Kazakhstan, Russia join in oil pipeline projects

May 14, 2007
Kazakhstan's president Nursultan Nazarbayev said his country will join with Russia in two pipeline projects aimed at nearly doubling the amount of oil shipped westward from the Central Asian nation to international markets.

Eric Watkins
Senior Correspondent

LOS ANGELES, May 14 -- Kazakhstan's president Nursultan Nazarbayev said his country will join with Russia in two pipeline projects aimed at nearly doubling the amount of oil shipped westward from the Central Asian nation to international markets.

"I discussed in detail with President [Vladimir] Putin the question of increasing the capacity of the Caspian Pipeline Consortium from 23 million [tonnes/year] to 40 million tonnes/year," said Nazarbayev, referring to the existing 1,500-km pipeline that extends from Kazakhstan's Tengiz oil field to Russia's Black Sea port of Novorossiysk.

"The extra 17 million tonnes[/year] may go to Burgas-Alexandroupolis pipeline," Nazarbayez said, referring to a planned 280-km route backed and shared by Russia (51%), Greece (24.5%), and Bulgaria (24.5%) that will carry crude from Bulgaria's Black Sea port of Burgas to the Greek port of Alexandroupolis on the Aegean.

An agreement on the Burgas-Alexandroupolis line was signed by the three partner countries in Athens on Mar. 15, and the Russian government approved a draft law on May 10 that would govern the agreement to be sent to the Russian parliament for ratification. The line will initially carry 35 million tonnes/year, rising eventually to 50 million tonnes/year.

Under the agreement signed in Athens, Russia's 51% stake will be owned by a consortium comprised of OAO Transneft 33.4%, along with Rosneft 33.3%, and GazpromNeft 33.3%. Transneft also will hold the operating rights of the line, which will receive oil at Burgas carried by tankers from the Russian ports of Novorossiysk and Tuapse as well as from the Ukrainian ports of Odessa and Pyvdenny, both outlets for Russian oil.

The Burgas-Alexandroupolis line has been touted as an alternative to ships traversing the busy Bosporus Straits, something that Turkey has expressed concern over for years.

In April, however, Turkish authorities launched construction of a rival 700-km oil pipeline linking its Black Sea port of Samsun to its Mediterranean port of Ceyhan in the south. As with the Burgas-Alexandropolis line, the new Turkish project is being touted as a new energy route and one that bypasses the busy Bosporus.

Contact Eric Watkins at [email protected].