51 per cent, not less!
text: Dmitry Pertsev , exclusively for Gazeta.kz
Kazakhstan will not export oil on Baku-Tbilisi-Ceyhan pipeline, unless it controls the pipeline. Astana wants to get it within the TransCaspian project of oil supply straight to the pipeline Baku-Tbilisi-Ceyhan (BTC).
Actualization of this project will allow Kazakhstan to reinforce its positions on the issue of expansion of capacities of the Caspian pipeline system (CPC), on which the Kazakhstani oil is provided to Europe via territory of Russia.
The talk is about that within the framework of the project on developing the biggest Kashagan oil field, Agip KCO consortium together with Tengizshevroil JV (TSO, where Chevron Texaco Overseas owns 50 per cent, Exxon Mobil Kazakhstan Ventures Inc. - 25 per cent, KazMunayGas - 20 per cent, Russian-American LUCArco JV - 5 per cent) in January 2007 signed with the national company KazMunayGas a memo on mutual understanding of the basic principles of cooperation on project of creation the KCST.
KCST - is a Kazakhstani Caspian system of transportation of hydrocarbons, more known as the TransCaspian project.
The Kazakhstani side not coincidentally has raised an issue about control under the system. At the moment it has 20 equity share in TSO and the only issue is only whether to add to this share 31 per cent more. The other participants of the consortium and TSO just do not want to share, considering the current condition of the shares as fair one. However, their stubbornness may delay the process of launching of the KCST, thereby, giving opportunity to Russia to intercept the initiative and to resolve the issue of expansion of the CPC from 32 up to 67 million of tons a year.
Interests of Russia
If Russia were interested in expansion of the CPC, nor problems would have appeared. But the point is that the CPC has become a great headache for Russia long ago. The Caspian Pipeline System created in the Soviet time, recently has become disadvantageous for the Russians.
One can think that the problem is rooted in the structure of the participants, who do not wish to obey the terms of Russia. Pursuing big profits (what is also not bad, as business can not work in another format), foreign participants of the project do not want to reconsider the conditions of the old contract. There is a number of circumstances, which do not satisfy the Russian side. Firstly, credit cost. Russian side considers that the credits are overrated and requires to reconsider them given their lowering. Only in this case the project might be cost-effective and interesting. Secondly, the CPC heavily owed to tax bodies of Russia, and without solving this issue Moscow does not count participation in the CPC as optimal one.
But why in this case, the Russians simply not to leave the project, just selling its share to the third party? The point is that, Russia can not act like this: it means losing control over the project, which with its bigger part goes through its territory. On the other hand, Moscow just has to have in view oil projects on the territory of Kazakhstan: if transportation of oil avoiding Russia is a reality, the country will lose the ability to influence this process. Therefore, for purely economic motives the geopolitical background is added - influence of Russia in the Caspian region.
Today, the USA, Europe, China and India show interest to the Caspian hydrocarbons. Japan and the Southern Кorea could be added to the list, who understand that the crisis will finish, and the importance of energy sufficiency will remain: it should be solved despite the present not much exciting economic conjuncture.
As soon as Russia will leave the consortium and TSO, it place will be occupied by oil companies from the countries which are interested in the project. Simultaneously in the structure of two key commercial structures there can be alliances, which are able to resolve the problem of the delivery of the Caspian, but in greater extent, of Kazakhstani oil namely to the infrastructure, which would sharply reduce the influence of Russia in the region Baku-Tbilisi-Ceyhan and other oil pipelines avoiding Russia.
Interests of business
Foreign participants of the consortium and the TSO not occasionally look across the Caspian at Baku. From business point of view - it is an optimal direction of oil export, which is able to reduce sharply charges on transportation, and thereby, to increase rebound of the project.
And they do not fear that initially oil should be contained in tankers, and then at the Azerbaijani seaside, transshipped to the pipeline. Firstly, marine transportations always have been ones of the cheapest, secondly, difficulties of reloading are not so severe, given the distance of the transportation.
