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Friday, 07 April 2017 19:00

Will the Caspian summit be held this year? Featured

It is hard to overestimate the results of the visit of the President of Kazakhstan Nursultan Nazarbayev to Baku, their importance in maintaining regional stability and solving urgent problems of cooperation in the Caspian, including Kazakhstan's contribution to the formation of new economic vectors for cooperation of the Eurasian countries. In BakuKazakhstan’s President was awarded with Heydar Aliyev’s Order, the superior order of Azerbaijan, by Ilham Aliyev. “To award Kazakhstan’s President Nursultan Nazarbayev with Heydar Aliyey Order for exceptional services in strengthening friendly relations between Kazakhstan and Azerbaijan”, the press service of the President of the Republic of Azerbaijan quotes the order. Foreign citizens receive this award for distinguished service to Azerbaijan, in particular for building political, economic, science and cultural relations between Azerbaijan and other countries.

In spite of the fact that Kazakhstan joined in the well-known Ankar declaration in 1998, which initiated a practical implementation of the Baku-Tbilisi-Ceyhan (BTC) project, Kazakhstan is consistent in building multi-vector economic international relations.

However, for it has not exported oil in the western direction yet, but actively develops the export in the direction of China (Atasu-Alashankou) and Russia (CPC, Atyrau-Samara pipelines). Kazakhstan has not got any acute issues with neighbor countries and upholds a constructive position about the Caspian Sea status, which coincides with the stance of Azerbaijan.

Therefore, the Conventional about the Caspian status is expected to be signed already this year in Astana. According to Kazakhstan’s Foreign Affairs Minister Erlan Idrisov, “it is necessary to divide the Caspian Sea bed between the Caspian states into areas where they will enjoy sovereign rights for the conduct of exploration and development of the natural resources of the Caspian shelf”. Proceeding from the same considerations, Kazakhstan finds it necessary to include the right of inland Caspian states for free transit of all means of transport and for access to other seas and oceans into the text of the Convention, as enshrined in a number of universal international treaties. In this case it involves not only the vessels but also other types of transport, including pipelines”, the Minister concluded after the completion of the session the working group on the Caspian status held in Astrakhan last year. Settlement of the Caspian Sea status will help to connect the eastern and western coast of the Caspian Sea, but only partially, as the complex of economic relations and trade turnover between the two countries leave much to be desired. Transport, production and trade relations were the focus of the talks between the leaders of Kazakhstan and Azerbaijan on April 3. It is transport, production and trade issues were in the agenda of negotiations of leaders of Kazakhstan and Azerbaijan on April 3.

"The trade, providing opportunities for development of other areas of cooperation, remains the main core of our relations. Today's meeting has revealed the need to increase trade turnover, since the existing volume of $140 million does not meet our interests”, Nursultan Nazarbayev said after the meeting with Ilham Aliyev.

“Now we are talking about transportation of containers from China. As far as you know, it takes 14 days to deliver containers to Western Europe and to the UK, whereas it takes 40-45 day across the seas and oceans. And now the question is to have goods delivered to Europe through the Caucasus, Baku and the Caspian Sea. The potential here is great. The estimates indicate that the volume of freight transportation will total 6-7 bln dollars. The substantial part of them will cross Baku”. So we asked all states (Turkey, Georgia, Azerbaijan, Kazakhstan) to consider and make tariffs beneficial for transportation”, Nursultan Nazarbayev highlighted at the briefing for journalists.

“Kazakhstan’s market is of big interest to us. And I want to say once again that we have specifically discussed the positions on which we can export and import to and from Kazakhstan”, Ilham Aliyev said.

“We are buying modern vehicles, diesel locomotives and electric locomotives from Kazakhstan.

I have also informed Nursultan Abishevich about the potential of the Baku shipyard, which produces all types of vessels, tankers and ferries. We place orders ourselves and also invite Kazakh companies to take advantage of the opportunities of this modern enterprise”, the Head of State of Azerbaijan emphasized.

We have found out that there is a potential to rapidly raise the goods turnover by several time in coming 2-3 years”, President of Kazakhstan resumed.


Transit potential of Kazakhstan

On the next day after the visit to Baku, President of Kazakhstan Nursultan Nazarbayev opened (April 04) Azersun Production and Logistics Center LLP in Aktau.

“LogisticsCenter in Aktau is aimed at reducing the cost of food products. It is necessary to take measures to increase in volume the storage and transportation of goods by way of reducing costs and supplying food products to both Mangistau and other regions of the country”, the President of Kazakhstan said. The size of made investments is $21.4mln. The overall area of the center comprises 4.2 hectares. The center receives and ships cargoes by railway, sea and motor transport.

Early in April Baku seaport processed the first cargoes shipped from the new port Kyryk (Mangistau region). Operations on construction of another berth are underway here now. It will open new opportunities for vehicle transporting vessels (Ro-Ro and Ro-Pax).

Kyryk port is located 100km to the south of Aktau. Construction of the port began in April 2015. The annual project capacity totals 4 mln tonnes of ferry freights. The project cost about $100mln. The port will increase Kazakhstan’s capacities on transshipment of ferry cargoes by three times and become an important link of the transport-logistics system of the Trans-Caspian international corridor.

In October of last year Azerbaijan, Kazakhstan and Georgia signed an agreement about establishment of the International Association ‘Trans-Caspian International Transport Route’ (TITR) headquartered in Astana. Its work is aimed at attracting transit and external trade cargoes, as well as at developing integrated logistics products within the framework of TITR. Trans-Caspian International Transport Route goes to Europe across China, Kazakhstan, Azerbaijan, Georgia and a number of other countries.

