7-10 and, later on, to 25 million tonnes.
As regards the diversification of oil exports, Kazakhstan has done enough to become less dependent on Russia. The Russian pipelines used to export up to 90 percent of the Kazakh hydrocarbons, while the present figure is 72%. Russia’s share may have been reduced up to 65% by 2011.
Kazakhstan would like Russia’s share to be decreased. The only restriction is too low capacity of the Baku-Ceyhan oil-pipeline. The fact is that when the oil-pipeline was designed, its capacity of 50 million tonnes seemed to be fabulous.
After the construction had been completed, the situation came to be totally different. Engineering capabilities failed to keep up with oil production.
Apart from that, Kazakhstan regards Azerbaijan as a better partner than Russia. If Astana cooperates with Baku, it has fewer political problems and disagreements over transit tariffs.
I believe that in several years the countries may start constructing another Baku-Ceyhan oil-pipeline. The only project Russia could offer to Kazakhstan is “Eastern Siberia – Pacific Ocean” pipeline. But it would require construction of an extra branch from Kazakhstan, 1.5-2 thousand kilometers long. That means it will be put into operation only in 2012-2015.
More than that, Russia is interested in the Kazakh pipelines going to China. Russia exports oil and gas mainly to Europe, particularly to its northwest, while Kazakhstan is interested in different routes.
Russian company “Transneft” could step up the Kazakh oil feed to the existing oil-pipelines. But I do not believe it will happen because so far “Transneft” has not done that.
August 9, 2007
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