CPC pipeline outage forces Kazakhstan to cut oil output by a fifth (updated)

Novorossiysk Commercial Sea Port PAO

29/03/2022 06:31

(Adds CPC comment)
    NUR-SULTAN, March 29 (Reuters) - Kazakhstan is set to lose
at least a fifth of its oil production for a month after storm
damage to mooring points used to export crude from the Caspian
Pipeline Consortium (CPC), the energy ministry said on Tuesday.
    The former Soviet republic will have to cut its oil output
by 320,000 barrels per day, or 20%, until repairs are done to
fully restore capacity of the CPC's Black Sea terminal, the
ministry said in a statement.
    The cuts are likely to be made at the expense of giant
oilfields operated by Western oil majors such as the Chevron-led
 CVX.N  Tengiz which has said it is already pumping below
capacity due to the CPC limitations.
    In an incident highlighting the Central Asian nation's
dependence on its former Soviet overlord Moscow, the CPC
terminal near Russia's Novorossiysk port was completely shut
down briefly this month after a storm damaged its
mooring-points.
    The terminal which along with the 1,000-mile CPC pipeline
pumps 80% of Kazakh crude exports, is now operating with just
one of its three mooring-points, with repairs to the second
expected to last until the end of April. The third is usually
kept idle as backup.
    CPC said in a separate statement on Tuesday it was waiting
for the weather to improve and building up a stockpile of
equipment in order to begin the repairs. But it warned that
sanctions against Russia could make further upkeep difficult.
    "It is necessary to note that the main foreign equipment
suppliers - Imodco, Blue Water and Gall Thomson Environmental
Ltd - have already notified CPC-R (the Russian arm of the
consortium) that they would no longer cooperate with it and have
cancelled all the planned supplies despite the fact they CPC
prepaid them in December 2021," the company said.
    Kazakhstan can offset some of the drop in CPC capacity by
shipping crude across the Caspian Sea and then through the
Baku-Tbilisi-Ceyhan pipeline, or diverting it to other pipelines
leading to Russia and China, officials say.
    However, the forced output cut, along with planned
maintenance at the giant Kashagan field later this year, will
help Kazakhstan meet its commitments under a pact with OPEC+
producers, the ministry said in a statement.
    Kazakhstan has failed to cut its output in line with the
deal, producing in excess of its quota, although it has said it
would catch up this year.

 (Reporting by Tamara Vaal; writing by Olzhas Auyezov;
editing by Clarence Fernandez, Jason Neely and Louise Heavens)
 ((olzhas.auyezov@thomsonreuters.com; +7 727 2508 500; Reuters
Messaging: olzhas.auyezov.thomsonreuters.com@reuters.net))