BP to flow Kazakh oil through BTC pipeline

BP PLC plans to begin shipping oil from Kazakhstan's Tengiz oil field via the 1,770-km Baku-Tbilisi-Ceyhan (BTC) pipeline beginning later this month.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Oct. 8 -- BP PLC plans to begin shipping oil from Kazakhstan's Tengiz oil field via the 1,770-km Baku-Tbilisi-Ceyhan (BTC) pipeline beginning later this month.

BP said the oil would be transported by barge from Kazakhstan to Azerbaijan and then loaded into the 1 million b/d BTC pipeline, with exports from Ceyhan expected to begin in mid-November.

BP, whose plan is similar to one attributed last month to Tengizchevroil, did not say how much Tengiz oil would be shipped along the BTC line, only that initial rates are "expected to be relatively low in volume."

The move comes as about 60% of the 850,000 b/d crude flow through the BTC has been cut following the shutdown of two platforms on the Azeri-Chirag-Gunashli field in the Caspian Sea last month after a gas leak.

However, a BP spokesman said the flow of Tengiz oil into the BTC has long been discussed and is not a response to short-term problems at the ACG fields. "There was always spare capacity available in the BTC," he said, adding that surplus Tengiz crude will flow through the pipeline in the long term.

BP's announcement coincided with reports quoting Kairgeldy Kabyldin, chief executive officer of Kazakhstan's state-owned Kazmunaigaz, that his firm has begun talks aimed at buying BP's stake in the 565,000 b/d Caspian Pipeline Consortium (CPC).

The 1,580-km CPC pipeline transports Kazakh oil to the Yuzhnaya Ozereevka terminal at Novorossiisk on Russia's Black Sea coast.

BP, which holds an indirect 6.6% stake in the CPC consortium through its LukArco joint venture, is said to be interested in selling its stake due to an ongoing impasse with the Russian government over plans to expand the pipeline's capacity.

Oman's government also is said to be interested in selling its 7% share in the project.

Analyst Global Insight said, "One way or another, it appears that there will be a shake-up in the current composition of the CPC consortium, which appears necessary in order to move forward with the expansion of the pipeline to its design peak capacity of 1.34 million b/d."

Late last month, Tengizchevroil was reported to have made an agreement to ship up to 2 million tonnes/year of oil—possibly rising to 5 million tonnes/year—by barge across the Caspian Sea to Azerbaijan and onward by rail across Georgia to export terminals on the Black Sea (OGJ Online, Sept. 25, 2008).

Russia owns 24% of CPC shares, Kazakhstan owns 19%, and Oman 7%. Other partners include Chevron Caspian Pipeline Consortium 15%, LukArco 12.5%, Rosneft-Shell Caspian Ventures 7.5%, Mobil Caspian Pipeline 7.5%, Eni International 2%, BG Overseas Holding 2%, Kazakhstan Pipeline Ventures 1.75%, and Oryx Caspian Pipeline 1.75%.

Contact Eric Watkins at hippalus@yahoo.com.

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