Kazakhstan wants to sell some of its crude through Azerbaijan’s largest oil pipeline starting in September. The country is looking at alternatives to the route that Russia controls and has threatened to close, three sources told Reuters exclusively.
Kazakhstan’s oil exports account for more than 1% of world supplies, or about 1.4 million barrels per day. For 20 years, they have been transported via the CPC pipeline to the Russian port of Novorossiisk on the Black Sea, which provides access to the world market.
In July, a Russian court threatened to shut down the CPC, prompting the Kazakh government to seek other outlets as a precaution. Neither alternative is as good as the CPC pipeline, which could affect energy markets. However, shortly after Russia invaded Ukraine in February, international crude oil prices hit 14-year highs, and prices have remained high.
The final contract, signed at the end of August
Kazakhstan’s state-owned oil company Kazmunaigaz (KMG) is in advanced talks with the commercial unit of state-owned company SOCAR in Azerbaijan to allow 1.5 million tonnes per year of Kazakh crude to be sold through the Azeri pipeline that delivers oil to the Mediterranean port of Ceyhan in Turkey.
The final contract is due to be signed at the end of August, and flows through the Baku-Tbilisi-Ceyhan (BTC) pipeline will start flowing a month later, the source said.
Another 3.5 million tonnes a year of Kazakh crude could start flowing in 2023 through an Azeri pipeline linked to the Georgian Black Sea port of Supsa, two sources said.