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The timing of the decision, of course, raised some eyebrows, but more importantly the lack of diversity of Kazakh oil export routes.
On July 6, a Russian court ordered the Caspian Sea Pipeline Consortium (CPC) to suspend operations for 30 days. CPC transports oil from Kazakhstan to Russia and to the edge of the Black Sea. Although it handles just over 1 percent of the world’s oil, CPC is critical to Kazakhstan; About 80 percent of Kazakhstan’s oil exports move through the Novorossiysk oil terminal.
The timing of the decision naturally raised some eyebrows, coming just two days after Kazakh President Kassym-Jomart Tokayev. Speaking to the President of the European Council Charles Michel Over the phone, Nur-Sultan was “ready to use its hydrocarbon potential to stabilize global and European markets.”
early last monthThe European Union imposed a partial embargo on Russian oil imports as part of the sixth package of sanctions in response to the Russian invasion of Ukraine. But the ban on Russian crude oil transported by sea did not take effect until December. As a Bloomberg article pointed out in late June, Russian exports of oil to Europe were Already starting to crawl back upThis is largely due to shipments to Russian-owned refineries in Italy and increased purchases by Turkey. In any case, Europe’s goal is to reduce its imports of Russian oil, and Kazakhstan stands as an option – but Kazakhstan’s exports to Europe depend on Russian pipelines.
The series of events does not necessarily refer to Kazakh-Russian tensions, although some have certainly come to this conclusion. Instead, the dirty work of transporting oil and the restrictions that Kazakhstan faces due to the lack of diversification of export routes are at the heart of the issue. Regarding the latter, Kazakhstan faces a geographic dilemma: since Russia or China are the main avenues for oil exports, diversification is not so simple.
a CPC Press Release About the stop, in late April, Rostransnadzor, the Russian federal agency that oversees transportation, including pipelines, ordered an audit of the company operating the Russian segment of the pipeline, CPC-R. After the review ended in May, it “revealed a number of documentary violations under the Oil Spill Response (OSR) plan”.
On June 6, the Committee to Protect Civilians issued a permit to address the violations by the end of November 2022. But Rostransnadzor appealed to the court on July 5 to immediately halt operations in Novorossiysk for 90 days. The court ordered the 30-day suspension, and the Civilian Protection Authority said it would appeal.
While some will particularly note political timing, as discussed above, this is not the first problem in Novorossiysk. as such Euroactiv . indicated:
Closures of the Novorossiysk plant are frequent, and it was previously closed in June due to the discovery of 50 WWII-era explosives in the port waters. It was also closed in March due to damage sustained during the storm. During the three-week shutdown, the global market lost about one million barrels of oil.
Indeed, the scrutiny that identifies problems with the oil spill response plan is not necessarily a shock. in August 2021, There was a leak in Novorossiysk while loading a Greek tanker. Although CPC said the leak was quickly contained, analysis of satellite images by the Institute for Space Research at the Russian Academy of Sciences indicated that the leak was larger than what the company announced. Evgeny Lubyan, deputy director of the institute, reportedly said, “Estimates show that there are about 40, 60, 80 tons of oil. It is by all accounts much more than the 12 tons announced by the company. A spill of this magnitude is certainly unprecedented in the Black Sea.”
on me 29 June 2022 CPC paid Russia 5.282 billion rubles ($83.6 million) in compensation for damages caused by the spill in August 2021.