Kazakhstan to use Baku-Supsa oil pipeline

It has become clear that the capacity of the Baku-Tbilisi-Ceyhan oil pipeline is not sufficient to cope with all of Kazakhstan’s oil exports. Therefore the Kazakh Ministry of Energy and Mineral Resources is considering transporting its oil through the existing Baku-Tbilisi-Supsa pipeline as well. However, this will mean Kazakhstan will be completely at the mercy of Azerbaijan’s fixed tariffs.

Malik Salimgereev, Director of the relevant department of the Ministry, has stated that in 2008 Kazakh sent its oil to Makhachkala (4.5 million tonnes), Baku (2.07 million tonnes) and Neka (1.7 million tonnes). However it is planned to considerably increase exports in the Baku direction by activating new transportation systems. This is a long-term plans for 2013-2014, when the Kashagan oil field starts functioning., and envisages sending 23 million tonnes of oil through Azerbaijan to begin with, eventually increasing this to over 50 million. However Azerbaijan will also be seeking to increase its output during this period, meaning that the need for additional oil transportation facilities has become very important recently.

The Kazakh side is prepared to use the existing Baku-Supsa oil pipeline but agreement should be reached between Kazakhstan and the pipeline Azeri international operations company before this can happen. From January-July this year 1.7 million tonnes of oil has been exported through Baku-Supsa, only about a quarter of the pipeline’s total capacity. Moreover, it has been reported that the Azeri side is interested in increasing the capacity of this pipeline. If Kazakhstan will finance this technical modernisation, the Azeri side most probably will agree to it using the pipeline.