Changing pipelines, diversifying investment?
Last week, ONGC Mittal of India claimed that Oman had offered its stake in the Caspian Sea pipeline to the company for 'about $200 million.'
Oman and Kazakhstan signed a memorandum of understanding regarding the Caspian Sea pipeline in June 1992. Work was delayed, and the deal was re-jigged in April 1996 to include Russia with a 15 percent stake. Restructuring concluded late in 1997.
The lead partner in the consortium of governments and private oil companies is Chevron Oil, which is managing the refinery at the Caspian Sea port of Tengiz, at the eastern end of the pipeline. The western end of the pipeline terminates at the Russian port of Novorossiysk on the Black Sea.
Chevron holds 15 percent. Russia currently holds 24 percent, Kazakhstan 19 percent and Oman has continued to hold seven percent. Royal Dutch Shell holds 7.5 percent.
The pipeline is currently handling 650,000 barrels of oil per day but is scheduled to expand to 1.4 million barrels and even 1.6 million barrels by 2015.
The Russians are expected to benefit by using 25% of the capacity of the pipeline. The Russians have also been holding up plans for expansion. They want more revenue from the pipeline and are claiming back taxes as well as checking the books. RosTekhNadzor, the Russian technical standards agency, cleared the Chevron pipeline of any technical breaches in January. But Russian objections to the expansion are eroding the value of the investment by up to $50 million a month.
A contact of mine in Kazakhstan suggested dryly that perhaps the prospect of supplying lots of steel for the pipeline might also have entered into the equation for Mittal.
Meanwhile, US Assistant Secretary of State for Economic, Energy and Business Affairs Daniel Sullivan visited Kazakhstan in early February to discuss alternative routes for exporting Kazakh oil and gas almost all of which are transported through Russia. He is reported to have said that 'it is high time that Kazakhstan joins the Baku- Tbilisi-Ceyhan oil pipeline project.' a mere 1,768 km of pipeline crossing Azerbaijan, Georgia and Turkey, emerging at the Ceyhan Marine Terminal, because 'the Russian transportation system will not be able handle the ever-increasing volumes of Kazakh oil and gas exports to Europe.'
Also early this month Oman signed an MoU expressing interest in investing, via Oman Oil, in a 'trans-Balkan oil pipeline that would carry Urals and Caspian crude from Bulgaria's Bourgas to the Greek port of Alexandroupolis'.
Well, a Russian agency announced on 2nd February that 'Russia’s national oil pipeline operator Transneft, state-owned oil company Rosneft and Gazprom Neft, an oil division of Russian gas giant Gazprom, have set up the Burgas-Alexandroupolis Pipeline Consortium,' which I guess is one and the same.
Russia's Deputy Minister for Industry and Energy, Andrei Dementyev, has said that shareholders in the Caspian Pipeline Consortium would be welcome to invest in this new 280 km pipeline which will bypass holdups in the Bosphorus and the Dardanelles.
It rather looks as if Oman is spoilt for choice when it comes to choosing pipelines.
Oman and Kazakhstan signed a memorandum of understanding regarding the Caspian Sea pipeline in June 1992. Work was delayed, and the deal was re-jigged in April 1996 to include Russia with a 15 percent stake. Restructuring concluded late in 1997.
The lead partner in the consortium of governments and private oil companies is Chevron Oil, which is managing the refinery at the Caspian Sea port of Tengiz, at the eastern end of the pipeline. The western end of the pipeline terminates at the Russian port of Novorossiysk on the Black Sea.
Chevron holds 15 percent. Russia currently holds 24 percent, Kazakhstan 19 percent and Oman has continued to hold seven percent. Royal Dutch Shell holds 7.5 percent.
The pipeline is currently handling 650,000 barrels of oil per day but is scheduled to expand to 1.4 million barrels and even 1.6 million barrels by 2015.
The Russians are expected to benefit by using 25% of the capacity of the pipeline. The Russians have also been holding up plans for expansion. They want more revenue from the pipeline and are claiming back taxes as well as checking the books. RosTekhNadzor, the Russian technical standards agency, cleared the Chevron pipeline of any technical breaches in January. But Russian objections to the expansion are eroding the value of the investment by up to $50 million a month.
'In fact, expansion is integral to CPC realizing its full economic potential for the host governments and shareholder companies.' Caspian Pipeline Consortium website.Such is the power of
RosTekhNadzor, along with state environment watchdog RosPrirodNadzor, that it has become one of the most feared institutions among foreign investors after months of pressure on the Royal Dutch Shell-led Sakhalin-2 oil and gas project.Given the equivocation and the lack of return on investment, it can hardly be surprising that Oman Oil, the Oman government's investment company, decided that it wanted to pull out, although agreement is required from the other members of the consortium.
Shell and its partners ultimately decided to sell half of Sakhalin-2 to state gas monopoly Gazprom late last year. After the sale the pressure quickly subsided.
A contact of mine in Kazakhstan suggested dryly that perhaps the prospect of supplying lots of steel for the pipeline might also have entered into the equation for Mittal.
Meanwhile, US Assistant Secretary of State for Economic, Energy and Business Affairs Daniel Sullivan visited Kazakhstan in early February to discuss alternative routes for exporting Kazakh oil and gas almost all of which are transported through Russia. He is reported to have said that 'it is high time that Kazakhstan joins the Baku- Tbilisi-Ceyhan oil pipeline project.' a mere 1,768 km of pipeline crossing Azerbaijan, Georgia and Turkey, emerging at the Ceyhan Marine Terminal, because 'the Russian transportation system will not be able handle the ever-increasing volumes of Kazakh oil and gas exports to Europe.'
Also early this month Oman signed an MoU expressing interest in investing, via Oman Oil, in a 'trans-Balkan oil pipeline that would carry Urals and Caspian crude from Bulgaria's Bourgas to the Greek port of Alexandroupolis'.
Well, a Russian agency announced on 2nd February that 'Russia’s national oil pipeline operator Transneft, state-owned oil company Rosneft and Gazprom Neft, an oil division of Russian gas giant Gazprom, have set up the Burgas-Alexandroupolis Pipeline Consortium,' which I guess is one and the same.
Russia's Deputy Minister for Industry and Energy, Andrei Dementyev, has said that shareholders in the Caspian Pipeline Consortium would be welcome to invest in this new 280 km pipeline which will bypass holdups in the Bosphorus and the Dardanelles.
It rather looks as if Oman is spoilt for choice when it comes to choosing pipelines.
