Preliminary agreement on Kazakhstan Caspian Transportation System to be signed late January

energy

Preliminary agreement on Kazakhstan Caspian Transportation System to be signed late January

By SRI ⋅ January 8, 2009 ⋅

(SRI) - A preliminary memorandum on exporting Kazakhstan’s crude oil to world markets via the Kazakhstan Caspian Transportation System (KCTS) will be signed in late January, AzerNEWS reported on Wednesday.

Work on creating the system for transporting hydrocarbons across the Caspian Sea from Kazakhstan to Azerbaijan should be completed by 2012.

KCTS will be built to provide export infrastructure mainly for Kazakhstan’s Kashagan field, a giant offshore field in the northern part of the Caspian Sea. Kashagan, which is expected to produce up to 1.5 million barrels per day at its peak, roughly equivalent to Kazakhstan’s current overall output, is due to launch production by October 2012.

The entire KCTS project, once constructed, will allow Kazakhstan’s producers to connect to the Baku-Tbilisi-Ceyhan (BTC) pipeline via a shuttle system of sea tankers.

On the Kazakh side, a new oil port will be built in Kuryk, a Caspian town with a natural harbor, and a pipeline originating in the town of Eskene in western Kazakhstan will connect it to the participating Kazakh fields.

A feasibility study on the the construction of the Eskene-Kurik pipeline is expected to be completed in late 2009. The conduit, with an annual capacity of about 20 million tons, will cost USD1.3-1.4 billion, according to preliminary estimates.

A fleet of tankers will then transport Kazakh oil to a new loading facility near Baku, which will link to the BTC pipeline.

The KCTS would be capable of transporting up to 500,000 bpd in its initial stage, with further increases to as much as 1.2 or even 1.8 million bpd possible.

Azeri national oil company SOCAR and its Kazakh counterpart Kazmunaigaz signed an agreement on basic principles of implementing the trans-Caspian project in Baku last year on November 14.

Azerbaijan and Kazakhstan will set up a joint venture to enforce the signed agreement.