Kazakhstan Won't Drop Caucasus Export Route for Oil

ASTANA (Dow Jones Newswires), September 4, 2008

Kazakhstan won't drop the Caucasus as an export route for its oil despite regional tensions caused by a conflict between Georgia and Russia, chief executive of Kazakh state oil and gas company said Thursday.

CEO Kairgeldy Kabyldin of KazMunaiGas told reporters in the capital, Astana, that Kazakhstan has restored shipments of the Kazakh crude oil via the Georgian port of Batumi to earlier levels. Oil is shipped to Batumi on the railroad from Azerbaijan's capital of Baku.

"I believe that the increased transit of oil from the Caspian Sea to the Black Sea, from Azerbaijan to Georgia can become a stabilizing factor for the region," Kabyldin said. "Involvement of foreign and Kazakh companies (in the region) will help reach agreements on stability and security in the region more quickly."

He said that Kazakhstan ships 2.5 million metric tons of oil a year through KazMunaiGas-owned Black Sea port in Batumi.

Oil shipments through Batumi were halted after the armed conflict erupted last month between Georgia and Russia over Georgia's separatist region of South Ossetia.

The Caucasian crude oil export route is seen as key for Kazakhstan's ambitions to boost its oil production in the next decade. It currently produces around 1.3 million barrels a day.

Kazakh Energy and Mineral Resources Minister Sauat Mynbayev told an energy conference Thursday that Kazakhstan would boost its oil production to over 100 million tons, or 2 million barrels a day, by 2015. Most of that increased production will be exported to foreign markets, Mynbayev said, adding that oil and gas-rich Kazakhstan exported 60 million tons of oil last year.

Kazakh Prime Minister Karim Masimov Thursday vowed that Kazakhstan would "maintain its existing multi-sector policy with a special emphasis on the safety of these routes."

"Specific routes will be selected exclusively on the basis of economic viability and practical considerations," Masimov said. "As before, our country will participate in all major Eurasian energy transportation projects, including the Caspian Pipeline Consortium, Baku-Tbilisi-Ceyhan, Kazakhstan-China, Burgas-Alexandroupolis and pre-Caspian gas pipeline."

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