But the most basic cornerstone is the position of Russia. It stipulates expansion of the CPC as a necessity to reconsider percents on previously obtained credits and increase of tax payments charged for oil circulation rate.
In this regard reconsideration of the CPC credits interests is rather difficult and ambiguous process. Investors understand that loans were made earlier and on such interests, which had been regarded at that time as fair one. Reconsideration of the contracts - is a long affair, linked with the risks to lose trust of the project's investors.
Investors also are not in a hurry to reconsider tax payments for oil circulation rates. It sharply alters all economy of the project. In front of those, who narrowed the project with money, operators presented a picture of effective investments, saying, that creditors will return their money with a good interest margin. If the conditions of Russians are to be fulfilled, then it is necessary to run negotiations with creditors again, persuading them to wait and simultaneously to reduce sharply profitability of business.
If someone wants to see political motives in the actions of foreign participants of the consortium and TSO, he or she will see it by all means. Although, if to approach this problem soberly, they want what any business would like to have: to return as soon as possible loan money, and become profitable and to get it.
As for the position of Russia on the CPC, it really provokes foreign participants to distrust related to the Russian authorities. They can not give any guarantees to creditors, that after the CPC is expanded up to 67 million tons a year, and Moscow will not have any pretensions to the project, which are, finally may be not doable.
On the other hand, expansion of the CPC make the project very much dependable from Russia, what concerns sponsors of the project a lot. They understand that even expansion of the pipeline will not resolve all problems of the oil transportation: others, alternative Caspian transportation Consortiums are needed, as well as routes of oil supplies avoiding Russia. Alternative will just reinforce positions of developers of Kashagan and will increase trust to them on behalf of the investors.
When interests coincides
Within the framework of fulfillment of the Trans Caspian project is necessary to build Eskene-Kuryk oil-pipeline and at the same time to expand capacities of the sea port Kuryk, having transformed it into high-class reloading point of the Kazakh oil towards Azerbaijan. It is also necessary to purchase big tankers with deadweight over 60 thousand ton. It is definitely that on the Trans Caspian system - system of long-term tanker transportation - oil will go not only from Kashagan, but from Tengiz.
And not let's make elementary mathematics calculations. Expansion of the CPC will enable to pump in additional 35 million ton of oil. Trans Caspian project at the initial stage will allow to transport 25, and then 38 million ton of oil. In 2008 Kazakhstan extracted about 70 million ton of oil, out of them 63 million were sent for export.
By 2010 the extraction is planned to be increased up to 80 million ton, and up to 100 million ton - by 2015. The CPC, oil pipeline Atyrau-Samara, Atasu-Alashankou - these are routes of transportation of the Kazakhstani oil could not tackle the objective to transport Kazakhstani oil.
Therefore, Kazakhstan should have routes, due to which it will be independent from Russia. The case of Ukraine on transportation of the natural gas proves that Russia from time to time uses dependency of other countries on it in its political goals. The Trans Caspian project - is a good chance to get such an alternative.
The necessity in control over transportation of oil by tankers across the Caspian Sea is ruled by the motives, which pushes Kazakhstan towards independency from Russia in the issues of export of oil. I am confident that foreign participants of the consortium should understand, what causes tough position of Kazakhstan: Astana should be assured, that the project on the territory of the country will be under its control. As any businessmen, foreign participants may have a seduction to maximize its revenues, forgetting about Kazakhstan. And control over the project is a guarantee that interests of the Republic of Kazakhstan will be of a priority.
The last but not the least, the USA, for whose money the oil pipeline Baku-Tbilisi-Ceyhan has been constructed, Europe, whose money plays the leading violin in the project, understand the obvious: BTC badly needs the Kazakhstani oil, without which it is impossible to speak of its commercial success.
Also in the "In Depth"
09.01.2013 2012 marked by multiple events in Kazakhstan