Status of pipeline projects in Kazakhstan as of December 2013

Astana, Kazakhstan, Dec.26

By Daniyar Mukhtarov - Trend:

Kazakhstan is a country that does not have access to an open sea. Therefore, access to export markets primarily takes place through pipelines. Today, the following pipeline projects are being developed in the country:

Caspian Pipeline Consortium (CPC) (Tengiz - Novorossiysk)

The Caspian Pipeline Consortium, also known as the CPC, is an international stock company constructing and operating the CPC pipeline stretching 1,500 kilometers, which connects the Western Kazakhstan fields (Tengiz, Karachaganak) with the Russian Black Sea coast (Southern Ozerevka terminal near Novorossiysk).

It is the largest route for oil transportation from the Caspian region to the world markets.

Capacity of the first stage is 28.2 million tons per year, including 22 million tons of Caspian oil. Full capacity was reached in mid-2004.

The shareholders of the consortium are Transneft (Russia) - 24 percent, CPC Company (Russia) - 7 percent, KazMunaiGas (Kazakhstan) - 19 percent, Kazakhstan Pipeline Ventures LLC (Kazakhstan) - 1.75 percent, Chevron Caspian Pipeline Consortium Company - 15 percent, LUKARCO B.V. - 12.5 percent, Mobil Caspian Pipeline Company - 7.5 percent, Rosneft-Shell Caspian Ventures Limited - 7.5 percent, BG Overseas Holding Limited - 2 percent, Eni International N.A. N.V. - 2 percent, Oryx Caspian Pipeline LLC - 1.75 percent.

Project Status

The consortium reported in late November that the Russian facilities of the first phase of the consortium expansion project will be prepared by mid-December 2013.

"The documents necessary to put the upgraded facilities into operation must be signed in late January-early February 2014," the consortium said. "The first phase operations are planned to be completed in Kazakhstan in October 2014."

CPC will be ready to receive oil from the Kazakh Kashagan field using its reserve capacities and also increase the oil injection quota at the Tengiz pumping station by May 2014.

The implementation of the CPC pipeline system capacity expansion project was discussed at the meeting of Kazakh Oil and Gas Minister Uzakbay Karabalin with the management of CPC, Russian Transneft, Kazakh KMG and U.S. Chevron in November 2013.

The working meeting resulted in adoption of a decision that all contractors involved in the construction of facilities in the territory of Kazakhstan, were required to work out and approve the corrected integrated schedule for implementation of the project and commissioning of facilities in the period until the end of December 2013.

Initially, the project was worked out with the calculations that its initial capacity will be increased from the current 35 million tons to 67 million tons of oil per year.

A 52-million ton capacity per year for Kazakh oil is expected to be available in the first quarter of 2015.

The work should be completed in 2015. Intially, the completion date was 2014.

The expansion project envisages modernization of five existing oil pumping stations and construction of ten additional stations (two - in the territory of Kazakhstan, eight - in Russian), six crude oil storage tanks (with capacity of 100,000 cubic meters each) in Novorossiysk and a third mooring facility at the CPC Sea Terminal, as well as replacement of 88 kilometers of the pipeline in Kazakhstan for large diameter pipes. The total investment in the project will be $ 5.4 billion.

Uzen - Atyrau - Samara Oil Pipeline

The Uzen - Atyrau - Samara oil pipeline envisages access to the Eastern Europe's markets through Russia. It is a unique warmed-up main oil pipeline. The pipeline originates at the Uzen field and runs to the Atyrau oil refinery where it connects to the Samara or "Transneft" oil pipelines system.

Owners of the oil pipeline are the Kazakh transport company KazTransOil to the Russian border, and in Russian territory - Russian transport company Transneft.

The oil pipeline is operated by the Western branch of KazTransOil CJSC in Kazakhstan and Privolzhsknefteprovod JSC of Transneft in Russian territory.

The length of the Uzen-Atyrau-Samara oil pipeline is over 1,380 km, with 1,232 km in the territory of Kazakhstan. Volume of pumped oil is 15.75 million tons. The maximum capacity of the oil pipeline is 30 million tons of oil. The proven capacity of the main oil pipeline in sections is: Uzen - Atyrau - 21 million tons per year, Atyrau-Samara - 15 million tons per year.

