Pipeline critical to Kazakh oil exports sentenced by Russian court to shut down – The Diplomat

Crossroads of Asia | Economy | central Asia

The timing of the decision has naturally puzzled some, but a more serious consequence is the lack of diversification of export routes for Kazakh oil.

On July 6, a Russian court ordered the Caspian Pipeline Consortium (CPC) to suspend operations for 30 days. CPC transports oil from Kazakhstan to Russia and to the Black Sea coast. Although CPC handles just over 1 percent of the world’s oil, it is critical to Kazakhstan; about 80 percent of Kazakhstan’s oil exports pass through the Novorossiysk Oil Terminal.

The timing of the decision naturally left some bewildered as it came just two days after Kazakh President Kassym-Jomart Tokayev said European Council President Charles Michel. by phone that Nur-Sultan is “ready to use its hydrocarbon potential to stabilize the global and European markets.”

At the beginning of last monthThe European Union imposed a partial ban on Russian oil imports as part of the sixth round of sanctions in response to Russia’s invasion of Ukraine. But the ban on shipping Russian crude oil won’t go into effect until December. As pointed out in a Bloomberg article at the end of June, Russian oil exports to Europe have declined. already started crawling back, mainly due to shipments to Russian-owned refineries in Italy and increased purchases by Turkey. In any case, Europe’s goal is to reduce imports of Russian oil, and Kazakhstan is an option, but Kazakhstan’s exports to Europe depend on Russian pipelines.

The chain of events does not necessarily point to tensions between Kazakhstan and Russia, although some would no doubt draw that conclusion. Rather, at the heart of the problem is the messy job of transporting oil and the restrictions Kazakhstan faces due to a lack of diversification of export routes. With regard to the latter, Kazakhstan faces a geographic conundrum: with Russia or China being the main oil export channels, diversification is not easy.

BUT CPC press release The reason for the shutdown is that at the end of April, Rostransnadzor, the Russian federal agency that oversees transport, including pipelines, ordered an inspection of the company operating the Russian section of the gas pipeline, CPC-R. After the audit was completed in May, “a number of documented violations of the Oil Spill Response Plan (OSP)” were identified.

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On June 6, the CPC issued an order ordering to eliminate the violations by the end of November 2022. But on July 5, Rostransnadzor filed a lawsuit in court for an immediate 90-day suspension of operations in Novorossiysk. The court ruled for a 30-day stay, but the CPC said it would appeal.

While some, as discussed above, will be particularly sensitive to political time, this is far from the first problem in Novorossiysk. As Evraktiv noted:

The terminal in Novorossiysk is frequently closed, and was previously closed in June following a report that 50 World War II explosives were found in port waters. It was also closed in March due to storm damage. During the three weeks of closure, the world market lost about a million barrels of oil.

Indeed, an audit that uncovers problems with an oil spill response plan is not necessarily a shock. AT August 2021, there was a spill in Novorossiysk while loading a Greek tanker. Although CPC said the spill was quickly contained, analysis of satellite imagery by the Space Research Institute of the Russian Academy of Sciences showed that the spill was larger than the company claimed. Yevgeny Lupyan, deputy director of the institute, reportedly said: “It is estimated that we are talking about 40, 60, 80 tons of oil. According to the general opinion, this is much more than the 12 tons declared by the company. A spill of this magnitude is certainly unprecedented for the Black Sea.”

On the June 29, 2022 CPC has paid Russia 5.282 billion rubles ($83.6 million) in damages from the August 2021 Games.