May 8, 2008

Kazakstan: We Don’t Need No Stinking Pipelines


Russia can’t get any love these days, not from the Washington Post, or Sen. McCain, and now Kazakhstan.

While everyone else is busy giving Medvedev unwanted advice on making Russia more friendly for democracy, EurasiaNet reports that Kazakhstan is dutifully working to cut Russia out of the Central Asian oil bonanza.

Et tu, Brute?

After years of paying ridiculous transit fees, the Kazakhs have had enough. “Attention is shifting to an oil transport route after Kazakhstan’s senate in late April ratified an energy export treaty with Azerbaijan…The treaty sets out the conditions for shipping Kazakhstani oil to Western markets via a route that bypasses Russia.”

What about Caspian demarcation, you say? A pipeline can’t be built.

Pipelines...we don’t need no stinking pipelines.

Instead, Kazakhstan will use boats, lots and lots of giant boats. These will be expensive boats with expensive port facilities, storage areas, and transfer points. The new “Caspian Transportation System” will cost $3 billion up front, with an additional $10 billion budgeted to transform Aktau (pictured) into an “energy hub."

While this demonstrate a slight western bias in Kazakhstan’s export priorities, as opposed to competing Chinese interests, Moscow stands to loose considerable revenue if it can no longer maintain a virtual monopoly on Central Asian export routes.

The Kremlin’s response will be telling.

4 comments:

Anonymous said...

This might be the real deal with Azerbaijan, but there must be a lollipop for the Chinese in the works, too. The Kazakhs can't afford to piss off both the big boys at the same time.

Ern said...

I just want to take this opportunity to pat ourselves on the back and say, "Congrats on our 700th Blog Entry! We did it, baby!"

Leopolis said...

If the Kazakhs do this then Russia will lose 1) yes, substantial transit revenue but also 2) the ability to commit to their own exports because of lack of Central Asian supplies and 3) subsidizing domestic consumers with Kazakh oil.

Most of all it's a big "up yours" to Russia for blocking expansion of CPC.

It also seems that Odessa-Brody, the rusty white elephant, could be jolted back to life once Kazakhstan starts pumping oil thru BTC at the maximum level.

Nazarbaev is also considering the construction of the Evraziya canal to link the Caspian and Black Seas without the use of pipelines:

http://eizvestia.com/state/full/23121

Maybe for Nazarbaev, this plan to boost ship traffic instead of importing steel and know-how to built pipelines is his way of "diversifying" the Kazakh economy and avoiding Dutch disease....?

Pirates&Diplomats said...

Leopolis, definetly agree on points 1-3.

The canal idea reminds me of Stalin's infamous white canal, and all of those delightful Belomorkanal papirosa I smoked.

But a canal to the Black Sea would be as long as Macadonia. I don't buy it.

Also, where on earth are the Kazakhs going to get enough boats for this idea. It's not like you and order them from Korea. This means Russian or Kazakh (?) made.

They'll have to build up their shipbuilding capacity, which will cost even more.

It's a damn bold idea. But this kind of project is like nothting the Kazakhs have tried before, in scope or ambition.

I'm going to cheer them on, but I don't know if it's going to fly.