Russian Pundit Looks at Future of Oil Supply Routes From Central Asia
Boris Makarenko, deputy head of Centre for Political Technologies, has said that although Russia does not own the Caspian Pipeline Consortium, it is “the lesser evil” of the two choices for transporting oil from Central Asia. He was speaking on Radio Russia’s “At First Hand” programme, hosted by Natalya Bekhtina, on 15 May.
Makarenko disagreed with the view that President Putin’s recent visit to Kazakhstan and Turkmenistan and the signing of a declaration on pipelines “has changed the global energy balance”. “Nothing will change, neither today nor in the next year. Energy balance cannot be changed quickly. In order to resolve problems in energy relations with Europe (and to a lesser extent, with the rest of the world), President Putin had to go to [Central] Asia for one simple reason – Turkmenistan is the second largest producer of gas in the post-Soviet area after Russia, while Kazakhstan has the biggest unused reserves of oil. In the next 10 to 20 years, Kazakhstan’s oil production will grow dramatically, and everyone is interested in that oil,” Makarenko said.
He went on to say that negotiations with Kazakhstan and Turkmenistan were “not easy” and that Russia was likely to pay a higher price for Turkmen gas than today. Noting the difference in the availability of means of transportation for oil and gas, Makarenko said that with respect to gas Russia “in principle” managed to secure control over the gas delivery route from Turkmenistan to Europe.
As regards oil, Makarenko said: “It is obvious that in 10-15 years, when the volume of Kazakh oil grows significantly, Russia’s North Caucasus-Novorossiysk pipeline alone will not be enough. There are two options. One is the so-called CPC, Caspian Pipeline Consortium, in which Russia is a significant, but not controlling, shareholder. For the time being, we do not like this pipeline very much because it is privately owned, it does not belong to the Russian state-owned Transneft company. This pipeline is not very profitable, but it exists, and Russia has an interest in it. The alternative way is to transport oil across the Caspian Sea, using tankers for example, through Azerbaijan and Turkey to the Mediterranean Sea, through the so-called Baku-Tbilisi-Ceyhan pipeline. Neither of these two alternative pipelines is quite advantageous for Russia, but here we will probably have to choose the lesser evil. Although, according to official statements, there is no final agreement yet, most probably Russia will agree to the transportation of Kazakh oil through the pipeline that is not our state-owned pipeline but goes through our territory, with our participation. After all, it goes to a Russian port. In that case, it will be possible to transport this oil, and the pipeline from the Bulgarian port of Burgas to Alexandroupolis in Greece, on which an agreement was recently reached, will become real.”
Makarenko also noted that Russia needed long-term plans to deal with the potential problem of gas shortage in the future due to its inefficient use and low domestic tariffs.
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