Kazakhstan Will Not Supply Oil to the Black Sea Terminal: What Are the Consequences of a Halt in Supplies?
21 July 19:13
Kazakhstan has been forced to halt the transport of crude oil to its main export terminal. The reasons lie in the terminal’s location and the tankers involved. This was reported by Bloomberg, as cited by "Komersant Ukrainian".
A series of attacks on oil tankers in the Black Sea is threatening Kazakhstan’s exports, the publication writes.
“The Caspian Pipeline Consortium terminal near the Russian port of Novorossiysk was supposed to stop accepting pipeline shipments on July 21. After all, tanker companies are too nervous to send their vessels to the facility,” two sources familiar with the matter told the publication.
It is currently unclear, Bloomberg notes, whether the announced suspension has begun.
Oil Production in Kazakhstan
Oil producers in Kazakhstan will also be forced to cut production. This will happen if pipeline deliveries to the CPC are suspended by the end of this week, sources say. These disruptions are occurring against the backdrop of an almost complete halt in crude oil shipments through the Strait of Hormuz. This is because hostilities between the U.S. and Iran have resumed, and Yemeni Houthis are threatening Saudi exports from the Red Sea.
The CPC terminal is Kazakhstan’s largest oil export market, accounting for about 80% of the country’s crude oil flows. Mostly from projects in partnership with international oil giants: Chevron Corp., ExxonMobil Holdings Corp., and Shell Plc.
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What Are the Risks of a Supply Disruption?
Kazakhstan is the second-largest supplier of oil to Europe. A reduction in its flows would hurt regional refineries at a time when they are seeking to replace supplies from the Persian Gulf, Bloomberg reports.
“Although the CPC terminal is located in Russia, exports from the facility are not subject to Western sanctions,” the publication noted.
As Bloomberg previously reported, Kazakhstan was forced to cut oil production in late June after a gas processing plant in Russia was shut down. The facility in question is the Orenburg Gas Processing Plant.
Impact on Production
The Karachaganak field is one of Kazakhstan’s three largest oil and gas projects, accounting for about 10% of the country’s total oil production. Since oil and natural gas production at this field are technologically inseparable processes, the shutdown of processing facilities in Russia led to an automatic decline in oil production.
According to official data, daily oil production at Karachaganak fell from 34,000 to 25,000 metric tons, equivalent to a decline of more than a quarter (about 180,000 barrels per day).
As a reminder, a drone strike on the Orenburg Oil Refinery, located approximately 170 kilometers from the Kazakh border, occurred on June 24. This plant processes raw materials supplied from Karachaganak, returning commercial products to Kazakhstan. The Orenburg Gas Processing Plant is a key facility that processed about 60% of the Russian Federation’s gas.
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