August 23, 2022 [ Upstream Media ] – No immediate solution to new technical issues in sight while Russia remains under Western sanctions

A key oil pipeline and export terminal capable of handling about 1% of global crude supply has announced a new reduction in loadings at its marine terminal near the Russian port of Novorossiysk on the Black Sea, stating that fresh problems came to light following a subsea inspection.

Caspian Pipeline Consortium carries 80% of Kazakh crude exports via its pipeline network across Russian territory to the export terminal at Novorossiysk, but has been excluded from Western sanctions against Russia following the invasion of Ukraine because its network remains the major export route for Kazakhstan’s foreign-led Tengiz, Kashagan and Karachaganak oil producing projects.

The consortium, which has Chevron, ExxonMobil, Shell and Eni among its stakeholders, said it had been forced to “temporarily suspend” crude shipments from two out of its three offshore tanker loading buoys at the marine terminal after cracks were discovered in connections between subsea offloading hoses and submerged buoyancy tanks.

Caspian Pipeline said it had to interrupt loadings from its SPM-1 and SPM-2 mooring points due to damage at “the attachment points of underwater sleeves to buoyancy tanks”.

The tanks are anchored midway between the buoys and seabed templates and serve to stabilise the oil feeding hoses during adverse weather conditions.

PIPELINE CONSORTIUM

One well-placed source with inside knowledge of Caspian Pipeline told Upstream that the consortium’s Russian subsidiary has two new tanks in storage, but described the matter as one that is “unlikely to be resolved anytime soon”.

Caspian Pipeline said it is trying to shortlist potential contractors to replace the two marine tanks.

However, the source consulted by Upstream stressed the job will have to be approved by all of the Caspian Pipeline partners.

Caspian Pipeline reported earlier this year that two of the offloading buoys were damaged by a powerful storm.

Repairs were reportedly delayed because international contractors and suppliers were reluctant to work with the operator to replace or repair damaged offloading systems due to fears about the reach of Western sanctions imposed on Russian interests following the invasion of Ukraine.

External contractor sought
Transneft-Service, a Russian-based contractor brought in to provide maintenance services to the marine terminal near Novorossiysk, is unable to handle the task of replacing the damaged tanks due to a lack of sea lifting equipment, according to the source.

It is unclear whether the repair will take place before the arrival of colder weather, when operational conditions are considered riskier.

Partial loadings of oil, coming mainly from Kazakhstan, are continuing with the third loading buoy, which is newer than the two suspended loading buoys, according to the operator.

However, the third buoy is expected to bear a loading rate of about 880,000 barrels per day, the operator said.

Caspian Pipeline exported more than 1.2 million barrels per day of oil from Kazakhstan to European and other international markets using the three Russian-based offshore loading buoys.

Planned upgrades are supposed to boost throughput capacity to 1.5 million bpd.

Tensions with Kazakhstan
According to reports in the Kazakh capital of Nur-Sultan, foreign-led operators at two largest development projects in the country — Tengiz and Kashagan oilfields — have had to extend maintenance periods at the two projects in response to Caspian Pipeline’s reduced capacity.

Caspian Pipeline said that foreign shareholders were informed about the cracks discovered on the first and second buoys on 5 and 17 August.

The company continued loadings until it received notices from the buoys’ manufacturer Imodco — part of SBM Offshore Group — and the American Bureau of Shipping, advising to suspend operations from these facilities.

Kazakh oil and gas industry social network channel Energy Monitor has also reported supposed disagreements between representatives of Russian oil pipeline monopoly Transneft and foreign shareholders after loading terminal maintenance shifted to the Transneft-Service contractor last year.

Transneft oversees operations of Caspian Pipeline’s Russian subsidiary and appoints its top and middle management on behalf of the Russian government that holds a 31% stake in the pipeline.

The source who spoke to Upstream vehemently rejected suggestions about poor Russian maintenance of the marine terminal, saying that most issues date back to the period when the facility was maintained by a previous contractor.

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