Karachaganak Petroleum Cleared to Continue Exports on Cpc

ASTANA. June 2 (Interfax) – Karachaganak Petroleum Operating (KPO) has received permission from customs officials in Atyrau region to export oil on the Caspian Pipeline Consortium (CPC) pipeline.

“The company’s documents were processed on Friday. They have begun exporting oil without paying export duties,” the head of the Finance Ministry’s customs control committee Yerzhan Baitanayev told Interfax on Monday.Last Friday a source close to KPO told Interfax the consortium might face a cutoff of exports on CPC due to the unresolved issue of export duties.

The customs control department in Atyrau region would not sign off on an oil export declaration for June because the Energy and Mineral Resource Ministry has not provided notification of whether KPO must pay the export duty, he said.

“If the issue is not resolved, Karachaganak may have to halt exports on CPC on the evening of May 31, since it does not have an approved declaration for June,” he said. KPO “faces a choice: either it pays the duties for June in order to keep exports flowing, or it defends its position, but then the pipeline may be closed to it.”

Kazakhstan introduced a customs duty on oil exports May 17. The rate is $109.91 per tonne of crude oil and $27.43 per tonne for those who pay royalties for exported oil and gas condensate. The customs duty on export of heavy distillates, coke and bitumen is $82.2 per tonne.

Initially the Kazakh Finance Ministry said the export duty did not apply to Tengizchevroil (developing the Tengiz and Korolevskoye fields) and Karachaganak Petroleum Operating “because their contracts include guarantees of stability.”

Karachaganak Petroleum Operating produced 11.588 million tonnes of oil in 2007, 11.6% more than in 2006.

Karachaganak is estimated to contain over 1.2 billion tonnes of oil and condensate and 1.35 trillion cubic meters of gas. The participants in the project are BG and Eni, each with 32.5% interest, Chevron – 20%, and Lukoil (RTS: LKOH) – 15%.

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