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Russian court orders halt to Caspian oil pipeline but exports still flow

Russian court orders halt to Caspian oil pipeline but exports still flow

FILE PHOTO: An exterior view shows a new pumping station of the Caspian Pipeline Consortium (CPC) near the city of Atyrau, Kazakhstan October 12, 2017. REUTERS/Mariya Gordeyeva

MOSCOW :Caspian Pipeline Consortium (CPC), which takes oil from Kazakhstan to the Black Sea via one of the world's largest pipelines, has been told by a Russian court to suspend activity for 30 days, although exports were still flowing.

Tengizchevroil, the operator of Kazakhstan's largest oilfield Tengiz, said oil supplies via the CPC pipeline have not been interrupted.

Tengizchevroil, in which Chevron holds a 50 per cent stake, said that it has sought clarification from the CPC on details and next steps after the ruling.

Three industry sources also said oil supplies from the fields in Kazakhstan to the CPC pipeline were uninterrupted as of Wednesday morning.

CPC, which handles about 1 per cent of global oil, said the ruling to suspend operations related to paperwork on oil spills and said the consortium, which includes Chevron and Exxon, had to abide by Tuesday's court ruling.

Any major disruption to the CPC would put further strain on the global oil market which is facing one of its the worst supply crunches since the Arab oil embargo in the 1970s.

CPC said it had submitted an appeal to the court in the Russian Black Sea port of Novorossiisk requesting that the enforcement of ruling be suspended to avoid a stoppage that could lead to irrevocable consequences for the pipeline equipment.

CPC did not offer further comment when contacted by Reuters.

The CPC pipeline has been in the spotlight since Russia sent troops into Ukraine, in what it calls a "special military operation". Western sanctions imposed as a result have driven down Russian exports and pushed up oil prices.

Oil prices were up more than 1 per cent on Wednesday at around $104 a barrel, supported by supply concerns.

Russia has already reduced gas flows via the Nord Stream 1 gas pipeline, which supplies Russian gas to Germany and other European states. That pipeline has been operating at 40 per cent capacity because of a dispute over equipment repairs.


The United States has imposed sanctions on Russian oil but has said flows from Kazakhstan through Russia should run uninterrupted. The European Union, meanwhile, has said it wants to wean itself off reliance on Russian fossil fuels by 2027.

A terminal situation report seen by Reuters showed oil loadings from CPC terminal were continuing as of midday on July 5 but it was not clear if operations were continuing on July 6.

CPC said on Wednesday that Russian Deputy Prime Minister Viktoria Abramchenko ordered regulators, including industrial safety regulator Rostekhnadzor, to inspect the facilities of the Russian part of the consortium.

It said the inspection has found some "documentary" irregularities on plans on how to tackle oil spills. An oil spill occurred at the terminal last year.

Kazakhstan said the government was discussing measures to tackle the impact of restrictions on oil exports via the CPC.

The pipeline exported up to 54 million tonnes, or some 1.2 million barrels per day, of Kazakhstan's main crude grade, light sour CPC Blend, last year from the Black Sea.

The pipeline's operations have already been interrupted by storm damage to the Black Sea's terminal equipment this year.

Separately, Kazakhstan police said there was an explosion at the giant Tengiz oilfield, the main source of oil for the CPC, killing two workers, Interfax news agency reported.

The operator said that production at the field was continuing after the accident.

Source: Reuters


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