Kazakhstan Resumes Negotiations On Trans-Caspian Project

Kazakhstan Resumes Negotiations On Trans-Caspian Project

Officials in Kazakhstan recently resumed negotiations on the establishment of the Kazakhstan Caspian Transportation System, Nefte Compass magazine reports citing its sources.

Project of Caspian oil transportation system was actively discussed in 2007-2009. It was assumed that the KCTS would consist of an Eskene-Kuryk oil pipeline on the territory of Kazakhstan and Trans-Caspian system, including the oil terminal in Kuryk port on the Kazakh coast of the Caspian Sea, tankers and vessels, oil discharge terminals on the Azerbaijani coast of the Caspian Sea and connecting facilities to the Baku-Tbilisi-Ceyhan pipeline system. Then oil would be transported to international markets via Baku-Tbilisi-Ceyhan pipeline or other oil transport systems located at the territories of Azerbaijan, Georgia and Turkey.

But the project was postponed due to the uncertainty of launching production at the Kashagan field and the expansion of Tengiz field in Kazakhstan.

According to the oil workers’ assessment the existing pipelines have sufficient capacity to ensure the export of oil from Kazakhstan in the current volumes.

The KCTS is back on the agenda in connection with the growth of optimism about the future of oil exports due to the beginning of production at the giant Kashagan field and making a final investment decision on the expansion of Tengiz field.

Creation of a transportation system in terms of global energy policies gives a possibility to Kazakhstan oil companies to take advantage of a new direction, providing an access to the port of Ceyhan, bypassing the Turkish straits of Bosporus and the Dardanelles.

This opportunity, in its turn, opens up a cost-effective access to remote oil markets such as America and Southeast Asia. Oil from Kashagan field, as well as from other fields of the Caspian shelf and western Kazakhstan is planned to deliver in this direction.

Kashagan, first discovered in 2000, is considered to be the world’s largest discovery in the last 30 years, combined with the Tengiz Field.

The field is developed by Kazakhstan’s state oil company, KazMunayGas, and a consortium of some of the world’s biggest oil companies, including ExxonMobil and Royal Dutch Shell.

Oil extraction at Kashagan, a large oil and gas field located in the north of the Caspian Sea, was re-launched in autumn 2016. The volume of production and export from the field has already exceeded 1 million crude oil and condensate. LS website reported that the figure of 1 million in export was reached on January 8, 2017.

Currently, the production rate is estimated at 180,000 bpd.

The project participants are KMG Kashagan BV (16.88 percent), AGIP Caspian Sea BV (nearly 16.81 percent), CNPC Kazakhstan BV (8.33 percent), Exxon Mobil Kazakhstan Inc. (nearly 16.81 percent), INPEX North Caspian Sea Ltd. (nearly 16.81 percent), Shell Kazakhstan Development BV (nearly 16.81 percent), and Total E&P Kazakhstan (nearly 16.81 percent).

The field is operated by North Caspian Operating Company BV (NCOC).

Kazakhstan enters the top 15 countries in the world when it comes to essential oil reserves, having 3 percent of the world’s total oil reserves. There are 172 oil fields, of which more than 80 are under development. More than 90 percent of oil reserves are concentrated in the 15 largest oil fields – Tengiz, Kashagan, Karachaganak, Uzen, Zhetybai, Zhanazhol, Kalamkas, Kenkiyak, Karazhanbas, Kumkol, North Buzachi, Alibekmola, Central and Eastern Prorva, Kenbai, Korolevskoye. Oil fields can be found in six of the fourteen provinces of Kazakhstan.

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