The country, which offers the shortest direct route for Central Asian oil and gas to international markets, has long sought to engage with the land-locked energy-rich states that became independent after the collapse of the Soviet Union in 1991. However, up to now, it has had limited success, and currently the country is facing the possibility of international sanctions over the issue of its use of nuclear power. But with offshore oil production in the Kazakh sector of the Caspian Sea set to soar from 3m tons/yr to nearly 90m tons/yr within a decade, Iran sees itself more than ever as an appropriate export option. “History has proved that economics shall prevail and politics shall fail,” Mr Khaghani said, speaking at a meeting in Almaty.
Kazakhstan, seeking to diversify from its dependence on Russia as an export route, is prioritizing sending its oil exports across the Caspian Sea to the BP-led Baku-Tbilisi-Ceyhan (BTC) pipeline, which has just entered service. France’s Total is leading the $4-bn Kazakhstan Caspian Transportation System (KCTS), which envisages pumping oil from the giant Kashagan field to the Kazakh port of Kuryk, then shipping it westward across the Caspian Sea to Baku. “We hope that we will soon reach a commercial agreement on the business structure of this project,” Kairgeldy Kabyldin, managing director of transport and service at state oil firm KazMunaiGaz, told the meeting. He also proposed expanding the Caspian Pipeline Consortium, which pumps oil from the Tengiz oilfield, and expanding a new eastward pipeline to China as priorities of Kazakhstan’s oil-export policy.
Despite this, Iranian officials consider that, within ten years, Central Asian will need a major southern export route. Mohammad Souri, managing director of the National Iranian Tanker Co (NITC), told the Almaty meeting that Iran was buying six new, larger, tankers to traverse the Caspian, which would boost the capacity of its Neka oil terminal. He went on to say that Iran wanted to increase imports of Central Asian crude to 370,000brl/d, which it would put through its Tehran and Tabriz oil refineries. At a later stage, volumes could be increased to 500,000brl/d, he confirmed. He estimated transport costs at $6/ton using the larger 63,000-ton capacity tankers, or around one-fifth of the cost incurred via other export routes.
An alternative viewpoint was expressed at the meeting when oil executives virtually dismissed Iran’s chances of becoming a key export route for Caspian crude, noting that in the current political climate their US partners would never support such an option. “For them it would be impossible,” Philippe Rochoux, managing director at Total E&P Kazakhstan, said. In addition to its role in KCTS, Total is involved in a study into the proposed Kazakhstan-Turkmenistan-Iran oil pipeline, which would be routed down the east Caspian coast. However, “it’s not a project that we are seriously considering,” Mr Rochoux was reported as saying.