Kazakh oil has served as a bone of contention between Russia and China

Experts evaluated the version of the tacit confrontation between Moscow and Beijing over the supply of “black gold”

Moscow and Beijing have entered into a “tacit confrontation” in connection with the supply of Kazakh oil to the world market, the American Internet resource Eurasianet reports. According to the authors of an analytical article posted on it, “after the start of the special operation in Ukraine, the Russian side twice blocked oil export channels from Kazakhstan.” The Chinese leadership allegedly expressed its displeasure to her in private.

According to Eurasianet, Beijing is extremely interested in the smooth flow of crude oil from Kazakhstan to the global market. Otherwise, world prices will continue to rise, which is absolutely not needed today by the slowing Chinese economy. In the medium term, the situation is fraught with a drop in consumer demand and an increase in the price of many goods in China.

Kazakhstan produces just over 2 million barrels per day (about 2% of world oil production). Almost 80% of this volume goes abroad – through the oil pipeline of the Caspian Pipeline Concern (CPC) with a length of more than 1.5 thousand kilometers and a throughput capacity of 67 million tons per year. The highway connects Kazakhstan’s Tengiz, Kashagan and Karachaganak fields with Novorossiysk, Russia’s Black Sea port. There, oil is loaded onto tankers to be shipped to markets. In 2021, CPC shipped 60.7 million tons of oil through the Novorossiysk terminal, that is, about 510 million barrels. Last year, income from the sale of this raw material amounted to 44% of the budget of Kazakhstan.

Meanwhile, today the pipeline functions with serious interruptions. On March 22, Moscow announced that two of the three oil piers in Novorossiysk were damaged by a storm. A month later, the shipment of raw materials recovered. Then, in June, the work of the CPC was again stopped – after Russian officials announced the discovery of anti-ship mines from the Second World War nearby. And in July, a Russian court ordered CPC to suspend operations for 30 days “due to violations of environmental laws.” A few days later, a higher court allowed oil transportation to resume, imposing a symbolic fine on the consortium.

In turn, CPC presented photographs of cracks in subsea equipment, but did not explain how long the repair would take. As Reuters reported the other day, the work could drag on for a month or more, and during this time the only remaining berth will pump 60-70% of the total nominal volume of oil. According to a number of Russian experts, we are talking about purely technical problems associated with faulty equipment and sea water pollution precedents. They must be eliminated – in order to avoid oil spills in the Black Sea off the coast of the Krasnodar Territory.

“As for the position of China, one can hardly speak of any kind of “tacit confrontation” with Russia,” says Kirill Melnikov, head of the Energy Development Center. – Kazakhstani oil is practically not transported to this country via the CPC pipeline, Europe is the main consumer: in 2021, more than 70% of CPC shipments went there, and today this share has grown even more.”

There are no Chinese investors in the consortium, Melnikov recalls. Of the three fields in Kazakhstan that account for the lion’s share of CPC supplies – Tengiz, Karachaganak and Kashagan – only in the last one does China’s CNPC have a small share of 8.3%. The main shareholders are American and European companies. Kazakhstan exports its oil to China mainly via the Atasu-Alashankou pipeline from fields in the eastern part of the country. In other words, interruptions in pumping through the CPC have no effect on the supply of Kazakhstani oil to China, and they practically do not affect the global price situation.

“Supplies to the global market through the CPC pipeline can be compared to a teaspoon of cold water added to a glass of boiling water,” says Nikolai Pereslavsky, an employee of the Economic and Financial Research Department of the CMS Institute. – By definition, they cannot have a decisive influence on oil quotes. Today, prices for basic energy carriers and electricity are growing largely due to drought in Europe, China and other regions of the planet.”