Tag Archives: pipelines

Russia says it needs to approve Turkmen-Azeri trans-Caspian pipeline

MAY 12 2016 (The Conway Bulletin) – Russia’s ambassador-at-large for Caspian affairs, Igor Bratchikov said that the Kremlin will not allow the construction of any projects across the Caspian Sea that are not sanctioned by all littoral states. “Unilateral action on construction of Trans-Caspian pipelines is inadmissible,” Mr Bratchikov said. Azerbaijan and Turkmenistan have discussed for years the possibility of building a trans-Caspian gas pipeline.

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(News report from Issue No. 280, published on May 13 2016)

ADB expects Turkmenistan’s TAPI to be completed by 2021

MAY 5 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said it expects the TAPI pipeline project to be completed by 2021. TAPI will pump Turkmen gas to India through Afghanistan and Pakistan. The Turkmen government insists the pipeline would be ready by 2019. For Turkmenistan TAPI has become a race against time. It wants to diversify its client base. The ADB, which is an adviser on the project, has offered a potential $600m loan.

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(News report from Issue No. 279, published on May 6 2016)

Turkmen President woos Qatar

APRIL 29 2016 (The Conway Bulletin) – Turkmen President Kurbanguly Berdymukhamedov invited Qatar’s business community to invest in the construction of the Turkmenistan- Afghanistan-Pakistan-India (TAPI) gas pipeline. The first investment agreement was signed by the consortium shareholders in April 2015. The project is considered pivotal in connecting South and Central Asia as well as for securing the long-term future of Afghanistan.

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(News report from Issue No. 279, published on May 6 2016)

Business comment: BTC fails to live up to hype

APRIL 29 2016 (The Conway Bulletin) – In the early 2000s, the Baku-Tbilisi- Ceyhan (BTC) oil pipeline was hailed as a key component of the New Silk Road, designed by the West for the West. The dream might now be over.

Western oil producers wanted a pipeline that would pump Caspian oil to world markets without having to pass through Russia.

Everyone in Washington DC was excited. “Happiness is multiple pipelines” was the slogan that could be heard espoused by US diplomats and oil companies. It was even seen on bumper stickers around the US capital.

The 1b barrels/day dream pipeline was inaugurated in 2005 and relied on Azerbaijan’s largest oil fields as well as on Kazakh and Turkmen trans-Caspian shipments.

The decade-long excitement, however, seems to have hit a wall as Kazakh oil shipments have now faded away.

Experts don’t believe shipments will resume anytime soon. Tengizchevroil appears to have let its contract with BTC lapse. Kazakhstan’s Aktau port management has said it doesn’t foresee oil shipments from Tengiz resuming.

At a time of low oil prices and rising extraction prices, cutting expenditure on shipments of oil across the Caspian Sea was the obvious move for Kazakh producers.

Tengiz, and Kashagan whenever it comes online, will use the expanded Caspian Pipeline Consortium for future exports.

This choice will isolate Azerbaijan at a time when it is under the spotlight to become Europe’s new gas provider. The take-home from this story is that corporate interest, in the long run, overrides diplomatic objectives.

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(News report from Issue No. 278, published on April 29 2016)

Kazakh oil producers ditch BTC pipeline export route

ALMATY, APRIL 26 2016, (The Conway Bulletin) — Kazakh oil producers have stopped exporting via the Baku- Tbilisi-Ceyhan (BTC) pipeline as they become increasingly cost-conscious during this period of low global oil prices, a shift that will damage Azerbaijan’s reputation as an energy transit route from Asia to Europe

Data from BTC showed that Kazakhstan’s latest contribution to the pipeline was in January. This is the first time in years that Kazakh producers have suspended shipments for more than a month.

This confirms the marginalisation of BTC as an export route for Kazakh producers, most predominantly Chevron-led Tengizchevroil (TCO).

Analysts said the ditching of BTC as an export route for Kazakh oil, a route once heralded as the region’s saviour, was linked to both contractual and market constraints.

“The contract between TCO and BTC for shipments recently ended, and with the CPC pipeline expansion adding new export capacity, there is capacity to export more TCO oil via CPC, which is a more economical option for TCO at low oil prices,” said Andrew Neff, senior petroleum analyst at IHS.

The CPC, Caspian Pipeline Consortium, is an oil pipeline that sweeps around the northern Kazakh shore of the Caspian Sea and ends at the Russian Black Sea port of Novorossiysk. It was designed in the 1990s to ship oil from TCO, Kazakhstan’s largest producer. It’s been gradually expanded and shipped 1.1m barrels/day in March, nearly double its rate of 10 years ago. BTC’s capacity is 1m barrels/day but in March 2016, it transported 721,500 barrels/day.

CPC is a cheaper export route because, to ship oil to the start of BTC, Kazakh producers needs to transport oil across the Caspian Sea.

Mr Neff, the IHS oil analyst, said that as well as hitting BTC’s earnings, dropping Kazakh oil from its mix will also reduce the quality of BTC exports.

