Kazakh CPC sess Black Sea Exports Up 40 Percent

The Caspian pipeline consortium, shipping crude from Kazakhstan to Russia's Black Sea port of Novorossiisk, said on Friday its exports will rise by 40 percent to 435,000 barrels per day by the beginning of 2004. The group, led by U.S. ChevronTexaco, said the increase was largely due to new oil from the giant Kazakh Karachaganak field, operated by British BG and Italy's ENI.

Russian Black Sea oil exports are also expected to rise, which, with a planned gradual rise in Iraqi supplies, sets the scene for tough competition among crude sellers in the Mediterranean market.

CPC is currently exporting 1.3 million tonnes a month or 310,000 bpd.

"The latest forecasts for the oil sector development in the Caspian region show the need to expand the capacity of the CPC pipeline," the CPC statement quoted its general director Ian MacDonald as saying.

"By optimising the system and using drug reducing agents (DRA), the consortium will be able to increase the initial pumping capacity of the pipeline (435,000 bpd) by another several million tonnes (a year)," he said.

A CPC official added that this increase could come as early as next year depending on the shippers' requests.

"But this is a temporary measure. Increased oil output by the shippers will require further phased expansion of the system by constructing new pump stations and storage tanks at the marine terminal near Novorossiisk," said MacDonald.

CPC's maximum designed capacity is 67 million tonnes a year, of which 17 million tonnes can be shipped by Russia if it builds a link between CPC and its pipeline monopoly Transneft.

Russia has said it prefers to use its own pipeline system and ports to ship crude to the West, which means CPC's maximum capacity for Kazakh crude only is 50 million tonnes or one million bpd.

CPC currently transports crude from of five different Kazakh fields, of which Tengiz, operated by Chevron, and Karachaganak are the biggest.

Output at both fields is set to rise but experts say CPC will be able to reach its maximum designed capacity only with the crude from Kazakhstan's third giant field, offshore Kashagan, operated by ENI and set to produce the first oil in 2005-2007.