SEPT. 14 2013 (The Conway Bulletin) — Rounding off a tour of Central Asia, Chinese president Xi Jinping signed a deal with his Tajik counterpart, Emomali Rakhmon, to build a 400km gas pipeline crossing Tajikistan to China from Turkmenistan. The deal, announced on the side lines of a regional summit in Bishkek, is a major boost for Tajikistan.
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(News report from Issue No. 152, published on Sept. 18 2013)
SEPT. 11 2013 (The Conway Bulletin) — Britain’s Rolls Royce has won a $175m contract to build compressor units to pump gas along a 1,115km pipeline from Kazakhstan to China, media reported quoting Beimbet Shayakhmetov, general director of the Asia Gas Pipeline. The pipeline is one of several being built in Central Asia.
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(News report from Issue No. 152, published on Sept. 18 2013)
SEPT. 10 2013 (The Conway Bulletin) –Just as first oil from the giant Kashagan field in Kazakhstan’s sector of the Caspian Sea draws tantalisingly close, a partner in one of its main export routes has warned of a delay to planned capacity expansion.
In an interview with Reuters, Mikhail Barkov, vice-president at Russian pipeline monopoly Transneft, said work to expand the Caspian Pipeline Consortium (CPC) pipeline that runs from Atyrau in west Kazakhstan to the Russian Black Sea port of Novorossiik had been delayed by 6-12 months.
He didn’t give any reason for the delay.
Transneft is the largest shareholder in CPC, followed by Kazmunaigas and US oil major Chevron. There are several other smaller shareholders. The pipeline started operations in 2001 and has been an important export route for Kazakh oil, mainly from the Chevron-led Tengizchevroil project.
The plan had been to roughly double the capacity of CPC to about 1.3m barrels of oil a day by 2015, partly to cope with extra supplies from the Kashagan oil field.
News of the CPC delay is likely to frustrate Kazakh oil exporters, particularly as they were set to soon celebrate the first oil from Kashagan after years of delays and cost overruns.
On Sept. 7, Sauat Mynbayev, head of Kazmunaigas, said that Kashagan would start production within a month.
An expanded CPC has been touted as one of the primary export routes for oil from Kashagan. The expansion delay is likely to push oil from Kashagan — operated by a consortium of ENI, ExxonMobil, Total, Kazmunaigas, Shell, Inpex and now China’s CNPC — onto other export routes wholly owned by Russia.
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(News report from Issue No. 151, published on Sept. 11 2013)
AUG. 19 2013 (The Conway Bulletin) — Azerbaijan’s state oil company SOCAR wants to buy 5m tonnes of oil from Russia’s Rosneft, media quoted SOCAR chairman Rovnag Abdullayev as saying. The plan is to reverse the flow of the Baku-Novorossiysk pipeline to pump the oil to Azerbaijan where it will either be refined or exported to Europe.
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(News report from Issue No. 149, published on Aug. 26 2013)
AUG. 13 2013 (The Conway Bulletin) — Relations between Azerbaijan and Russia have generally been cool for the past decade or so. Russian President Vladimir Putin’s trip to Baku on Aug. 13 only served to underline this.
Azerbaijan’s President, Ilham Aliyev, has looked to balance the interests of the country’s former master, Russia, with that of Europe, a major energy client. In previous years there has been talk of Russia buying up Azerbaijan’s gas supplies but this never materialised. Instead, Western energy firms have tightened their hold on Azerbaijan’s vast Caspian Sea energy supplies by buying up stakes in fields and building pipelines.
And despite rhetoric of improved ties between Moscow and Baku before a trip by Mr Putin, his first to the Azerbaijani capital in seven years, this general trajectory appears set.
Russia’s Rosneft had talked of an energy deal with SOCAR, the Azerbaijani state-owned energy company, but this never materialised. Sources told media outlets that a vague agreement had been signed but there were too many differences to commit to anything more meaningful.
These differences are varied. Some are personal, others strategic — last year Russia and Azerbaijan failed to agree on a lease extension for a Russian radar base — and others are commercial. Azerbaijan-Russia relations still need some mending.
