Tokayev looks to Caspian Sea to diversify oil export routes – The Diplomat


Crossroads Asia | Economy | Central Asia

Kazakhstan is eyeing the potential of a Trans-Caspian pipeline again, but are plans to diversify oil export routes just hooking the Kazakh economy to a doomed fossil fuel industry?

Kazakh President Kassym-Jomart Tokayev has called the diversification of oil export routes, especially the Trans-Caspian option, a “priority” in a July 7 government meeting. Although Tokayev did not mention Russia directly, the comments came days after a Russian court ordered a suspension of operations in Novorossiysk, the Russian port that handles the majority of Kazakhstan’s oil exports.

Although CPC appealed, which would have delayed the suspension of operations, the incident follows a number of disruptions in Novorossiysk over the past year which illustrate the vulnerability of Kazakhstan’s most lucrative industry. to disturbances.

As Paolo Sorbello explained earlier this year“Now, [CPC] carries two-thirds of Kazakhstan’s oil exports. This represents around 40% of Kazakhstan’s total exports. It is a significant liability for such a critical sector to be dependent on a foreign choke point. Of spills at stormsmany risks can interrupt operations before taking into account the often substantial, but more difficult to measure, influence of politics.

Diversification would seem to be the obvious solution, but the difficulties in achieving it are just as obvious. As a landlocked country, Kazakhstan depends on the territory of other countries to see its oil reach world markets, regardless of the direction in which the oil is flowing. In addition to CPC, which transports oil from Kazakhstan’s Atyrau province through southern Russia, Kazakhstan can transport oil via the Uzen-Atyraui Samara Pipeline in Russia and from there via the Russian gas pipeline network to the Baltic terminal at Ust-Luga or Novorossiysk on the Black Sea. Then there is the Kazakhstan-China pipeline network. Kazakhstan also ships oil by rail and tankers across the Caspian, but at much lower volumes.

Trans-Caspian oil and gas routes have long been envisioned, but none have yet been realized.

Like this article ? Click here to register for full access. Just $5 per month.

Tokayev’s call for a rapid diversification of export routes is “an unrealistic goal to achieve in the short term”, Luca Anceschi, lecturer in Central Asian studies at the University of Glasgow, told The Diplomat. “[P]Ipelins are expensive energy infrastructures which, in order to be built and commissioned, require lengthy negotiations with transit partners and, above all, buyers.

Tokayev’s insistence that the ‘priority direction’ of oil diversification is the Trans-Caspian route resuscitates efforts by his predecessor, Nursultan Nazarbayev, to transport more oil across the Caspian Sea to Azerbaijan and then on to Europe . In 2006Kazakhstan and Azerbaijan have signed a framework agreement on a trans-Caspian oil transportation system, although that leaves open details of whether the planned system would include an undersea pipeline or increased tanker transportation. By 2009the public energy companies of the two countries have agreed to carry out further feasibility studies and during a visit by Nazarbayev to Francethe then Kazakh President announced the “Participation on the French side in the project to build the main export pipeline from the Caspian Sea to Baku and Europe.

More than a decade later, there is still no pipeline across the Caspian. Whether Tokayev’s recent emphasis on diversifying oil export routes will actually advance the process is unclear, but arguably unlikely.

More importantly, the diversification of oil export routes is only worsening Kazakhstan’s economy in an industry that many see as inevitably doomed as climate change drives a hoped-for global shift away from fossil fuels. .

“The regime’s stubbornness to keep the entire structure of the economy dependent on the energy sector will one day come up against the reality of the post-oil world,” warns Anceschi. “At that time, it is reasonable to expect a dramatic economic crisis: the leaders of a new Kazakhstan must be prepared to mitigate the risks associated with this scenario, because a post-rentier economy is not only more stable but also… and perhaps crucially, given the socio-economic grievances that continue to arise from Kazakh society – a fairer economy.

Previous Domestic Crude Production Holds 2022 Peak as Demand Rises; OPEC chief dies
Next The peso is now the worst student in the region