Kazakhstan signs BTC agreement into law, plans new pipelines
10 June 2008
Kazakhstan has signed into law a 2006 agreement to transport oil through the Baku-Tbilisi-Ceyhan (BTC) pipeline, while making plans to connect its oil to the BTC route through additional domestic and trans-Caspian pipelines.
On May 29, 2008, Kazakhstan President Nursultan Nazarbayev signed into law an agreement for the export of Kazakhstan’s oil through the Baku-Tbilisi-Ceyhan (BTC) pipeline. The original agreement with Azerbaijan came in 2006. Civil society groups have documented serious environmental risks and social problems associated with the BTC pipeline. The entrance of oil from Kazakhstan’s Tengiz and Kashagan fields would substantially increase the scope and significance of the pipeline.
In order to reach the BTC pipeline, however, Kazakhstan must expand its transportation network. Plans have been made to construct a 730 km pipeline to carry oil from the Kashagan and Tengiz fields in Eskene to the port of Kuryk. From there, the oil will be sent via tankers to Baku, where it will join the BTC pipeline. The Eskene-Kuryk pipeline has an estimated cost of $1.5 billion with the completion date set for 2012.
Additionally, the Eskene-Kuryk pipeline is part of a broader $3 billion project, which includes a 600 km undersea trans-Caspian pipeline, linking Kazakhstan’s oil directly with the BTC pipeline. The government is reportedly discussing the project with the Asian Development Bank (ADB), the World Bank, the European Bank for Reconstruction and Development (EBRD), and other financial institutions. Given the expense of transporting oil from one pipeline onto tankers and back into another pipeline, along with the West’s interests in bypassing Russia, the possibility of a trans-Caspian pipeline appears viable if the technological challenges can be overcome. Nevertheless, while the project may prove economical in those respects, civil society groups are concerned about the greater costs to the fragile Caspian environment.
Sources
Chevron, KazMunaiGaz to Build $1.5 Billion Pipeline, by Nariman Gizitdinov, June 6, 2008 (Bloomberg website)
Kazakhstan/Azerbaijan Industry: Eskene-Kuryk Oil Pipeline JV Agreed, Economist Intelligence Unit, May 1, 2008 (Economist Intelligence Unit website)
Chevron Joins New Kazakh Caspian Pipeline Project, by Olzhas Auyezov, Reuters, June 6, 2008 (Reuters website)
Additional Resources
BTC Pipeline Project (BIC website)