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(News report from Issue No. 148, published on Aug. 19 2013)
JULY 30 2013 (The Conway Bulletin) — Azerbaijani state energy company SOCAR (20% stake), BP (20%) and Total (10%) joined the consortium developing the Trans Adriatic Pipeline (TAP) that will pump gas from the Azeri sector of the Caspian Sea to Italy, TAP said. The other members of the consortium are Statoil (20%), Fluxys (16%), E.ON (9%) and Axpo (5%).
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(News report from Issue No. 146, published on Aug. 5 2013)
JULY 8 2013 (The Conway Bulletin) — Azerbaijan state energy company SOCAR and Russian pipeline monopoly Transneft are negotiating on re-starting oil shipments along the Baku-Novorossiysk pipeline, media reported.
This is probably more significant for Azerbaijan-Russia relations than to energy supplies.
With construction finished in 1997, the Baku- Novorossiysk pipeline was one of the early post-Soviet Union pipelines. It runs 1,330km from Baku to the Black Sea port of Novorossiysk. From there the oil is shipped on to Europe. Volumes along the route, though, have been declining as Azerbaijan has worked to open up alternative routes to Europe, including the Baku-Tbilisi-Ceyhan pipeline.
Last year, the Baku-Novorossiysk oil pipeline pumped only about 8% of Azerbaijan’s oil to its export markets.
In May 2013, throughput along the Baku-Novorossiysk pipeline stopped altogether. Both sides were losing money on the deal. There wasn’t enough volume for the Russians and the price for its oil was too low for the Azerbaijanis.
It may be economically more efficient for the pipeline to stay idle but politically it needs to re-open.
Russia has approved a major arms deal with Azerbaijan, executives from Rosneft, the Russian state energy company, have visited Baku and senior Russian politicians have talked about a strategic deal between the two countries.
Re-starting an oil pipeline between the two countries may fit the pattern of increasingly close cooperation.
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(News report from Issue No. 143, published on July 15 2013)
MAY 28 2013 (The Conway Bulletin) — Austria’s OMV has agreed to sell a 9% stake in the company planning to build the proposed Nabucco gas pipeline from the Shah Deniz II gas field in Azerbaijan to Europe. France’s GDF Suez agreed to buy the stake for an undisclosed amount. The consortium developing Shah Deniz II will decide whether to use Nabucco or a rival to deliver gas to Europe.
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(News report from Issue No. 137, published on June 3 2013)
MAY 17 2013 (The Conway Bulletin) — SOCAR, Azerbaijan’s state-owned energy company, said it would borrow $4b to part-finance an ambitious new oil refinery in Turkey, only 10 days after figures showed slowing output at its most important oil field.
The refinery, to be built in western Turkey, will be operational by 2016 and produce 10m tonnes of oil a year. The $4b loan will cover around two-thirds of the construction costs.
SOCAR will fund the rest of the project itself.
Azerbaijan’s wealth is anchored to its energy industry and the refinery plan projects both a confidence about the future and an understanding of its most important market — Europe.
The importance of Europe as Azerbaijan’s main market was underlined when the European Commission approved plans to build a pipeline to pump gas from Azerbaijan across the Adriatic to Italy, on May 17.
A few days earlier, though, on May 7, BP announced that production at the main oil field in the Azeri sector of the Caspian Sea, Azeri-Chirag-Guneshli (ACG), was still falling. Bloomberg reported that production at ACG, which produces three-quarters of the country’s oil, had dropped to 662,000 barrels per day in Q1, a fall of 8.4% from a year earlier.
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(News report from Issue No. 135, published on May 20 2013)
APRIL 6 2013 (The Conway Bulletin) — Kazakh president Nursultan Nazarbayev made one of his regular visits to Beijing to meet his Chinese counterpart Xi Jinping. During the visit, Mr Nazarbayev agreed a number of bilateral deals including an extension, media reported, to a pipeline pumping oil from Kazakhstan to China.
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(News report from Issue No. 131, published on April 12 2013)