Russian authorities have extended restrictions on shipments of oil from three major Western-led developments in Kazakhstan that need to cross Russian territory to an export terminal near the Russian Black Sea port of Novorossiysk.
The Russian Energy Ministry said a further 10 days had been added to the restrictions on the Caspian Pipeline Consortium-operated pipeline, which carries crude from Kazakhstan’s Tengiz, Kashagan and Karachaganak fields to its terminal at Novorossiysk for export to international markets.
Caspian Pipeline had to halt operations at two of the terminal’s three marine loading buoys on 15 June to allow the Russian Emergency Situations Ministry to carry out a seabed mine survey.
The survey is now scheduled to be completed on 5 July instead of 25 June, according to the Energy Ministry.
The ministry added that shipments of oil from Kazakhstan “have been reduced slightly, however, remain within the agreed schedule”.
Caspian Pipeline declined to comment on the ministry’s statement.
Caspian Pipeline said last week that earlier preliminary surveys revealed “hydroacoustic and magnetic targets have been identified that require additional examination and disposal”.
It added that “in the past, coastal sea areas [where the export terminal operates] have repeatedly been a war zone”, in an apparent reference to World War 2.
However, the Russian invasion of Ukraine has significantly increased risks of navigation in the Black Sea, as both sides are understood to be laying sea mines.
Russian regulations require the elimination of “residual mine danger” before the start of operations that touch the seabed, the company added.
Setbacks
The extended restrictions are the latest in a series of recent setbacks for Caspian Pipeline, which had said earlier that it needs to replace two of its three loading buoys with new units, although it was unable to confirm the replacement schedule.
A severe storm in March damaged two of the buoys — including one of those scheduled for replacement — forcing the terminal to temporarily halt loading operations.
Loading operations resumed a few days later, but at a reduced rate while Caspian Pipeline carried out extensive inspections of all three buoys and their subsea connections.
Normal loading did not resume until the end of April.
Also in April, Russian state technical compliance watchdog Rostekhnadzor carried out a series of unscheduled inspections of a segment of the pipeline that transits Russian territory.
As well as the loss of transportation revenues following the continued loading restrictions, Caspian Pipeline said it faces a further expense after losing an appeal against a fine from Russian environmental watchdog Rosprirodnadzor.
Rosprirodnadzor had fined the operator about 5.3 billion rubles ($96 million) over a spill at the terminal of about 3000 barrels of oil following an accident on a loading buoy in August.
A higher-level appeals court backed Rosprirodnadzor, despite the operator arguing that, even in a worst-case scenario, no more than 540 barrels could have been spilled into the sea from the buoys’ faulty facilities.
Expansion plans
Despite the setbacks, Caspian Pipeline’s expansion plans are still expected to be completed before the end of 2023.
The company began de-bottlenecking upgrades to pumping stations and the pipeline network in 2019, with the aim of increasing the 1500-kilometre pipeline’s throughput capacity for Kazakhstan producers to 545 million barrels per annum from the current 503 million barrels, at an estimated cost of $600 million.
The upgrade is also expected to boost the capacity for Russian volume suppliers to 79 million barrels per annum.
The Russian government holds a 31% stake in Caspian Pipeline — the largest single minority shareholding in the consortium — but a combined 50% is controlled by privately held companies, led by US supermajor Chevron.
Chevron also heads the Tengizchevroil partnership operating Kazakhstan’s Tengiz field and is involved in the Karachaganak development alongside Eni and Shell. Eni, Shell, TotalEnergies and ExxonMobil are among the partners developing Kashagan.
