Kazakhstan redirects oil flows through Russia due to storms

Storms on the Black Sea, which limited the supply of Kazakh oil through the CPC oil pipeline to Novorossiysk, forced local producers to redirect raw materials in transit through the Russian pipeline system in the direction of Germany. In December, oil supplies through the Russian Federation may increase to 200 thousand tons, but by the end of the year they will not reach the 1.2 million tons planned by Astana and Berlin. Kazakhstan wants to pump more, but the implementation of these plans will require difficult coordination not only with the Russian Federation, but also with Poland.

Pipeline operator “Kaztransoil” announced that in November it will increase oil supplies through the Druzhba pipeline to Germany by 54%, to 154 thousand tons. The decision was caused by the fact that the oil pipeline of the Caspian Pipeline Consortium (CPC), through which more than half of Kazakhstan’s oil is exported, stopped pumping due to storms and the impossibility of loading tankers in the port of Novorossiysk.

Transneft this year allowed Kaztransoil was to transit 1.2 million tons of oil through the Russian Federation to Germany, but Kazakh companies supplied only 690 thousand tons in January-October, another 100 thousand were planned for November. Kommersant sources familiar with the situation note that in December, pumping from Kazakhstan could double, to 200 thousand tons per month. Nevertheless, by the end of the year it will barely exceed 1 million tons. This oil is intended to feed the German refinery in Schwedt, which was owned by Rosneft, but in September 2022 the German government introduced external management of the plant. Germany refused supplies of Russian oil, and as a result, the refinery in Schwedt began to experience problems with access to raw materials.

As Transneft representative Igor Demin told Kommersant, at the moment the application from Kazakhstan for December is 100 thousand tons.

“That is, 200 thousand tons is the volume that our Kazakh partners are going to announce for December. We are studying the technical feasibility of fulfilling such an application, but there has not been an official request yet,” he explained. Kommersant’s sources in the industry note that the main problem may be the position of Poland, through which the northern branch of Friendship passes. Previously, the country had objected to the current increase in supplies to 154 thousand tons, citing agreements of only 100 thousand tons per month.

According to Kommersant’s calculations, this year Kazakh companies are shipping about 350 thousand tons per month in transit through the Russian Federation to the port of Ust-Luga on the Baltic. However, pipe delivery to Germany is a more premium route. According to a Kommersant source, Kazakhstan has not yet asked to increase pumping in the direction of Ust-Luga.

During 2024, Kazakhstan hopes to send 2 million tons of oil via Druzhba. According to one of Kommersant’s interlocutors, the pumping volume could exceed 1.5 million tons.

Kazakhstan is now trying to mitigate the consequences for its oil industry from a storm in the Black Sea, due to which shipments via the CPC have been interrupted since the end of November. As a result, Kazakhstan reduced production at its largest fields Tengiz, Karachaganak and Kashagan by approximately 40%. At the same time, according to Kommersant, in October Kazakhstan produced about 7.7 million tons of oil. “We are really looking forward to the weather window when we can load at least two tankers. A pre-storm post-storm inspection of the TPU (remote mooring devices) will be carried out.— “Kommersant”) and floating hoses,” CPC reported.

One of Kommersant’s interlocutors points out that in the last two or three years the number of storm days in the port of Novorossiysk has increased significantly, in contrast to Tuapse, where no changes in storms have been observed. Often, a storm warning is introduced much in advance and removed very late, despite the fact that the weather already allows for shipments, he notes. On November 27, Transneft stated that this month shipments were stopped for 17 days due to storm warnings. According to Kommersant’s calculations, because of this, more than 1 million tons of oil could not be exported, which creates serious problems, since there are not sufficient reserves to store them in the port, and it is technically and economically unrealistic to redirect such a volume to other ports.

“The pipe is pumped in one direction, tankers are chartered in advance. All that remains is to wait for the weather by the sea,” notes Kommersant’s interlocutor.

The Schwedt refinery also buys oil from the world market using the port of Rostock, but 110 thousand barrels per day (b/d) from the sea and 25 thousand b/d of Kazakh oil are not enough for a plant with a production capacity of 230 thousand b/d , notes Kpler’s Victor Katona. He recalls that production at the Tengiz field (operator of the Chevron project) could soon, as part of the last phase, increase by 260 thousand b/d, to 860 thousand b/d. Considering that CPC’s capacity has already reached its maximum, it is necessary to find additional opportunities for export, the analyst argues: the Schwedt refinery could become one, “if, of course, all interested parties agree.”

Dmitry Kozlov, Olga Mordyushenko