Disruption to Caspian oil pipeline adds to Kazakhstan's woes

Shipping agents have suspended all oil exports from the Caspian Pipeline Consortium (CPC) line due to reported sea storms, putting further pressure on Kazakh oil exports at a time when global oil prices are spiking.

On 22 March, the CPC stated that sea storms damaged one of the three loading facilities at the Russian Black Sea port of Novorossiisk. In an unusual announcement, Pavel Sorokin, Russian deputy energy minister, said that a second loading facility was also impaired. Russia does not normally comment on the CPC pipeline, which is run by an international consortium. The next day, 23 March, agents called off all loadings citing the storm damage as a reason.

The CPC plays an important  role in the global oil trade, 1.2% of all oil exports globally goes through the pipeline. Energy giants Chevron, Exxon Mobil, Shell, and Total use the line to export their production in Kazakhstan's vast oil fields. At the moment the oil market is under severe pressure and the suspension of the pipeline will add further strain.

While U.S sanctions have forbidden the use of Russian oil, they have said that oil exports from Kazakhstan, which passes through Russia, should remain uninterrupted. Nevertheless, the closing of the Caspian line will add further stress on Kazakhstan’s economy, which has already been facing major economic difficulties since the Russia-Ukraine crisis began last month. An executive from an international firm said anonymously that “Eventually the threat is that CPC will force the shut-in of fields in Kazakhstan." The Kazakh government has not yet commented.

The extent of the damage to the pipeline is, however, unclear. One official claimed that there is only limited damage to the pipeline, while another stated that the damage is extensive. Analysts say Russia, who has declared that it will resort to any means necessary to exert leverage on "enemy" countries, may be using the storms to its advantage. Paul Donovan from UBS said, “There may well be storm damage, but it is politically well-timed storm damage."

One energy official in Kazakhstan suggested that the country will look to work with Russia to create alternative routes for their oil if the pipeline remains suspended. Earlier this week, Russian Deputy Prime Minister Alexander Novak said Moscow and Nur-Sultan have agreed to establish a working group to increase oil transit to China to make up for the shortfall in exports to Europe.

 

Sources: CommonSpace.eu with Reuters (London), Eurasianet (New York), and other media agencies.
Picture: CPC terminal in Novorossiisk (CPC)

Related articles

Editor's choice
News
Borrell tells the European Parliament that the situation in Afghanistan was critical, but the EU will remain engaged

Borrell tells the European Parliament that the situation in Afghanistan was critical, but the EU will remain engaged

Borrell underlined that the European Union will make every effort to support the peace process and to remain a committed partner to the Afghan people. "Of course, we will have to take into account the evolving situation, but disengagement is not an option.  We are clear on that: there is no alternative to a negotiated political settlement, through inclusive peace talks.
Editor's choice
News
More than 3,000 Ukrainian prisoners join army to fight against Russia

More than 3,000 Ukrainian prisoners join army to fight against Russia

Thousands of Ukrainian prisoners have expressed interest in a new initiative that offers them the opportunity to exchange their prison sentence for military service. According to Ukrainian Deputy Justice Minister Olena Vysotska, more than 3,000 prisoners have already signed up to contribute to strengthening Ukraine's armed forces. "This response is in line with our expectations when introducing this legislation," Vysotska stated. Furthermore, she noted that up to 20,000 prisoners could potentially be eligible to participate in the programme, with approximately 4,500 having expressed interest thus far. It is important to stress that prisoners convicted of serious crimes such as murder, rape, other sexual violence, and crimes against national security are excluded from this scheme. This development coincides with Ukraine's urgent need for additional troops in its ongoing conflict with Russia. Russia has similarly implemented analogous arrangements for prisoners of war in the context of this conflict.

Popular

Editor's choice
News
More than 3,000 Ukrainian prisoners join army to fight against Russia

More than 3,000 Ukrainian prisoners join army to fight against Russia

Thousands of Ukrainian prisoners have expressed interest in a new initiative that offers them the opportunity to exchange their prison sentence for military service. According to Ukrainian Deputy Justice Minister Olena Vysotska, more than 3,000 prisoners have already signed up to contribute to strengthening Ukraine's armed forces. "This response is in line with our expectations when introducing this legislation," Vysotska stated. Furthermore, she noted that up to 20,000 prisoners could potentially be eligible to participate in the programme, with approximately 4,500 having expressed interest thus far. It is important to stress that prisoners convicted of serious crimes such as murder, rape, other sexual violence, and crimes against national security are excluded from this scheme. This development coincides with Ukraine's urgent need for additional troops in its ongoing conflict with Russia. Russia has similarly implemented analogous arrangements for prisoners of war in the context of this conflict.