Establishment of Trans-Caspian System for Oil Transportation Acquires More Exact Contours

Oil&Gas Materials 25 April 2008 21:05 (UTC +04:00)

Azerbaijan, Baku, 25 April /corr. Trend S.Aliyev / This week, the Senate of Kazakhstan (Upper House of Parliament) ratified the Inter-Governmental Agreement with Azerbaijan on oil transportation via Baku-Tbilisi-Ceyhan, which was signed by the Presidents of Azerbaijan, Ilham Aliyev and Kazakhstan, Nursultan Nazarbayev, on 16 June 2006. Thus, establishment of trans-Caspian system for transportation of Kazakh oil and its export via Baku-Tbilisi-Ceyhan acquires more exact contours.

For realization of this project, it needs to establish a special system for transportation of Kazakh oil via Caspian. According to estimations of specialists, transportation of up to 20mln tons of Kazakh oil may be carried out via tankers. However, it is expedient to establish a pipeline for transportation of more than 20mln tons of oil.

In January 2007 a document was signed in Kazakhstan regarding Kazakhstan Caspian Transportation System (KCTS), which will transport Kazakh oil to BTC. KCTS will be comprised of terminal in the Kazakh coast of the Caspian Sea, pipelines to a new port in Kuryk and Tanker Park.

Throughout a month, the key principles of the transport agreement are expected to be signed between the national companies of Kazakhstan and Azerbaijan as well as companies participating in the project on establishment of KCTS.

Creation of the transportation system is firstly necessary for four companies which are shareholders of BTC project (ENI, INPEX, ConocoPhillips and ChevronTexaco) and work on Kashagan field in Kazakhstan. They acquire 15% participation share in the pipeline and it makes up nearly 150,000 barrels of oil per day from the projected capacity of the pipeline in 1mln barrels. In addition, ChevronTexaco participates in development of Tengiz field in Kazakhstan and repeatedly highlighted its intention to transport this oil via Azerbaijan's territory.

The value of the establishment of the Kazakhstan Caspian Transportation System (KCTS), intended for the organization of the Kazakh oil to the Baku-Tbilisi-Ceyhan export oil pipeline (BTC) is estimated at $3bln.

A new pipeline Eskene-Kuryk should be constructed on the territory of Kazakhstan to realize the project. The initial cost of this pipeline with a capacity of nearly 20mln tons per year totals $1.3-$1.4bln. Construction of oil terminals on Kazakh coast of Caspian is estimated at $500-600mln. The same amount should be spent on terminal works in Azerbaijan.

Currently there are terminal capacities in territory if Azerbaijan for receiving and transporting Kazakh oil via BTC. An oil terminal is located near Sangachal terminal where the key pumping station of TBC is located. This terminal with a transshipment capacity of up to 10mln tons per year is connected with the terminal of BP which may pump the oil delivered with tankers. Up to now, an agreement has not been reached on deadweight of tankers which will be used for oil transportation. According to estimates of the Kazakh side, it needs to construct tankers with deadweight of up to 60,000 tons, with cost of each totaling nearly $70-80mln. The existing tankers are supposed to be used till construction of these tankers.

Azerbaijan State Caspian Shipping Company (ASCSC), which is the largest transporter of oil cargos in Caspian, does not agree with the conception of construction of tankers with capacity of 60,000 tons. According to ASCSC experts, it is not expedient to use such kinds of tankers in the Caspian Sea. It is explained through the issue that the maximal deadweight of the ships being received by the ports of Caspian is 13,000 tons (at the same time, Aktau port receives tankers with only 12,000 tons of load). It needs to construct new infrastructures moorings for using tankers with 60,000 capacity (if the coastal depth is small, the length of such moorings may make up several km). In addition, it is possible to use small tankers to load large tankers, but according to the experts of the company, it is not beneficial economically.

The total BТС length is 1.768km, including the 443km section running via Azerbaijan, the 249km section via Georgia and the 1.076km via Turkey. The pumping capacity of the pipeline is over 50mln tons of oil (1mln barrels of oil per day).

A total of $4bln has been spent to construct the BTC 1,768km pipeline, not including the fulfillment of the pipeline, financial expenses and payment of the bank rates. The credit allocated for the project totaled $2.6bln.

BTC Company Shareholders includes: BP (30.1%); AzBTC (25%); Chevron (8.90%); Statoil Hydro (8.71%); ТРАО (6.53%); Eni (5%); Total (5%); Itochu (3.40%); Inpex (2.50%); ConocoPhillips (2.50%) and Amerada Hess (2.36%).

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