Project Status

The Atyrau-Samara pipeline remains one of the key routes for Kazakhstan, but the republic has no plans to expand exports in this direction.

Atyrau-Kenkiyak-Kumkol-Atasu-Alashankou oil pipeline (Kazakhstan-China)

The Atasu-Alashankou oil pipeline is a part of Kazakhstan-China's main oil pipeline network. Between the moment was launched in 2006 until 2012, 52.1 mln. tons of oil were transported via the pipeline (of this 2.2 mln. tons in 2006 and 10.4 mln. tons in 2012). For 11 months of 2013 the volume of oil throughput in the Atasu-Alashankou oil pipeline amounted to 10.9 mln.tons.

The Atasu-Alashankou oil pipeline is owned by Kazakhstan-China pipeline LLP, a joint venture of KazTransOil JSC and China National Oil and Gas Exploration and Development Corporation (CNODC).

KazTransOil JSC is a national operator of the Republic of Kazakhstan on the main oil pipeline. The company owns 50-percent interest in Kazakhstan-China Pipeline LLP and 51-percent of stocks in MunaiTas NWPC JSC.

Project Status

On December 13-14, 2013 Kazakhstan-China Pipeline LLP commenced operation of oil pumping stations OPS 8 and OPS 10 of the Atasu-Alashankou main oil pipeline.

The two new OPS were constructed within the frames of the second stage of the second phase of construction of Kazakhstan-China main oil pipeline network. Commissioning of the production facilities will allow an increase in throughput capacity of the Atasu-Alashankou oil pipeline up to 20 mln. tons per year.

The construction of the facilities was financed by the Kazakhstan-China Pipeline LLP. Since the beginning of the project implementation the actual costs on OPS 8 has constituted 9.3 bln. tenge (excluding VAT), on OPS 10 - 11, 6 bln. tenge (excluding VAT) (153.85 tenge = 1 dollar).

The production facilities of OPS are equipped with modern automated remote monitoring and control (SCADA), commercial electricity metering (AMR), fire and gas alarms. The whole technological, administrative and residential buildings and facilities complex meets modern requirements on organization of labor and production safety.

The staff of OPS 8 and OPS 10 will work in shifts because of their remote location from the settlements. A total of 124 new jobs were created at the new facilities. Part of the staff includes local residents, who have the necessary education and training.

Implementation of the project on construction of the Kazakhstan-China oil pipeline is to be carried out in two stages, with the pipeline's performance standing at 10 million tons per year at Phase I and increasing capacity to 20 million tons per year following completion of Phase II.

Phase I of the project's implementation saw construction of the Kenkiyak-Atyrau oil pipeline in 2003, owned by Munaitas JSC NWPC and Atasu-Alashankou oil pipeline in 2006, owned by the Kazakhstan-China Pipeline company.

Implementation of Phase II includes two stages. Kenkiyak-Kumkol oil pipeline, owned by Kazakhstan-China Pipeline LLP and Kumkol Head Oil Pumping Station (HOPS), owned by KazTransOil were constructed in 2009.

During the second stage, plans are to reverse the crude oil pumping direction and construct four additional pumping stations in the Atyrau- Kenkiyak area, as well as construct three pumping stations in the Kenkiyak-Kumkol area and increase the capacity of Kumkol-Karakoin and Karakoin - Atasu pipelines.

Kazakhstan Caspian Oil Transportation System (KCTS)

On Jan.24, 2007 Kazakh National Company, KazMunaiGas signed a Memorandum of Understanding on creating the Kazakh Caspian oil transportation system, which would allow exporting oil from the Kashagan and Tengiz fields through the Caspian Sea to Europe.

Once completed the KCTS will consist of the Eskene-Kurik pipeline, a system of tanker supplies from the Kurik Port and further via the Baku-Tbilisi-Ceyhan pipeline.

Multi-transport KCTS should have an initial capacity of 23 million tons per year.

Project Status

There is no information on the volumes on the second phase of the Kashagan production yet, as the budget of the project's second phase has not been approved. Production of the second phase will start no earlier than 2018-2019, but by this time KCTS should start functioning, according to the Kazakh Oil Ministry.

Translated by N.H., L.Z., M.L., E.A.

Edited by C.N.

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