“It will change BTC’s overall blend and lower its quality, as Turkmen crude is heavier, plus it will reduce oil transit revenues for Azerbaijan,” he said.

BTC’s main shareholders are BP with a 30% stake and Azerbaijan’s state-owned SOCAR with a 25% stake.

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(News report from Issue No. 278, published on April 29 2016)

ADB says that Turkmenistan’s TAPI pipeline is ‘doable’

APRIL 8 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said it will support infrastructure projects in Turkmenistan, including the $10b TAPI gas pipeline and also rail and electricity links to neighbouring countries.

Over the next two years, the ADB plans to invest around $1b on construction of railway corridors and the production and supply of electricity.

On TAPI, the pipeline that should, if all goes to plan, pump Turkmen gas to India through Afghanistan and Pakistan by 2019, the ADB delivered a determined, positive endorsement.

“We’re going through some of the toughest territory in Afghanistan, so the challenge is there. There’s no doubt about it,” Sean O’Sullivan, director for Central Asia at the ADB, told Reuters the day after a $200m investment deal was signed for TAPI between its key shareholders — Turkmenistan, Afghanistan, Pakistan and India.

“But I am sure it’s doable.”

The ADB has been a staunch defender of the TAPI pipeline, which many analysts have said is too complicated to pull off successfully, and advised the partners on the financing of the $10b project.

Previously, the ADB pulled funding from the Turkmenistan-Afghanistan-Tajikistan railway link, because of security concerns. Now, by saying that TAPI is “doable”, Mr O’Sullivan is effectively giving the ADB’s endorsement to the project, despite ongoing doubts on security guarantees.

In the meantime, construction work continued on TAPI, with Turkmen officials triumphantly announced that they had finished welding the first kilometre of the pipeline.

The other countries have reportedly started construction work too.

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(News report from Issue No. 276, published on April 15 2016)

Georgia charges transit fee

APRIL 8 2016 (The Conway Bulletin) – After months of negotiations, Georgia and Russia’s Gazprom retained a deal that will give Georgia 10% of Gazprom’s gas throughput to Armenia. The deal was heralded by the Georgian side as a victory. They said that Gazprom had wanted Georgia to charge it a transit fee for hosting a pipeline to Armenia and then pay for its own gas.

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(News report from Issue No. 276, published on April 15 2016)

Azerbaijan- Armenia fighting over N-K threatens Europe’s plans

APRIL 2 2016 (The Conway Bulletin) – For Europe, the fierce fighting this week between Azerbaijani forces and Armenian-backed forces was a reminder that their plan to bring the South Caucasus firmly into its economic sphere is a risky one.

Eight years ago Russia and Georgia fought over the rebel region of South Ossetia. Now Azerbaijan and Armenia are close to all-out war over another sliver of land.

Wedged between these two scruffy, mountainous regions is the trade corridor that Europe relies on to transport goods to and from the Caspian Sea and Asia.

Theodoras Tsakiris, assistant professor for energy, geopolitics, and economics at the University of Nicosia in Cyprus told RFE/RL that two major pipelines pumping oil gas to Europe which lie just north of the conflict zone could be effected.

“A potential conflagration over Nagorno Karabakh is quite likely to affect both of these pipelines,” he said. “They are of critical significance primarily for Azerbaijan, then Turkey and, to a lesser extent, Europe and the global economy.”

European officials have avoided mentioning trade and gas exports from the South Caucasus in their comments on the fighting and have instead focused on calling for a full ceasefire but bureaucrats across Europe’s capitals will be troubled by the conflict.

Central to their plan is to build a network of pipelines stretching from the Caspian Sea across Azerbaijan, Georgia and Turkey into Europe. Gas from this route, dubbed the Southern Gas Corridor, would start to compete with Russian supplies.

Sections of the pipeline, after all, run only 40km north of the frontlines in Nagorno-Karabakh.

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(News report from Issue No. 275, published on April 8 2016)

KazTransOil revenues grow in Kazakhstan

APRIL 1 2016 (The Conway Bulletin) – KazTransOil, Kazakhstan’s state owned pipeline distributor, said its revenue grew 3.2% to 213b tenge ($617m) in 2015. In US dollar terms, however, the company’s revenues shrank by around 30% due to the sharp depreciation of the tenge last summer. Analysts forecast a decline in sales for KazTransOil in 2016, but the company hopes to boost its revenues in 2017 with the giant Kashagan project coming online.

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(News report from Issue No. 275, published on April 8 2016)

Four members, including Turkmenistan agree on TAPI investment

APRIL 7 2016 (The Conway Bulletin) – State-owned Turkmengaz, Interstate Gas Systems of Pakistan, Afghan Gas Enterprise and India’s GAIL agreed to invest $200m in engineering studies for the TAPI gas pipeline project. The four members of the consortium forecast that TAPI will cost around $10b. Construction works started last December. Once built, TAPI will pump gas from Turkmenistan’s Galkynysh gas field to India.

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(News report from Issue No. 275, published on April 8 2016)