Euro-Caspian energy plans inch forward

Azerbaijan’s state oil company SOCAR and Kazakhstan’s state monopoly KazMunaiGaz this month signed an agreement setting out the main principles for a transport system to convey Kazakh oil across the Caspian Sea for entry into the Baku-Tbilisi-Ceyhan (BTC) pipeline and subsequent re-export to world markets.

This represents a step forward in the realization of the Kazakhstan-Caspian Transportation System (KCTS) that, while long discussed, has become Kazakhstan’s response to Russia’s unwillingness and/or inability to implement the long-promised

doubling of the capacity of the Caspian Pipeline Consortium (CPC) line.
The CPC line takes oil from the Tengiz deposit in northwest Kazakhstan across southern Russia to the port of Novorossiisk on the Black Sea, to be loaded onto tankers for transit through the Turkish Strait. But it is also entirely possible that the oil could come from the offshore Kashagan deposit now under development, or even from both. The new document is said to specify quantities of 500,000 barrels per day (bpd) by 2012, rising to 750,000 bpd later.

This bilateral agreement was signed on the side of a larger meeting in the Azerbaijan capital, Baku, this month, which saw another significant pact in which it was agreed to supply Georgia’s natural gas consumption requirements for five years. This agreement represents Azerbaijan’s declination of Russia’s recent commercial offer for purchase of all of Azerbaijan’s gas production. While the commercial basis of the offer was excellent, Azerbaijan President Ilham Aliev averred non-commercial interests that must be considered.

The recent Baku meeting marked the second anniversary and fourth ministerial-level follow-up to the November 2006 Baku initiative, itself a follow-up to a 2004 conference that, in the words of the European Commission (EC), “set the stage for a new cooperation” among the EC, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkey, Ukraine and Uzbekistan. Russia was present in 2004 and 2006 as an observer but did not respond to an invitation to send a representative to the most recent meetings.

Asia Times