Kazakhstan agreed to export part of oil to Europe via Baku

/REUTERS, Almaty, Raushan Nurshayeva, Denis Demkin, June 16, 06/ - Kazakhstan and Azerbaijan after three years of discussion on Friday agreed upon alternative to Russia and China route of export of Kazakh oil, whose annual volume will not exceed 30 m. tons, starting from 3-7 m., informed authorities and sources in the branch. Azerbaijan is interested in transit of oil from Kazakhstan so that 1.768- kilometer pipeline Baku-Tbilisi-Jeykhan (port in Turkey), which cost to investors more than $4 bn., worked at full power - 50 m. tons per annum. Kazakhstan exports "the black gold" primarily by Caspian pipeline consortium, loaded up to maximal 32 m. tons, to Novorossiysk. Since last year Astana has started supplying by oil-pipeline to China, planning 10 m. tons annually with further doubling of volume. "We obtained third alternative way for sale of our hydrocarbon," informed the head of Kazakhstan Nursultan Nazarbayev after signing a contract "on support and assistance of oil transport" in Almaty. Official president site www.akorda.kz quotes the president. It is proposed to deliver the Kazakh oil to Baku by tankers from huge field Kashagan, where the extraction will start only in 2008. "It is difficult to overestimate the significance of the pipeline, to which Kazakhstan joined: now it will become the biggest oil-bearing artery of the region," said Ilgam Aliyev, the president of Azerbaijan. Kazakhstan and Turkey in May came to an agreement about construction of refinery on the shore of the Black Sea, to which Kazakhstan oil will be supplied, particularly, from Novorossiysk. "UNTIL 2030" Companies Eni, ConocoPhillips, Inрex and Total, which form a part of shareholders of Baku-Jeykhan (BTJ), participate in exploitation of Kashagan. In June they claimed that Kashagan consortium will invest $4 m. in construction of pipeline from Kashagan to Kazakh port Kuryk in Kazakhstan, establishment of oil terminals and oil trans-shipment point in Azerbaijan. Baku plans to widen capacity of BTJ, and on June 13 negotiated with American Halliburton about this project. Nazarbayev, who also has met with leadership of Halliburton recently, thinks that widening of BTJ will take place, but not soon though. "By 2030 all necessary terminals will have been built and capacity of the pipeline will be increased for priming our oil," he said. Aside from Kashagan, American Chevron, which is the co-founder of Tengizchevroil JV, the biggest oil miner in Kazakhstan, also does not exclude supplies via BTJ since 2007. Kazakhstan extracted 62 m. tons of oil and intends to mine 84 m. tons by 2010 and 150 m. by 2015, exporting the main part of mined oil. Azerbaijan in 2006 planned to produce more than 30 m. tons of oil, and by 2008-09 can double this indicator. TRANSIT LIMIT On the initial stage sides provide annual transportation of 3-7 m. tons of Kazakhs oil by BTJ, a source in oil branch of Kazakhstan informed Reuters on Friday. "Perhaps we will deliver 3 m. tons via Azerbaijan until the end of this year. Technically saying, it is possible," he informed, adding that it can be the oil of Tengizshevroil. Azerbaijan is optimistic in forecasts about volumes of Kazakh transit oil, expecting up to 35 m. tons, which are conveyed by the Caspian Sea annually, however, Astana gives more moderate numbers. "The limit is 25-30 m. tons (a year), not earlier than mining starts in Kashagan," said the source. "Transportation of more than 30 m. tons by tankers is a very big question". He also confirmed that Astana considers unreal the idea of oil-pipeline along the bottom of the Caspian Sea, since the legal status of the pond has not been determined yet. The government of Kazakhstan earlier stated that the project of submarine oil-pipeline to Azerbaijan depends on that how other the Caspian region states - Iran and Russia will act towards it. For the time being they are against. The position of Moscow is determinative for Astana also in the question of joining the other big project - gas pipeline along the bottom of the Caspian Sea bypassing RF. [2006-06-16]