[ASIA] Chevron to help Kazakhstan skirt Russia with pipeline

Chevron will help Kazakhstan's state oil company build a $1.5 billion pipeline from the nation's biggest producing field to the Caspian Sea, expanding export routes to world markets that bypass Russia.

The U.S. crude producer, the main shareholder in Kazakh oil venture TengizChevroil LLP, will help construct the link from Yeskene, near Atyrau, to Kuryk, near the Aktau port, Chief Executive Officer David O'Reilly said in a statement posted on President Nursultan Nazarbayev's Web site late Thursday.

The pipe will add to Chevron's export options as it ramps up production in Kazakhstan. The venture plans to boost output almost 60 percent to 540,000 barrels a day by the end of this year, or about 25 million tons a year, Ian MacDonald, regional vice president, said May 28. Of that, 13 million tons will be exported via the Chevron-led Caspian Pipeline Consortium link and 12 million tons transported in rail cars, MacDonald said.

Kazakhstan, which holds 3.3 percent of the world's oil reserves, and San Ramon, California-based Chevron have for years sought Russian approval to expand the CPC link. Russia agreed on May 7 to double the pipeline's capacity to as much as 67 million tons of oil a year by 2012.

The 750-kilometer (465-mile) Yeskene-Kuryk link will be built in two years and have an initial capacity of 23 million metric tons a year, Nazarbayev's press secretary Yerlan Baizhanov said, according to the state-run Kazinform news service.

State-run KazMunaiGaz National Co. said in January it would start sending oil across the Caspian Sea to the BP Plc-led Baku- Tbilisi-Ceyhan pipeline in 2012. The new link will carry oil from the Kashagan and Tengiz fields to Kuryk for shipment by tanker to Azerbaijan, where the BTC link to Turkey originates.

"The new pipeline will increase its capacity to 56 million tons of oil when crude production at Kashagan will start," Baizhanov said. Kazakh Energy Minister Sauat Mynbayev said May 12 that commercial output at Kashagan may not begin until 2012 or 2013.

Source: Bloomberg

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