Kazakhstan increases stake in key oil pipeline, boosts potential export capacity

Kazakhs boost access to key oil export route

ALMATY, Kazakhstan — Kazakh state oil company KazMunaiGaz struck a deal Thursday that will significantly boost its access to the Caspian Pipeline Consortium, the only oil pipeline on Russian territory not controlled by the Russian government.

KazMunaiGaz will pay BP PLC $250 million for the British company’s 49.9 percent stake in Kazakhstan Pipeline Ventures, which holds a 1.75 percent interest in the CPC. KazMunaiGaz already owns the remaing share of the venture.

KazMunaiGaz’s acquisition of Kazakhstan Pipeline Ventures will give it rights to ferry an additional 10.5 million metric tons of crude oil per year through CPC upon completion of work to expand the route, expected by 2013, the Kazakh company said in a statement.

Increased access to the Caspian pipeline route is vital for Kazakhstan to increase its oil exports to some 400,000 tons per day in the next decade.

Russia controls nearly all export routes for Central Asia’s substantial oil and gas reserves, and has maneuvered to keep the U.S. and European governments from laying the groundwork for new export pipelines, such as a Western-backed pipeline under the Caspian Sea.

The 1,510-kilometer (940-mile) pipeline, which connects oil fields in western Kazakhstan with the Russian Black Sea port of Novorossiysk, currently transports 28.2 million tons annually. After work on expanding the pipeline has been completed, CPC’s capacity is expected to reach 67 million tons of oil per year, with 50 million tons capacity reserved for oil extracted in Kazakhstan.

The deal unveiled Thursday takes the Kazakh government’s stake in CPC to 20.75 percent and will raise KazMunaiGaz’ access rights to the route to 14.3 million tons per year after completion of the expansion project.

U.S.-based Chevron Corp. is the biggest oil company involved in the Caspian Pipeline Consortium, with a 15 percent stake. The Russian government has the largest interest with 24 percent. Other shareholders include Exxon Mobil Corp., Royal Dutch Shell PLC, and Russia’s OAO Lukoil.