Thursday, December 23, 2010

Kazakhstan Increasing Ties to Europe

Kazakhstan President Nursultan Nazarbayev pledged in October to increase energy exports to the European Union. Kazakhstan already meets 20 percent of the EU's energy needs, and its 3.3 trillion cubic meters of gas reserves ("The EU and Kazakhstan Aim for Enhanced Partnership," Eurasia Daily Monitor 7/211, 19 November 2010) would be a welcome addition to Europe's energy hope chest.

The first step in increasing energy deliveries was announced on December 15, but it concerned oil instead of gas. The Caspian Pipeline Consortium agreed to invest $5.4 billion to double the pipeline's capacity from 35 million tons to 70 million tons. This is more than double the original 2005 estimate that the project would cost $2 billion. Investors should not be concerned, however, since expected annual revenues after completion in 2014 is $2.3 billion ("CPC in $5.4Bln Bid to Double Capacity," The Moscow Times, 16 December 2010).

The project is scheduled in three phases, and it includes the refurbishment of the existing five pump stations and the replacement of 88 kilometers of pipeline. New construction will include 10 additional pump stations, six new storage tanks, and a third offshore mooring point at Novorossiysk. (

The Caspian Pipeline is 1,511 kilometers long, running from the Tengiz oil field to the Black Sea port of Novorossiisk. (Moscow Times, ibid.) The pipeline does not transverse the Caspian Sea, but runs along the northern rim. As a result, the pipeline crosses Russian territory and is not part of a solution for Europe to develop energy independence.

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