On July 6, 2022, the Primorsky District Court decided to suspend activities of the Caspian Pipeline Consortium-P (CPC) JSC for 30 days. It is the third stop of the pipeline since the beginning of the year.
CPC is the main export route of Kazakh oil to the international market. About 80% of all crude oil from Kazakhstan is transported in this direction. In general, more than 90% of Kazakhstan’s oil is transported through the territory of Russia.
The figure shows: the volume of exports for 2021 (million tons) and the maximum/design capacity (million tons/year) of oil pipelines
Against favorable international energy market conditions the loss of profit through CPC will cost 5% of an annual budget revenue. It will be a highly influential force in the economy of Kazakhstan, especially considering that oil occupies 52% of the country’s export positions.
In our view, due to the lack of proper transport and transit infrastructure it will be difficult for Kazakhstan to diversify oil exports in the near future. An international consortium, which includes Russia, Kazakhstan and leading mining companies in the world (Russia – 24%, KazMunayGas National Company JSC – 19%, Chevron Caspian Pipeline Consortium Company – 15%, LUKOIL INTERNATIONAL GmbH – 12.5%, Mobil Caspian Pipeline Company – 7.5%, Rosneft-Shell Caspian Ventures Limited – 7.5%, CPC Company – 7%, BG Overseas Holdings Ltd – 2%, Eni International N.A. N.V. S.ar.l. – 2%, Kazakhstan Pipeline Ventures LLC– 1.75%, Oryx Caspian Pipeline LLC– 1.75%), it is necessary to settle the matter with the suspension of CPC as soon as possible.
In addition, Kazakhstan need to diversify the energy resources supply that transit through the infrastructure of the Russian Federation in order to compensate for financial losses. There are alternative ways to export oil through the Atyrau-Samara pipeline and in the direction of China. However, these directions are limited and require a pipeline capacity increase.
In the near-term and long term outlooks, Kazakh oil can be transported to the West through the Baku–Tbilisi–Ceyhan oil pipeline. However, this route also requires capital-intensive investments and the purchase of oil tankers for transportation to the port of Baku.
Moreover, Kazakhstan exports oil not only to the West, but also to the East to China. In the Chinese direction, it is necessary to increase the capacity of the Atasu-Alashankou oil pipeline – a part of Kazakhstan–China trunk oil pipelines general system.