Kazakhstan seeking stake in Russian-controlled pipeline

Apr 04, 2007 02:00 AM

Kazakhstan wants a stake in a key Russian-controlled oil pipeline that bypasses Turkey's busy Bosporus in a move that would allow the Central Asian nation more access to European markets, the Kazakh energy minister said.
Speaking during a visit to Azerbaijan -- another oil- and gas-rich ex-Soviet republic -- Energy and Mineral Resources Minister Baktykozha Izmukhambetov said the Kazakh government could start talks with Greece and Bulgaria after it finishes consultations with Russia on the deal.
"The tentative understanding is that we will get part of the 49 % share of Greece and Bulgaria in the project," he said.

The 175-mile (280-km), $ 1.2 bn (EUR 900 mm) pipeline runs from Bulgaria's Black Sea port of Burgas to Alexandroupolis, in northern Greece. Three state-owned Russian firms control 51 % in the venture, leaving EU-members Bulgaria and Greece with 24.5 % each.
By taking stake in the pipeline, Kazakhstan will be able to further increase crude exports, shipping to world markets via the Russian Black Sea port of Novorossiysk. Kazakhstan is a major oil and gas producer whose export routes have long been dominated by Russia. In recent years, China, Western nations and other ex-Soviet republics have angled to develop new pipelines and shipping routes to help Kazakhstan and other Central Asian nations to increase exports and avoid Russia.

Izmukhambetov also said Kazakhstan, which is steadily increasing production as its Tengiz offshore fields, wanted to speed up talks to expand the Caspian Pipeline Consortium project running along the Caspian's north to Novorossiysk.
Russia and Kazakhstan have long been at loggerheads over plans to double the pipeline's capacity to 1.34 mm bpd. The expansion is vital for Kazakhstan to increase its oil exports to some 3 mm bpd in the next decade. Russia, however, has resisted the move, which would put millions of tons of oil in competition with Russian oil for the limited number of tankers allowed from Novorossiysk through the overcrowded Bosporus.

Izmukhambetov said Russia had indicated a willingness to expand the CPC pipeline in parallel with the Burgas-Alexandroupolis pipeline.
Kazakhstan also signed a memorandum of understanding in January with several international companies outlining a new export route for Kazakh oil, using tankers to transport the oil across the Caspian Sea. The tankers would ship the crude to Azerbaijan for pumping into the Baku-Tbilisi-Ceyhan pipeline, which now carries Azerbaijani oil to a port on Turkey's Mediterranean coast -- bypassing Russia altogether.

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