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Kazakhstan’s state oil firm Kazmunaygas (KMG) is reportedly in advanced discussions with the trading arm of Azerbaijan’s state firm SOCAR to allow 1.5 million tons per year of Kazakh crude to be sold through the Azeri pipeline that delivers oil to Turkey’s Mediterranean port of Ceyhan.
Kazakh oil is expected to start flowing through Azerbaijan’s biggest oil pipeline from September, as the nation seeks alternatives to a route Russia threatened to shut, three sources familiar with the matter said. Kazakh oil exports account for more than 1% of world supplies, or roughly 1.4 million barrels per day (bpd). For 20 years, they have been shipped through the CPC pipeline to Russia’s Black Sea port of Novorossiysk, which provides access to the global market.
In July a Russian court threatened to shut the CPC, prompting the Kazakh government and major foreign producers to set up contracts for other outlets as a precaution. None of the alternatives is as practical as the CPC pipeline, raising the risk of further volatility on energy markets. At just over 30,000 bpd, the volume is a trickle compared to the usual 1.3-1.4 million bpd that flows through the CPC.
