Russian President Vladimir Putin met with Kazakh President Noursultan Nazarbaev yesterday on Astana. Kommersant special correspondent Andrey Kolesnikov noticed that, after the meeting, the Kazakh president was sure that he had agreed with the Russian president on the expansion of the Caspian Pipeline Consortium, while the Russian president was equally sure of just the opposite.
The two presidents spoke much longer one-on-one than had been scheduled. Nazarbaev had been enthusiastic in the wider negotiations.
Consortium without Consensus
“I am completely in favor of having most Kazakh oil, if not all Kazakh oil, go to Russia,” he said.
He paused and added that he had reached an agreement with the Russian president on the expansion of the Caspian Pipeline Consortium.
“Vladimir Vladimirovich [Putin] and I discussed it in detail – from 23 million tons to 40 million,” Nazarbaev said, although the CPC pumped 31 million tons last year. “And the 17-million ton increase can go to Burgas-Alexandroupolis. We agreed and wrote it in the plan for joint action that the construction of the Burgas-Alexandroupolis pipeline and the expansion of the CPC would go parallel, so that we would be ready when construction finished.”
News of the expansion of the CPC must have been a shock for Transneft president Semyon Vainshtok, who also took part in the negotiations. Transneft, which only recent took over management of the Russian CPC assets, is strongly opposed to the expansion of the loss-making pipeline, since it would only be expanding it losses for Transneft.
After the expanded negotiations, the presidents held a press conference. The first thing that Putin said when they asked him to talk in more detail about the agreements they had reached probably disheartened Nazarbaev.
“We are working with oil with Kazakhstan,” Putin said. “The president of Kazakhstan raised the question of expanding the CPC. We are thinking about it and think that it is possible.”
That is a different story. The Russian president effectively disavowed the Kazakh president's statement. Putin obviously did not think any agreement had been made with Nazarbaev. And Vainshtok, I'm sure, heaved a sigh of relief.
It's a game that could turn out badly. Nazarbaev obviously thought he was in some sense doing Putin a favor when he spoke about expanding the CPC (as Putin seems to have thought himself when he spoke about it with Nazarbaev). The Kazakh president has a choice of ways to transport his oil that do not involve Russia. Hearing Putin speak, he may decide that it was time to look at that selection more closely.
The Kazakh president had gotten excited when he spoke of reaching an agreement with Putin. He obviously decided to wrap up their negotiations after not getting any clear response on expanding the CPC from the Russian president. Nazarbaev decided that he would solve that problem with his statement at the press conference. He was wrong.
Nazarbaev then said, “It is good news that our agencies reached n agreement on gas prices.
That agreement really exists, no mistake. After the press conference, I asked Gazprom head Alexey Miller what prices they were talking about – the price Gazprom will pay for Kazakh gas from the Karachaganak deposit or the prices the Kazrosgaz joint enterprise will charge.
“Both,” he said.
He did not give the exact numbers, but it was at least clear that Gazprom did not lose out by raising the purchase price for Kazakh gas along with the sale price.
The presidents answered a few more questions at the press conference. Putin caused a stir of interest when he said in reference to the social perspectives of cooperation at the Baikonur cosmodrome, “As for the future of Kazakhstan, it is decided through 2050.”
Nazarbaev looked at him questioningly. It was clear that Putin was referring to Baikonur, which is rented until 2050. But it sounded somewhat more ambitious.
After the press conference, I went up to Transneft's Vainshtok. He was talkative and looked triumphant, like someone who has just come through a huge spiritual trial, only to find out, to his relief, that it was just a big farce.
“Of course, the CPC has to be expanded,” he said. “Of course. There is only one condition. One. It has to make a profit. But it is losing money! We have to sit down and figure this out. Calculate operating costs and minimize them. Calculate profit margins. And then set the fee. Just think. If you compare the costs of Atyrau-Samara with the CPC, the costs for CPC are $70 per ton higher. Not $7. $70!”
It was a tense day.
The two presidents spoke much longer one-on-one than had been scheduled. Nazarbaev had been enthusiastic in the wider negotiations.
Consortium without Consensus
“I am completely in favor of having most Kazakh oil, if not all Kazakh oil, go to Russia,” he said.
He paused and added that he had reached an agreement with the Russian president on the expansion of the Caspian Pipeline Consortium.
“Vladimir Vladimirovich [Putin] and I discussed it in detail – from 23 million tons to 40 million,” Nazarbaev said, although the CPC pumped 31 million tons last year. “And the 17-million ton increase can go to Burgas-Alexandroupolis. We agreed and wrote it in the plan for joint action that the construction of the Burgas-Alexandroupolis pipeline and the expansion of the CPC would go parallel, so that we would be ready when construction finished.” News of the expansion of the CPC must have been a shock for Transneft president Semyon Vainshtok, who also took part in the negotiations. Transneft, which only recent took over management of the Russian CPC assets, is strongly opposed to the expansion of the loss-making pipeline, since it would only be expanding it losses for Transneft.
After the expanded negotiations, the presidents held a press conference. The first thing that Putin said when they asked him to talk in more detail about the agreements they had reached probably disheartened Nazarbaev.
“We are working with oil with Kazakhstan,” Putin said. “The president of Kazakhstan raised the question of expanding the CPC. We are thinking about it and think that it is possible.”That is a different story. The Russian president effectively disavowed the Kazakh president's statement. Putin obviously did not think any agreement had been made with Nazarbaev. And Vainshtok, I'm sure, heaved a sigh of relief.
It's a game that could turn out badly. Nazarbaev obviously thought he was in some sense doing Putin a favor when he spoke about expanding the CPC (as Putin seems to have thought himself when he spoke about it with Nazarbaev). The Kazakh president has a choice of ways to transport his oil that do not involve Russia. Hearing Putin speak, he may decide that it was time to look at that selection more closely.
The Kazakh president had gotten excited when he spoke of reaching an agreement with Putin. He obviously decided to wrap up their negotiations after not getting any clear response on expanding the CPC from the Russian president. Nazarbaev decided that he would solve that problem with his statement at the press conference. He was wrong.
Nazarbaev then said, “It is good news that our agencies reached n agreement on gas prices.
That agreement really exists, no mistake. After the press conference, I asked Gazprom head Alexey Miller what prices they were talking about – the price Gazprom will pay for Kazakh gas from the Karachaganak deposit or the prices the Kazrosgaz joint enterprise will charge.
“Both,” he said.
He did not give the exact numbers, but it was at least clear that Gazprom did not lose out by raising the purchase price for Kazakh gas along with the sale price.
The presidents answered a few more questions at the press conference. Putin caused a stir of interest when he said in reference to the social perspectives of cooperation at the Baikonur cosmodrome, “As for the future of Kazakhstan, it is decided through 2050.”
Nazarbaev looked at him questioningly. It was clear that Putin was referring to Baikonur, which is rented until 2050. But it sounded somewhat more ambitious.
After the press conference, I went up to Transneft's Vainshtok. He was talkative and looked triumphant, like someone who has just come through a huge spiritual trial, only to find out, to his relief, that it was just a big farce.
“Of course, the CPC has to be expanded,” he said. “Of course. There is only one condition. One. It has to make a profit. But it is losing money! We have to sit down and figure this out. Calculate operating costs and minimize them. Calculate profit margins. And then set the fee. Just think. If you compare the costs of Atyrau-Samara with the CPC, the costs for CPC are $70 per ton higher. Not $7. $70!”
It was a tense day.
Tags: Blogalaxia:Russia,Putin,Gazprom
