Russia Orders Caspian Pipeline to Suspend Activity
- July 7, 2022
- Posted by: Quatro Strategies
- Category: Energy
A Russian court ordered the Caspian Pipeline Consortium (CPC), which delivers oil from Kazakhstan to the Black Sea through one of the world’s largest pipelines, to suspend activity for 30 days. Tengizchevroil, owned 50% by Chevron, has asked the CPC to clarify the details and next steps after the ruling.
CPC said the ruling was related to paperwork on oil spills and added that the consortium, which includes Chevron and Exxon, had to comply with Tuesday’s court ruling.
A disruption to the CPC would further strain the global oil market, which already faces one of its biggest crisis since the Arab oil embargo of the 1970s.
CPC said it submitted an appeal to the court asking the ruling to be suspended to avoid a stoppage that could lead to irrevocable consequences for the pipeline equipment.
Oil prices were up more than 1% on Wednesday at around $104 a barrel, on the back of by supply concerns.
Russia has reduced gas supplies via the Nord Stream 1, which supplies Russian gas to Germany and other European states. The pipeline has been operating at 40% capacity.
The United States has imposed sanctions on Russian oil imports but CPC oil flows through Russia were exempted. The EU has announced it aimed to phase out Russian fossil fuel imports by 2027.
CPC said Russia’s industrial safety regulator ordered an inspection on the facilities of the Russian part of the consortium. The inspection found some documentary irregularities on plans on how to tackle oil spills. An oil spill occurred at the terminal last year.
Kazakhstan said the government was discussing measures to tackle the impact of restrictions on oil exports via the CPC.
The pipeline exported up to 54 million tonnes, or some 1.2 million barrels per day of Kazakh crude last year from the Black Sea.
The pipeline’s operations have already been interrupted by storm damage to the Black Sea’s terminal equipment this year.
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