KazTransOil and Transneft to expand the Atyrau-Samara pipeline

energy

KazTransOil and Transneft to expand the Atyrau-Samara pipeline

By SRI ⋅ July 10, 2008 ⋅

(SRI) - Russian Transneft and Kazakh KazTransOil, the national pipeline operators, are in talks to expand the capacity of the Atyrau-Samara pipeline from current 16 to 26 million tons of oil per year, RBC Daily reported.

The expansion of the pipeline should be completed by 2015.

Mikhail Barkov, vice president of Transneft, is confident that the two sides will come to an agreement. “As Kazakhstan plans to increase output, it will be able to supply the pipeline with additional oil.”

The Atyrau-Samara pipeline links Kazakhstan to the Transneft system which, in turn, provides a connection to the world markets via ports at the Black Sea. Among the oil companies that currently use the pipeline are KazMunaiGas, Mangistaumunaigas, and other smaller companies. In the first 5 months of 2008, they exported approximately 8.6 million tons via the pipeline.

Local analysts suggest that the motive behind the expansion (originally planned to 20 million tons of oil per year) is political rather than economical. The main objective is to prevent the planned expansion of the CPC pipeline, a rival pipeline that links Kazakhstan’s richest oil fields to world markets.

The CPC pipeline provides an alternative to the Transneft system as a route to the world markets because, even though it passes through Russian territory, it is not owned by the national pipeline operator but by a consortium of the Russian and Kazakh governments and oil companies. There have been long negotiations about increasing the capacity of the pipeline but Russia, the largest shareholder in the consortium, is yet to approve the expansion.