Tag Archives: pipelines

Georgia to receive pipeline fees

MAY 20 2016 (The Conway Bulletin) — Georgia’s PM Giorgi Kvirikashvili said that he hopes to receive 1b cubic metres of gas annually as payment in-kind for the transit of Azerbaijani gas through Georgia via the Southern Gas Corridor. Azerbaijan will pump 16b cubic metres of gas through a network of pipelines, called the Southern Gas Corridor, to Europe. The project will be completed in 2019.

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(News report from Issue No. 282, published on May 27 2016)

Azerbaijan may receive funding for pipeline from EBRD

MAY 25 2016 (The Conway Bulletin) — During a trip to Azerbaijan, EBRD President, Sir Suma Chakrabarti, confirmed that the Bank is considering a €1.5b ($1.7b) loan to the Trans-Adriatic Pipeline (TAP), part of the Southern Gas Corridor network that will pump gas from Azerbaijan’s Caspian Sea fields to Europe (May 25). Sir Suma also said the Bank is considering co-financing the TANAP pipeline, which will run from Azerbaijan through Turkey to Greece, where it will joint TAP.

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(News report from Issue No. 282, published on May 27 2016)

Stock market: Nostrum Oil & Gas and KTO pipeline

MAY 27 2016 (The Conway Bulletin) — Amsterdam-based Nostrum Oil & Gas posted poor results for Q1 2016, but the company’s promising outlook encouraged investors, sending its share up by 1% when the results were published on May 25 before falling on May 26.

The share price has grown steadily since the beginning of April, as the company successfully completed maintenance work the month before.

The management is confident that new agreements and infrastructure would boost the company’s profile “We look forward to completing negotiations to open up the possibility of transporting our crude oil through the KTO pipeline, thereby further reducing our crude oil transport costs,” CEO Kai-Uwe Kessel said in a statement. The KTO pipeline is the network operated by the Kazakh pipeline company KazTransOil.

Mr Kessel also said that the company plans to ramp up production by 2.5 times to 100,000 barrels of oil per day in 2017.

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(News report from Issue No. 282, published on May 27 2016)

Azerbaijani and Georgian delegation to attend ceremony TAP construction start

MAY 17 2016 (The Conway Bulletin) – Azerbaijan and Georgia sent a delegation to Greece for the groundbreaking ceremony of the Trans Adriatic Pipeline (TAP), part of a network of pipelines that will pump gas from the Caspian Sea to Europe, in a show of support for a project that the European Union considers vitally important.

Georgia’s PM Giorgi Kvirikashvili and Azerbaijan’s deputy PM Yagub Eyyubov attended the inauguration event with Greek Prime Minister Alexis Tsipras, European Commissioner Maroš Šefčovič and Special Envoy at the US State Department Amos Hochstein.

“Georgia, as a transit country, reiterates its commitments to the diversification of energy supplies to Europe and expresses supports for existing and future energy projects connected to the Southern Gas Corridor,” Mr Kvirikashvili said.

The so-called Southern Gas Corridor, a network of pipelines, is scheduled to be completed in 2019 and will send 16b cubic metres of gas to Europe every year.

TAP will ship 10b cubic metres from Greece’s border with Turkey across the Adriatic Sea to Italy. From there it will be pumped to central Europe.

Mr Kvirikashvili said the project “creates a new dimension for economic cooperation and for the security in the region.”

Azerbaijan is an integral part of the project. The Corridor’s pipelines will be filled with gas from its major fields, chiefly Shah Deniz.

Azerbaijan is also invested in the construction and management of the pipelines. SOCAR, the state energy company, owns 20% of TAP. BP (20%), Snam (20%), Fluxys (16%), Enagas (16%) and Axpo (5%) consti- tute the remaining shareholders.

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(News report from Issue No. 281, published on May 20 2016)

Editorial: European gas

MAY 20 2016 (The Conway Bulletin) – Construction work on the Trans-Adriatic Pipeline (TAP) has begun. It will link the Azerbaijani and Turkish sections of the so-called Southern Gas Corridor to Greece and Italy.

The Southern Gas Corridor is the EU and the US’ pet project and will bring Azerbaijani gas to Europe.

This is the culmination of years of planning and fending off rival projects, Russian and European.

But the fundamentals of the energy sector have changed dramatically in the past couple of years. The oil price collapse means that profit margins have dropped through the floor, making it near impossible to invest in major infrastructure projects.

That is unless you’re working on the Southern Gas Corridor. The point is not that the Southern Gas Corridor is more profitable than other pipelines, it isn’t, but that politics is more important than economics on this project.

The drivers of the project want to reduce Europe’s reliance on Russia for gas.

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(Editorial from Issue No. 281, published on May 20 2016)

Russia says it needs to approve Turkmen-Azeri trans-Caspian pipeline

MAY 12 2016 (The Conway Bulletin) – Russia’s ambassador-at-large for Caspian affairs, Igor Bratchikov said that the Kremlin will not allow the construction of any projects across the Caspian Sea that are not sanctioned by all littoral states. “Unilateral action on construction of Trans-Caspian pipelines is inadmissible,” Mr Bratchikov said. Azerbaijan and Turkmenistan have discussed for years the possibility of building a trans-Caspian gas pipeline.

