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
Turkey holds delicate talks with Sweden and Finland ahead of a decision on their NATO membership application

Turkey holds delicate talks with Sweden and Finland ahead of a decision on their NATO membership application

Senior Turkish officials have met with government delegations from Sweden and Finland as discussions continue following Ankara's threat to veto the NATO membership application of the two Nordic countries. Most NATO countries have warmly welcomed the decision of Sweden and Finland since their membership in NATO will considerably strengthen the northern flank of the alliance, but Turkey accuses both countries of having an ambivalent position on Turkey's struggle with militant Kurdish groups. On Wednesday, Swedish and Finnish government delegations travelled to Ankara to meet with Turkish representatives in an effort to resolve the country’s doubts regarding their accession to NATO. In their first face-to-face meeting since the two Nordic countries applied for membership, Turkish representatives stressed their security concerns, and conditions regarding Sweden’s “cooperation” with Kurdistan Workers’ Party (PKK). Turkish presidential spokesperson Ibrahim Kalin said in a statement late on Wednesday that positive steps towards the lifting of an arms embargo from Finland and Sweden had been taken. In October of 2019, Sweden and Finland were among some  European states that imposed an arms embargo on Turkey following a military incursion into Syria.

Popular

Editor's choice
News
Turkey holds delicate talks with Sweden and Finland ahead of a decision on their NATO membership application

Turkey holds delicate talks with Sweden and Finland ahead of a decision on their NATO membership application

Senior Turkish officials have met with government delegations from Sweden and Finland as discussions continue following Ankara's threat to veto the NATO membership application of the two Nordic countries. Most NATO countries have warmly welcomed the decision of Sweden and Finland since their membership in NATO will considerably strengthen the northern flank of the alliance, but Turkey accuses both countries of having an ambivalent position on Turkey's struggle with militant Kurdish groups. On Wednesday, Swedish and Finnish government delegations travelled to Ankara to meet with Turkish representatives in an effort to resolve the country’s doubts regarding their accession to NATO. In their first face-to-face meeting since the two Nordic countries applied for membership, Turkish representatives stressed their security concerns, and conditions regarding Sweden’s “cooperation” with Kurdistan Workers’ Party (PKK). Turkish presidential spokesperson Ibrahim Kalin said in a statement late on Wednesday that positive steps towards the lifting of an arms embargo from Finland and Sweden had been taken. In October of 2019, Sweden and Finland were among some  European states that imposed an arms embargo on Turkey following a military incursion into Syria.