March 28, 2022 [Argus] – Loadings of Caspian CPC Blend were halted today following storm damage to offshore single point moorings (SPMs) at the Black Sea terminal where the crude is loaded.
“Loading at the sea terminal has been completely stopped,” Caspian Pipeline Consortium (CPC) general director Nikolai Gorban said. “Reception through the pipeline is taking place, but there is only free capacity left in tanks until tomorrow evening.”
The CPC system is the main export route for Kazakhstan’s crude. The CPC terminal near the Russian Black Sea port of Novorossiysk has 10 storage tanks, each with 100,000m³ of capacity.
Earlier today Russian deputy prime minister Alexander Novak told Russia’s lower parliamentary house, the Duma, that repairs to the SPMs could take one-and-a-half to two months “during which this volume of crude will not be supplied to global markets”.
CPC had said yesterday that the system will operate at around a third of its normal capacity following storm damage to two of the three offshore SPMs where crude is loaded. “Repairs are likely to last for an extended period of time because of the unfavorable weather forecast,” it said.
The disruption to CPC Blend supplies, which account for 80pc of Kazakh crude and condensate exports, will hit Kazakhstan’s three largest oil fields, Tengiz, Kashagan and Karachaganak. The fields are operated by international consortiums, whose members include US firms Chevron and ExxonMobil.
The disruption comes against the background of a recent US ban on Russian oil imports and increasing calls from some EU members for a similar ban. When announcing its ban, the US said that supplies of Kazkah crude through the CPC system would not be affected.
Tengiz operator Tengizchevroil is led by Chevron with a 50pc stake, in partnership with ExxonMobil with 25pc, Kazakh state-owned firm Kazmunaigaz with 20pc and Lukoil subsidiary Lukarco with 5pc. ExxonMobil has a 16.81pc stake in Kashagan operator NCOC, while Chevron has 18pc in Karachaganak operator KPO.
Exports of CPC Blend, which includes small volumes of Russian crude, are scheduled at 1.52mn b/d in April, 3pc higher than this month. Some crude could be diverted for shipment through the Baku-Tbilisi-Ceyhan (BTC) pipeline or by pipeline to China, as well as by rail. But spare capacity on alternative routes is limited.
CPC’s Gorban said yesterday that it could take at least three weeks to restore one of the damaged SPMs if the weather is favourable, although he cautioned that it is unclear if the consortium has enough equipment and materials to carry out the necessary work. “Currently, relations with foreign partners for the supply of equipment are rather complicated, so I assume that there will be certain difficulties,” he said.
Sanctions imposed by the US and EU on the Russian energy sector over the Ukraine conflict would not necessarily cover SPM equipment, but many international firms are shying away from doing business in Russia. Producers of Kazakh crude have made requests this month to pump additional amounts through the CPC system in order to reduce shipments through Russia’s Transneft pipeline network. This followed a sharp decline in the value of Urals crude against benchmark North Sea Dated.
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