Trans-Caspian Pipelines: A New Frontier for Kazakhstan's Oil and Gas Industry

A significant agreement was reached in Washington on Wednesday, where Nurlan Kapparov, president of Kazakoil, signed an agreement with three Western oil firms to study the feasibility of building trans-Caspian pipelines to ship oil and gas to Turkey and Western markets. This move comes as the Caspian Pipeline Consortium (CPC) plans to build a pipeline to carry approximately 560,000 barrels per day (b/d) from the giant Tengiz field in landlocked Kazakhstan across Russia to the Black Sea port of Novorossiisk. In a separate development, Kazakoil and executives from Chevron Corp., Mobil Corp., and Royal Dutch/Shell Group signed an agreement to conduct a feasibility study of a unified system of oil and gas pipelines running from western Kazakhstan to Baku, Azerbaijan, and then to the Turkish Mediterranean port of Ceyhan.

Key Takeaways:

• The agreement signed by Nurlan Kapparov with Western oil firms aims to study the feasibility of building trans-Caspian pipelines to ship oil and gas to Turkey and Western markets.
• The Caspian Pipeline Consortium (CPC) is planning a pipeline to carry approximately 560,000 b/d from the Tengiz field in Kazakhstan across Russia to the Black Sea port of Novorossiisk.
• Kazakoil and executives from Chevron Corp., Mobil Corp., and Royal Dutch/Shell Group signed an agreement to conduct a feasibility study of a unified system of oil and gas pipelines from western Kazakhstan to Baku, Azerbaijan, and then to the Turkish Mediterranean port of Ceyhan.
• The 12-month study is being financed by the three Western firms, and is aimed at identifying a second major export pipeline to complement the CPC project.
• Azerbaijan International Operating Co. (AIOC) has several options for building a pipeline, but pressure from the United States is pushing for the more expensive route to Turkey.

Statistics:

• The planned pipeline by the Caspian Pipeline Consortium (CPC) will carry approximately 560,000 b/d of oil.
• The feasibility study will run for 12 months, during which time the three Western firms will finance the project.
• The study aims to identify a second major export pipeline to complement the CPC project.

Sources:

• [1] Richard Morningstar, quoted in the article, USA's Caspian policy coordinator.
• Kazakoil, quoted in the article.
• Chevron Corp., Mobil Corp., and Royal Dutch/Shell Group, quoted in the article.
• Energy Department, quoted in the article.