Kazakhstan Considers Joining Iranian Oil Pipeline Project
Excerpt from Yelena Butyrina’s report, entitled “Kazakhstan may participate in the Iranian Neka-Jask oil pipeline construction project”, published by Kazakh newspaper Panorama on 29 February
Kazakhstan may participate in a project on the construction of the Neka-Jask oil pipeline in Iran to make provision for transit of its oil via this country, a source at the information policy department of the KazMunayGaz [Kazakh oil and gas] national oil and gas holding company has said to Panorama [newspaper]. “The Kazakh side is analyzing prospects for its participation in the Neka-Jask oil pipeline project at the moment,” the source said, responding to a relevant inquiry from Panorama.
[Passage omitted: on special working group that is studying the issue and sizing up common positions on swap operations]
It is proposed that the Kazakh oil, earmarked for the Neka-Jask oil pipeline, will be delivered to the Iranian coast by tankers via the Caspian Sea from Kazakh sea ports, the source at the department said.
Presumably, KazMunayGaz and the National Iranian Oil Refining and Distribution Company will set up a joint venture to implement this transport project. As is known, [Kazakh] President Nursultan Nazarbayev has already approved the project on the construction of the Neka-Jask oil pipeline earlier. Therefore, the on-going consideration of the issue of involving KazMunayGaz in the project is rather of purely economic nature and concerns discussion of commercially favourable terms for the Kazakh side. Participation of the Kazakh company should, among others, provide it with cheap access to open seas.
[Passage omitted: background on the Neka-Jask oil pipeline]
However, despite the fact that Kazakhstan has been interested in the Iranian direction for a long time, Astana is not making public its plans for possible implementation of the project on constructing this oil pipeline due to the multivector nature of its foreign policy. For the time being, it is satisfied with the increasing transport volumes on tankers by sea and potential participation in the Neka-Jask project. Gradual entering into the prospective Iranian and then to the Middle Eastern market will make it possible to study their opportunities, identify guaranteed sources of raw materials as well as to “prepare” Iran’s adversary, represented by the United States, for increasing the Kazakh share in hydrocarbon supplies in this region. Only after that Astana may seriously consider constructing an oil pipeline system jointly with Iran.
It is worth noting the involvement of Total and Inpex in the commercial working group for swap operation issues: these companies – which are, at the same time shareholders of the Agip KCO international consortium (operator of the North Caspian project) and BTC Co (operator of the Baku-Tbilisi-Ceyhan oil pipeline) – signed a memorandum on establishing a Kazakh Caspian transport system exactly one year ago. This project, in particular, envisages transporting oil from the Kashagan deposit via the Caspian Sea and then via Azerbaijan and Georgia to Ceyhan [in Turkey]. It is being lobbied by Washington and is a competitor of the Iranian route. Despite the fact that Kazakhstan officially joined the BTC Co project already one and a half years ago, our oil has not gone in that direction up to the present. A year after the above mentioned memorandum was signed, a source at KazMunayGaz said that projecting and research work for constructing the Yeskene-Kuryk oil pipeline and for the Transcaspian project has not been carried out and, therefore, the implementation period, technical and economic parameters, investment volume and financing schemes have not been determined yet.
Originally published by Panorama, Almaty, in Russian 29 Feb 08, p 7.
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