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(News report from Issue No. 280, published on  May 13 2016)

ADB expects Turkmenistan’s TAPI to be completed by 2021

MAY 5 2016 (The Conway Bulletin) – The Asian Development Bank (ADB) said it expects the TAPI pipeline project to be completed by 2021. TAPI will pump Turkmen gas to India through Afghanistan and Pakistan. The Turkmen government insists the pipeline would be ready by 2019. For Turkmenistan TAPI has become a race against time. It wants to diversify its client base. The ADB, which is an adviser on the project, has offered a potential $600m loan.

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(News report from Issue No. 279, published on May 6 2016)

 

Turkmen President woos Qatar

APRIL 29 2016 (The Conway Bulletin) – Turkmen President Kurbanguly Berdymukhamedov invited Qatar’s business community to invest in the construction of the Turkmenistan- Afghanistan-Pakistan-India (TAPI) gas pipeline. The first investment agreement was signed by the consortium shareholders in April 2015. The project is considered pivotal in connecting South and Central Asia as well as for securing the long-term future of Afghanistan.

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(News report from Issue No. 279, published on May 6 2016)

 

Business comment: BTC fails to live up to hype

APRIL 29 2016 (The Conway Bulletin) – In the early 2000s, the Baku-Tbilisi- Ceyhan (BTC) oil pipeline was hailed as a key component of the New Silk Road, designed by the West for the West. The dream might now be over.

Western oil producers wanted a pipeline that would pump Caspian oil to world markets without having to pass through Russia.

Everyone in Washington DC was excited. “Happiness is multiple pipelines” was the slogan that could be heard espoused by US diplomats and oil companies. It was even seen on bumper stickers around the US capital.

The 1b barrels/day dream pipeline was inaugurated in 2005 and relied on Azerbaijan’s largest oil fields as well as on Kazakh and Turkmen trans-Caspian shipments.

The decade-long excitement, however, seems to have hit a wall as Kazakh oil shipments have now faded away.

Experts don’t believe shipments will resume anytime soon. Tengizchevroil appears to have let its contract with BTC lapse. Kazakhstan’s Aktau port management has said it doesn’t foresee oil shipments from Tengiz resuming.

At a time of low oil prices and rising extraction prices, cutting expenditure on shipments of oil across the Caspian Sea was the obvious move for Kazakh producers.

Tengiz, and Kashagan whenever it comes online, will use the expanded Caspian Pipeline Consortium for future exports.

This choice will isolate Azerbaijan at a time when it is under the spotlight to become Europe’s new gas provider. The take-home from this story is that corporate interest, in the long run, overrides diplomatic objectives.

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(News report from Issue No. 278, published on  April 29 2016)

 

Kazakh oil producers ditch BTC pipeline export route

ALMATY, APRIL 26 2016, (The Conway Bulletin) — Kazakh oil producers have stopped exporting via the Baku- Tbilisi-Ceyhan (BTC) pipeline as they become increasingly cost-conscious during this period of low global oil prices, a shift that will damage Azerbaijan’s reputation as an energy transit route from Asia to Europe

Data from BTC showed that Kazakhstan’s latest contribution to the pipeline was in January. This is the first time in years that Kazakh producers have suspended shipments for more than a month.

This confirms the marginalisation of BTC as an export route for Kazakh producers, most predominantly Chevron-led Tengizchevroil (TCO).

Analysts said the ditching of BTC as an export route for Kazakh oil, a route once heralded as the region’s saviour, was linked to both contractual and market constraints.

“The contract between TCO and BTC for shipments recently ended, and with the CPC pipeline expansion adding new export capacity, there is capacity to export more TCO oil via CPC, which is a more economical option for TCO at low oil prices,” said Andrew Neff, senior petroleum analyst at IHS.

The CPC, Caspian Pipeline Consortium, is an oil pipeline that sweeps around the northern Kazakh shore of the Caspian Sea and ends at the Russian Black Sea port of Novorossiysk. It was designed in the 1990s to ship oil from TCO, Kazakhstan’s largest producer. It’s been gradually expanded and shipped 1.1m barrels/day in March, nearly double its rate of 10 years ago. BTC’s capacity is 1m barrels/day but in March 2016, it transported 721,500 barrels/day.

CPC is a cheaper export route because, to ship oil to the start of BTC, Kazakh producers needs to transport oil across the Caspian Sea.

Mr Neff, the IHS oil analyst, said that as well as hitting BTC’s earnings, dropping Kazakh oil from its mix will also reduce the quality of BTC exports.

“It will change BTC’s overall blend and lower its quality, as Turkmen crude is heavier, plus it will reduce oil transit revenues for Azerbaijan,” he said.

BTC’s main shareholders are BP with a 30% stake and Azerbaijan’s state-owned SOCAR with a 25% stake.

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(News report from Issue No. 278, published on  April 29 2016)