Project for construction of southward oil pipeline in Kazakstan doubted by Chinese

/IRBIS, Apr 4, 01/ - The GSRW informs that the President of CNPC International Ltd. has stated at a press conference in Aktobe that the implementation of the once widely-acclaimed project for the construction of an oil pipeline from Kazakhstan to China "is not foreseen in the short term". The official explanation is veiled: insufficient clarity as regards the availability of hydrocarbons in the region. Let us remind you of the background to the project. In 1997, during the tender privatization of Aktobeneft, the Chinese party undertook to construct an oil pipeline from Kazakhstan to China. Construction was to comprise three stages: - the Kenkiyak-Kumkol section, which in the early stages was supposed to supply oil from the Aktobe and Kumkol fields to the Shymkent and Pavlodar Refineries (now known as SHNOS and the Pavlodar Petrochemical Plant). The section is 785 km long, has a capacity of 12-15 mln tones per year, and is 28 inches in diameter; - the Atyrau-Kenkiyak section, delivering oil from the Aktau and Atyrau regions to the Shymkent and Pavlodar Refineries. This section is 410 km long, has a capacity of 5-6m tones per year, and is 20 inches in diameter. (Feasibility studies and surveys for these two sections were carried out as early as 1994); - the third stage included the construction of a section from an oil-transfer terminal on the Pavlodar-Shymkent oil pipeline directly to the Chinese border. The decision to begin the section there was based on the fact this is a main terminal for blending oil. The total length of pipeline to be laid from Karakoin to the Chinese border was supposed to be 200 km shorter than any other prospective model. The total project cost was estimated at about $3 bln, given that a minimum of 20 mln tones of oil would be pumped annually. This project was all the more attractive as Kazakhstani hydrocarbons could be delivered not only to the western provinces of China, but also to the South-East Asian coast. I believe the real reasons behind the statement are quite different. To all appearances, the Chinese party did not ever intend to fulfil the obligations it undertook during the privatization of Aktobeneft. Then, the principal objective was to gain the controlling stake in the third largest (in terms of oil production and reserves) petroleum company in Kazakhstan at a bargain price. This argument may be supported by the numerous breaches of legislation recorded at CNPC-Aktobemunaigas (which GSRW has reported several times). Now that just over a quarter of the state shareholding has been transferred to the US company Access Industries, Inc. for trust management, and the Kazakhstani party has begun filing claims seeking the fulfillment of contractual obligations, the situation for CNPC has obviously changed for the worse. Therefore, we have every reason to assume that CNPC International's statement was not a diplomatic tactic, as it is clear that any third party willing to finance this project will have to take account of Chinese interests. The Great Silk Road World News Agency 7, Gainsford Street, London, SE1 2NE, U.K. TEL/ FAX 44 0171 403 20 37 greatsilkroad@btinternet.com