Russia shuts down Novorossiysk oil terminal after Kazakhstan offers to send more oil to the EU

Russia shuts down Novorossiysk oil terminal after Kazakhstan offers to send more oil to the EU
# 06 July 2022 12:38 (UTC +04:00)

A Russian court ordered the “temporary closure” on Wednesday (6 July) of the Novorossiysk oil terminal, which is key for exporting Kazakh oil, just two days after President Kassym-Jomart Tokayev told Council President Charles Michel his country is ready to send more oil to the EU, APA reports citing Euractiv.

According to press reports, a Russian court has temporarily shut down the Caspian Pipeline Consortium’s (CPC) oil terminal at Novorossiysk over ‘environmental concerns’ in a closure that will last 30 days, a CPC statement said.

Closures of the Novorossiysk terminal are frequent, and it was previously closed in June over the reported discovery of 50 World War II-era explosives in the port’s waters. It was also shut down in March due to damage sustained during a storm. During the three-week closure, the world market lost some one million barrels of oil.

Kazakhstan annually supplies 67 million tons of oil through Russia to Europe.

The Russian court’s decision comes two days after a telephone conversation between Tokayev and Michel.

According to a press release by the office of Tokayev, he said “Kazakhstan could contribute by acting as a “buffer market” between East and West, South and North” about “the deepening geo-economic fractures”.

“Kassym-Jomart Tokayev has also expressed concern about the risks to global energy security and emphasized Kazakhstan’s readiness “to use its hydrocarbon potential to stabilize the situation in the world and European markets”.

Kazakhstan is rich in oil and gas. However, it needs the gas for its own consumption, and there is no pipeline to export Kazakh gas to the EU. Regarding oil, there is scope to increase exports to mitigate the reduced flows of Russian due to EU sanctions.

Last month Kazakhstan branded its exports via Russian seaports to Kazakhstan Export Blend Crude Oil (KEBCO) to dissociate it from oil originating in Russia to avoid sanction risks and issues with financing.

“Due to recent significant geopolitical changes … and to avoid the negative effect of the changes on Kazakh oil exports via Russian ports, from June 2022, the following name for the grade applies – KEBCO (Kazakhstan Export Blend Crude Oil)”, Kazakh oil producer CNPC-Aktobemunaigaz that transits its oil via Russian ports said, as quoted by Reuters.

Although Kazakhstan is a member of the Russian-led Eurasian economic union and the Collective Security Treaty Organisation, Tokayev said that his country would not recognize the breakaway so-called ‘Republics’ of Donetsk and Lugansk.