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  • Kazakh Oil And Gas Worries

    KAZAKH OIL AND GAS WORRIES

    New Europe
    http://www.neurope.eu/articles/89452.php
    Se pt 1 2008
    Belgium

    Georgian conflict may jeopardise Caucasus energy corridor

    The latest events in the Caucasus jeopardise many of Kazakhstan's
    plans with respect to transportation of its strategic goods - oil and
    gas - by the southern route. The Caucasian corridor that Kazakhstan
    considered until recently, as an alternative transport route may
    prove the most unreliable.

    Kazakhstan has signed an agreement with Azerbaijan to transport its
    crude to the world markets by the Baku-Tbilisi- Ceyhan oil pipeline
    (BTC). Long before the conflict broke out, when speaking about the
    transit potential of the Caucasus, Azerbaijan President Ilham Aliev
    said that the future of such major oil and gas project as the BTC
    would depend on stability in that region.

    The first alarming news that the world media reported two weeks ago
    was a fire in the BTC. The pumping of crude from Baku was stopped. The
    Turkish media reported that a Kurdish terrorist organisation took
    the responsibility for the explosion on the BTC.

    While the Azeri leader referred to Nagorno Karabakh when he raised the
    stability issue, the Georgia-A bkha - zia-Ossetia situation was no less
    worrisome. Georgian Economic Development Minister Ekaterina Sharashidze
    told a press-conference in Tbilisi that "We cannot disregard the
    attempts of the Russian aviation to bomb the oil and gas pipelines."

    Although the Kazakh crude is not yet transported by the BTC, many
    Kazakh experts predict that the latest developments will make the
    owners of crude think hard about using the other directions to
    transport their crude.

    During a teleconference in Astana, Kazakhstan Prime Minister Karim
    Masimov directed the ministry of energy and mineral resources and
    the national oil and gas company KazMunaiGas (KMG) to consider
    re-orientation of exports of crude from the Caucasian corridor
    to the internal market. According to KazMunaiGas President Serik
    Burkitbaev, about one million tonnes of crude could be pulled out
    from the Caucasian corridor.

    Commenting on the words of the KMG leader, a Kazakh oil expert
    told New Europe that "one million tonnes of crude is not big enough
    volume for us to regret." However, such a situation is not good for
    Azerbaijan and Georgia who are going to lose profits from transit of
    crude through their territories, he said.

    He also doubted that with the current high prices for crude, oil
    companies would be willing to send about one million tonnes of
    crude to the internal market. "If the northern direction, that is
    through Russia, is fully packed (the expansion of the Caspian Pipeline
    Consortium being on hold), these volumes are most likely to go either
    to China, or through Iran," the expert concluded.

    In spite of the distance, the Kazakh oil companies have been seriously
    concerned over the events in Northern Ossetia and Georgia. As is
    known, last year the national company KazMunaiGas became the 100
    percent owner of the Batumi port on the Black Sea. The information
    agencies have reported bombing damages to another Georgian port on
    the Black Sea, Poti.

    At a government meeting, Burkitbaev said that although the Batumi
    port did not suffer as a result of the situation at the Caucasus,
    the concerns were still there. The Batumi port did not suffer like the
    Poti port did. But we have removed all the bulk carriers and tankers
    that were in the loading area. However, the concerns are still there.

    As New Europe wrote earlier, with the purchase of the terminal in
    Batumi, Kazakhstan had plans to transport its crude through it and
    through the Azeri-Georgian oil pipeline Baku-Supsa, to a refinery
    in the Romanian port of Constanca. As the 75 percent owner of the
    oil concern Rompetrol, the Kazakh national company nurtured ambitious
    plans to enter the European market. Now, in the light of the situation
    in Georgia, these plans are also under a threat of frustration.

    "Kazakhstan can still deliver its crude to Romania by the Russian
    oil pipeline Atyrau-Samara. However, we are not losing hope that
    by the time of the big Kazakh oil, the situation in the Caucuses,
    in particular, in Georgia, will normalise," the Kazakh oil expert
    told New Europe.
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