As far as the overall transit potential of Kazakhstan is concerned, it is big. Kazakhstan has to have 4-5 thousand railway platforms in operation in order to ensure transit, Chairman of the Board of KTZ-Express JSC Dias Iskakov said at the briefing early in March.

“Our company is performing container transportation and we see that there has been a steady growth since 2011. Comparing indicators of 2016 with those of 2011, we see a 100 growth of the volume of container transportation in the transit direction along China-Europe-China route, Trans-Caspian route and North-South route – it is Russia, Kazakhstan, Turkmenistan and Iran.

According to our forecasts, the volume of container transportation will reach about two million TEU by 2020 which means a twenty-foot container equivalent unit. In general, at present we see a stable and very rapid growth of container transportation”, D.Iskakov said.

According to him, China-Europe-China route is the major road for container transportation inside the Eurasian continent. Last year the company transported over 250,000 containers through all routes, while the transportation along the China-Europe-China totaled over 104,000 TEU. “KTZ Express” will receive 1,102 units of 80-feet platforms which are universal and capable of transporting two 40-feet containers. After working visit made to China on February 27 and the meeting with Minister of Transport of China Li Xiaopeng, Minister on Investments and Development of RK Jenis Kasymbek wrote on his facebook page that according to estimates of experts, the volume of trade in the region will reach 1.2 trillion dollars by 2020. At the same time, the turnover of goods between China and the European Union will reach 800bln dollars while the volume of cargo transportation will increase up to 170mln tonnes.

“For us it is getting important to develop container transportation from China to Central Asian countries, Russia, Europe, as well as to Iran and Near East countries. Container transportation along the China-Kazakhstan-Europe is the most beneficial route for freight transportations”, J. Kasymbek wrote.


Trans-Caspian project

“There was a time when we supported Baku-Tbilisi-Ceyhan and in the future there is a prospect that Kazakh oil will go along this route to Turkey and Europe”, President of Kazakhstan Nursultan Nazarbayev said the joint press conference with President of Azerbaijan Ilham Aliyev. It is important for Kazakhstan to use one more export route, since production at the largest offshore field Kashagan with reserves from 9 to 13 billion barrels of oil and more than 1 trillion cubic meters of gas can grow to 1.5 million barrels a day in the next 5 years.

The shareholders of NCOC, the operator of Kashagan, are: AgipCaspian Sea B.V. (16.81%), ExxonMobil Kazakhstan Inc. (16.81%), KMG Kashagan B.V. (8.44%), Samruk-Kazyna (8.44%), Inpex NorthCaspian Sea Ltd. (7.56%), Shell Kazakhstan Development B.V. (16.81%), Total EP Kazakhstan (16.81%) and CNPC Kazakhstan B.V. (8.33%).

Energy Minister of Kazakhstan Kanat Bozumbayev did not rule out oil supplies from the Kashagan field via Azerbaijan already in 2017, KazTAG reports.

According to him, in this case it will be possible to use “the system of both railways and oil pipelines via Azerbaijan”. “Because the volume of production is expected to grow significantly in the near future”, the minister said.

Production at Kashagan resumed in September last year and in 2017 it is planned to produce from 4 to 7 million tonnes of oil.

In turn, last October Minister of Energy of Azerbaijan Natig Aliyev said about the plans to construct the 739-km long Eskene-Kuryk-Baku oil pipeline. “The pipeline will enable Kazakhstan to deliver oil to the ports of Georgia and Turkey via Azerbaijan. At the first stage its capacity will be 23-25 million tonnes per year and reach up to 56 million tonnes per year in the future”, Natig Aliyev said.

According to his estimates, the existing oil pipelines, including the Caspian Pipeline Consortium, do not ensure using of the export potential of Kazakhstan - only Azerbaijan can do this with its oil pipeline system, primarily thanks to BTC.

The length of the Eskene-Kuryk oil pipeline is estimated at 770 km, and 950 km with the connection of the pipeline from the Tengiz field. Moreover, in 2009 “the agreements were reached on involvement of the French side in the project for construction of the export main oil pipeline from the Caspian Sea to Baku and Europe”, the President of Kazakhstan told Kazakhstan Today.

Whatever the case, now Kazakhstan has two main oil export routes.

On March 31, the 100 millionth ton of oil was transported through the Alashankoucustody transfer point of the Atasu-Alashankou main oil pipeline since when the oil pipeline was put into operation. The pipeline’s owner is Kazakhstan-China Pipeline LLP, a jointly controlled entity of KazTransOil JSC and CNODC. The Atasu-Alashankou oil pipeline became the first export pipeline in the CIS area to ensure a direct access to the promising market of China.

Oil supplies towards Russia also break records. “As of March 2017, 4,929,486 tonnes of oil (38,990,365 barrels) were shipped at the sea terminal of the Consortium. This is the record volume for a month during for the entire operation of the Tengiz-Novorossiysk oil pipeline system. Since the beginning of the year, 13,014,080 tonnes of oil (102,883,780 barrels) were shipped”, the released press statement said.

The report said that the previous record was set in December 2016, then 4 517 286 tons of oil (35 729 373 barrels) were loaded for tankers per month.

Thus, the potential for a multiple increase in trade between the countries is obvious. The question is only in the time of using this potential. Most likely, much will depend on results of the Summit of the Caspian littoral countries in Astana, which was to be held back in 2016, but despite the intensity of the negotiation process and the important agreements already reached in Astrakhan in 2015, it was postponed to the next year.


Natalya Aliyeva, Editor-in-Chief of Caspian Energy


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