Karachaganak linked up
13/01/2003, Gulmira Kenjegalieva
In the end of 2002 the administration of Caspian Pipeline Consortium has signed its third agreement on transportation of oil with Karachaganak Integrated Organisation, which is the consignor of a number of CPC shareholders.
The mutual interest of both parties to this contract is more than obvious. One party wants to earn money, offering its pipe as a transport means, and another one is interested in pushing its commodity to the world market, using the companions services.
The middle of July, 2003, will be marked by a big event, at which the participation of two presidents is supposed - Kazakhstan and Russia. Exactly in this period Karachaganak crude hydrocarbons will start to be pumped into CPC system.
The same period will also be marked by the second phase of Karachaganak project development intended for 40 years. For Kazakhstan the commissioning of export pipeline Karachaganak-Atyrau connected to the CPC, is of strategic importance. It's not for nothing that the foreign authority of the country observes the fact of the economic growth of the country after the commissioning of the pipeline. As soon as Karachaganak-Atyrau pipeline is commissioned, the production of liquid hydrocarbons is planned to increase significantly - to 10 million tons against 5 in the previous year. And in the future it is planned to increase the production at the field up to 12 million tons per year. This record figure for Karachaganak and it is exactly in this period that the FPSA participants are going to receive a significant profit from the field development. The third phase of Karachaganak development will be directed exactly at the strengthened operations at the field. Today, foreign investors will bear colossal costs. And the second phase of the project is the most expensive, in total 3.5 billion US dollars were invested in it. Big funds were required for the pipeline and processing complex construction. One of the alliance participants, Russian company "Lukoil", possessing 15 per cent of the share in Karachaganak project, last year even took a loan in the World Bank in the amount of 150 million dollars exactly for financing its share of costs in Karachaganak development.
The first Karachaganak oil will come to CPC in the middle of July of 2003. At this period the visits of presidents Nazarbaev and Putin to Western Kazakhstan is expected. Today KIO reported that the export pipeline Karachaganak-Atyrau, with the 635 km length, is ready for final tests. As "Gazeta.кz" correspondent has been advised in the PR Department of KIO, the construction of a pipeline, which will allow Karachaganak field production to reach the world markets, was finished three months nefore the schedule. At the present stage all efforts are directed at the completion of facilities, related with the pipeline. These include: valve blocks, scrapers receipt chambers, the pumping station at Big Chagan and the terminal in Atyrau, where the pipeline will be connected to the CPC pipeline.
The pipeline connecting the field with the terminal in Atyrau, was constructed in 14 months.
Currently, preparations are carried out for final tests with the usage of a special measuring swab for a detailed inspection of the pipeline. This work will take 57 days and includes a series of tests with the usage of various instrumentation to confirm the inner geometry and the pipe walls thickness. Besides, the work on construction of 32 valve blocks, located along the pipeline, as well as two intermediate scrapers receipt chambers.
The pipeline construction is one of the most difficult and labour intensive projects of this phase, apart from financing. Only to by-pass the archaeological monuments of Western Kazakhstan, lying on the way of the pipeline construction, foreign investors had to spend 2 million dollars. In total at the construction of the pipeline 7 thousand workers are employed, tha main part of which are Kazakhstanis. By the way, during the whole period of work they expressed their discontent with the employer - the project's main contractor CCC/Saipem. The latter has not always been correct towards the workers, infringing upon their interests in the payment of salaries, as well as in creation of elementary living conditions.
Many facts of the workers rights abuses at Karachaganak are related with this company. However, the consortium CCC/Saipem has gained an experience of work at a field of world importance so it won the bid for Baku-Cheyhan pipeline construction late last year without any problem. It leaves Kazakhstani market, but it will leave its trace in the shape of its small unit at Karachaganak.
As analysts observe, after the commissioning of the CPC (Tengiz-Novorossiysk) the work load of Atyrau-Samara pipeline will be reduced significantly. If previously the main exporters problem lied in gaining an access to this pipeline, now it's in finding oil for this route. On the other hand it's not so simple to get the CPC loaded, therefore the interest of Caspian Pipeline Consortium in Karachaganak crude material with its growth taken into consideration is quite understandable.
But the main thing for any pipeline consortium is, undoubtedly, the quality of transported crude. Therefore, as Sergey Gnatchenko, first deputy general director of CPC, observes, "due to the fact that the consignors provide oil of various qualities to the CPC, while loading "the CPC blend" to tankers, the CPC Oil Quality Bank provides compensation payments between the consignors. From the qualitative characteristics of oil in the CPC system sulphur density and content are measured. This provides a receipt of full value of oil by each producer in compliance with its market value".
To link up the Kazakhstani oil consignors with the CPC system in Atyrau two 1.5 km long pipeline branches were constructed, connecting "KazTransOil" pumping stations with the CPC. In accordance with the increase of the consignors number, CPC and "KazTransOil" are planning to increase the quantity and the capacity of linking facilities.
And in relation with this Karachaganak is for sure interested in the CPC. Karachaganak reserves make around 12 billion of oil and condensate and 1.35 trillion cubic meters of gas.