Azerbaijan and Kazakhstan to lay new oil pipeline

Azerbaijan and Kazakhstan to lay new oil pipeline

Azerbaijan and Kazakhstan are planning to lay new Eskene-Kuryk-Baku oil pipeline with a length of 739 kilometers, Azerbaijani Energy Minister Natig Aliyev said.

He noted that Kazakhstan has huge proven reserves of hydrocarbons, which account for 5.5 billion tons of oil and 3 trillion cubic meters of gas.

According to the minister's article, published today, this makes it possible for Kazakhstan to produce 33.6 billion cubic meters of gas and 80 million tons of oil per year, however, the country has no guaranteed independent, reliable and secure oil export route except the Baku-Tbilisi-Ceyhan (BTC) pipeline.

"Capacities of Tengiz-Novorossiysk, Atyrau-Samara and Atasu-Alashankou pipelines and the route of the Caspian Pipeline Consortium are insufficient to meet the growing export potential," Trend cited Natig Aliyev as saying.

He said that considering the capacity of these routes and the volumes of export planned to be achieved, Astana has focused on the Kazakhstan Caspian Transportation System (KCTS).
“The KCTS envisages construction of the Eskene-Kuryk-Baku pipeline with a length of 739 kilometers. The feasibility study of the Eskene-Kuryk section of the pipeline envisages construction of an oil pumping station at the Tengiz field, the Tengiz-Oporny-Uzen-Aktau main oil pipeline, an oil terminal and a new port in Kuryk village, as well as reconstruction and expansion of the port in Aktau city,” the Azerbaijani Energy Minister said.

At the same time he stressed that the construction of this pipeline will enable Kazakhstan to export its oil to ports in Georgia and Turkey. “The initial capacity of the new pipeline will amount to 23-25 ​​million tons per year with the possibility of future expansion to 56 million tons,” the minister noted.

The KCTS must ensure the export of Kazakh oil to international markets mainly from the Kashagan field (second and third phase) via the Caspian Sea, through the Baku-Tbilisi-Ceyhan pipeline and other oil transportation systems both in Azerbaijan and other transit countries.

The head of the Center for Oil Research 'Caspian Barrel', Ilham Shaban, speaking with a correspondent of Vestnik Kavkaza, noted that the pipeline has been scheduled ten years ago. "The intergovernmental agreement was signed between Kazakhstan and Azerbaijan in 2006: a document signed by Ilham Aliyev and Nursultan Nazarbayev provided a gradual increase in pumping Kazakh oil via Azerbaijan to continue its transportation both via the Baku-Tbilisi-Ceyhan oil pipeline and the South Caucasus transport corridor to the world markets. A huge production growth was expected in Kazakhstan due to the development of the Kashagan field, and it was assumed that up to 25 million tons of oil will be transported through Azerbaijan per year," he recalled.

These plans have been postponed due to problems with the development of the Kashagan field. "In the best case, Kazakhstan will be able to produce 20 million tons per year by 2020 at the field. They will be able to reach the level of commercial production, which is 75 thousand barrels per day for Kashagan, only at the end of this year, only 5 million tonnes are planned for 2017. I think that less than one-fifth of this amount will be delivered to foreign markets. Nevertheless, the development of Kashagan opens up a new route to the Kazakh-Azerbaijani oil cooperation," the expert admitted.

"As we can see now, the transportation of Kazakh oil via Azerbaijan fell sharply due to a drop in oil prices, Therefore, we should not expect that significant volumes of Kazakh oil will be delivered to world markets via Azerbaijan in a short time," Ilham Shaban stressed.

"Today's article by the Minister Natig Aliyev specifies the volume of Kazakh oil supplies as 150 thousand barrels per day, that is, 7.5 million tons per year. But it is more profitable to transport volumes less than 15 million tons per year in tankers. In 2025-2030, when Kazakhstan will produce 150 million tons of oil per year, and the price will rise to $100 per barrel, the pipeline can be built. Its cost price - only $2 billion at minimal capacity of 15 million tonnes per year - will cause no problems for the two countries. But now the existing routes to the West and to the East are enough for Kazakhstan with an annual production of 75-78 million tons," he explained.