Home / Oil & Energy / General Energy News / Russia likely to maintain grip on Kazakhstan-China oil pipeline

Russia likely to maintain grip on Kazakhstan-China oil pipeline

Russia is likely to remain the dominant supplier of oil through the Kazakhstan-China pipeline even as Kazakhstan looks to diversify export routes, industry players say.

The Central Asian nation ships most of its crude to Western markets via Russia, but the main pipeline it utilises has curbed shipments twice so far this year.

Most recently, a Russian court ordered the CPC pipeline to suspend operations over spill concerns, before another court changed the ruling to a fine.

Amid the disruptions, Kazakh President Kassym-Jomart Tokayev ordered his government to look for alternative shipping routes.

The former Soviet republic already has a direct pipeline to China, but mostly uses it to tranship Russian crude. It plans to pump 10 million tonnenes of Russian oil this year compared with just 1 million tonnenes of its own.

Moscow sells oil to Beijing under a long-term deal which expires next year, and the sides are in talks to extend it.

Russia, under pressure from Western sanctions over Ukraine, is likely to offer a better price than Kazakhstan, market players say.

“Why buy Kazakh crude when there is plenty of cheap Russian (oil)?” said one trader speaking on the condition of anonymity.

The pipeline’s capacity could in theory be doubled to 20 million tonnenes, but Kazakhstan does not believe there is sufficient demand from China.

“China does not buy a lot of Kazakh oil and they do not need more,” said a Kazakh oil company executive who also requested anonymity because he was not to authorised to comment publicly.
Source: Reuters

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping