Kazakhstan intends to join the widely advertised "oil pipeline of the century" project

Wednesday, October 21, 2020

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Kazakhstan intends to join the widely advertised "oil pipeline of the century" project - Baku-Tbilisi-Ceyhan

The relevant agreement was discussed during the third meeting of the Azeri-Kazakh intergovernmental commission on economic cooperation in Baku on Sunday. The draft of the agreement is among the series of documents planned to be signed during the upcoming visit of Kazakh President Nursultan Nazarbayev to Azerbaijan on May 24. "We have been working on the draft of the agreement for several days. It is basically ready and initialed. I believe its signing will be an event of historic importance," First Vice-Premier of the Azeri Cabinet Abbas Abbasov, who serves as co-chairman of the committee on the Azeri side, told the journalists. He said, more than 3 million tons of Kazakh oil was exported through the Azeri territory in 2004. The expanding transport potential of the two countries will ensure the future increase in the volume of transported goods, including the transportation of Kazakh oil along the Aktau (an oil terminal on the east coast of the Caspian Sea) - Baku route. In his turn, the co-chairman of the committee on the Kazakh side, Minister of Energy and Mineral Resources of Kazakhstan Vladimir Shkolnik announced "all technical issues of coordination regarding the joining of the above-mentioned transport corridor and the Kazakh sub-system Aktau-Baku had been almost solved." During the meeting, the participants also discussed the issues of the development of bilateral economic ties. In particular, Vladimir Shkolnik suggested that the Azeri side should participate in the joint monitoring of ecological and seismic situation in the Caspian Sea region, currently conducted by the Kazakh side. During the upcoming visit of Nazarbayev to Azerbaijan, the sides are expected to sign a series of documents on cooperation in the economic sphere and a political declaration of both presidents. The major problem facing the major opponent of the new oil pipeline project - the Oil Pipeline Consortium (OPC) where Russia plays the leading role - is the insufficient capacity of the existing pipeline. At present, the OPC transports about 28 million tons of oil to the Russian town of Novorossiisk on the Black Sea annually. However, the profitability of its pipeline under current tariffs ($27 per ton) is very low. While waiting for the expansion of the OPC pipeline capacity, the major OPC client, the American Tengizchevroil whose production volume is expected to increase drastically by 2006 (by 10-15 million tons annually) has practically re-oriented its future supplies on the Baku-Tbilisi-Ceyhan oil pipeline, which is almost ready to become operational (all works are completed by 95%).

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