OPINION: Kazakhstan and in-country international majors such as Chevron, ExxonMobil, Eni and others have become hostage to Russia, despite gazing at the warning signs for years.
An estimated 96% of the roughly 1.4 million barrels per day crude that Kazakhstan exported in 2021 went via two routes — one operated by the Caspian Pipeline Consortium, the other a link into the Russian system.
In 2021, Caspian Pipeline carried over 1.1 million bpd from the Western-led developments of Tengiz, Kashagan and Karachaganak via a terminal near the Russian Black Sea port of Novorossiysk.
A major storm near the port two weeks ago damaged two of Caspian Pipeline’s three tanker loading buoys, forcing the operator to suspend operations.
The operator said repairs would take at least one month, possibly because international suppliers are being caught by sanctions imposed following Russia’s invasion of Ukraine.
Russia’s unpredictability as an energy transit country was apparent in 2009, when it refused to adhere to a long-term gas contract with Turkmenistan.
Taps were suddenly shut on a gas pipeline exiting Turkmenistan towards Russia, leading to a major accident because of an unexpected pressure build-up.
Yet, western shareholders stuck with the Caspian’s Pipeline capacity expansion, dropping an alternative route from Kazakhstan to Azerbaijan.
Azerbaijan already operates an oil export pipeline across Georgia to the Turkish Mediterranean coast, in which BP holds a stake of over 30%.
Diversification of export and import routes often seems an expensive option, but it usually pays off in the long term.
(This is an Upstream opinion article.)