President of Russia Vladimir Putin (left) and President of Kazakhstan Nursultan Nazarbaev at the signing of the joint statement of the presidents of Russia and Kazakhstan in Almaty, June 17, 2006
Photo: Dmitry Azarov
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Kazakhstan Hops on the Baku-Tbilisi-Ceyhan Line
// A third route for Kazakh oil
On Friday, a few hours before his meeting with Russian President Vladimir Putin in Astana, Kazakh President Nursultan Nazarbaev signed an agreement with Azerbaijan on joining Kazakhstan's entry into the Baku-Tbilisi-Ceyhan oil pipeline project. Although the 3 million tons of oil that Kazakhstan will ship to Europe through the pipeline this year is no competition for Russian projects, Nazarbaev has again shown that his country, in spite of its support for Russian geopolitical initiatives, is not rejecting a third path in its foreign economic policy.
Azerbaijan and Kazakhstan began negotiations on supplying Kazakh oil to the world market through the pipeline in 2002. The agreement was to be signed in June 1 at the Conference on Interaction and Confidence-Building Measures in Asia on June 17 in Almaty, but Nazarbaev decided to sign it a day earlier, ahead of his meting with Putin.
The $4-billion pipeline stretches 768 km. and will be officially opened on July 13. At the first stage of its operation, it will transport 10 million tons of Azerbaijani oil, and eventually reach a capacity of 50 million tons. At the Turkish port of Ceyhan, the oil will travel by ship on the Black and Mediterranean Seas to Europe. It will operate in competition with the Russian Transneft pipeline and the Caspian Pipeline Consortium, which is already used by Kazakhstan. Kazakhstan already supplies oil to Europe across Russian territory and to China.
Kazakhstan intends to provide 7.5-10 million tons of oil per year to the pipeline at the first stage and reach a final capacity of 25 million tons. The pipeline will transport oil from the Kashagan field beginning in 2008. This year, the pipeline will receive 3 million tons of Kazakh oil. Azerbaijan is negotiating with the American Halliburton on the expansion of the Baku-Tbilisi-Ceyhan pipeline, and Eni, ConocoPhillips and Total have stated their intentions invest another $4 billion in a pipeline running from the Kashagan field to the Kazakh port of Kuryk for nautical transport to Baku.
Kazakhstan's participation in the Baku-Tbilisi-Ceyhan increases the likelihood of that expense project becoming profitable and provides the country with alternatives to the Transneft and KTK projects, in which Russia owns 24 percent and Kazakhstan 19 percent, and in which Russia insisted on redividing usage rights last year. Russia has been opposed to the Baku-Tbilisi-Ceyhan project for the last decade.
Dmitry Butrin
All the Article in Russian as of June 19, 2006
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