Europe braces for further cuts in Russian oil and gas exports

An interior view shows a new Caspian Pipeline Consortium (CPC) pumping station near the city of Atyrau, Kazakhstan October 12, 2017. REUTERS/Mariya Gordeyeva

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  • CPC says two of three mooring points (SPM) are suspended
  • An SPM can handle less than 70% of the terminal’s capacity – sources
  • The Nord Stream 1 gas pipeline under maintenance
  • This content was produced in Russia where the law limits coverage of Russian military operations in Ukraine

MOSCOW, Aug 22 (Reuters) – Europe is facing further energy supply disruptions due to damage to a network of pipelines carrying oil from Kazakhstan via Russia, reported by the pipeline operator on Monday. adding to concerns over falling gas supplies.

CPC, which handles around 1% of the world’s oil and whose biggest shareholder is Russian pipeline company Transneft, said exports from two of its three berths at a Black Sea terminal had been suspended, confirming a report from Reuters. Read more

The West accuses Russia of restricting energy supplies to raise prices in retaliation for sanctions imposed after Moscow invaded Ukraine in what the Kremlin calls a special military operation. Russia denies this, blaming Western sanctions themselves and various technical issues.

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Russian natural gas supplies to Europe are down around 75% year-on-year, with export firm Gazprom announcing last week unscheduled maintenance of the Nord Stream 1 gas pipeline, which runs under the Baltic Sea to the ‘Germany. Read more

Natural gas prices jumped on Monday, with outages at Norwegian and British gas fields adding to concerns.

British gas for immediate delivery rose 125 pence to 490 pence per therm at 1730 GMT, while day-ahead contract rose 123 pence to 484 p/therm.

The operator of the Ukrainian gas transmission network said that the Polish gas pipeline network has the capacity to transport Russian gas to Europe and to compensate for the shutdown of the Nord Stream. Read more

Gazprom (GAZP.MM) did not respond to a request for comment on increased gas exports via other routes.

CPC (Caspian Pipeline Consortium) said it had to suspend loading from its SPM-1 and SPM-2 mooring points due to damage to “subsea sleeve attachment points to buoyancy tanks”.

He said shipments were only handled from SPM-3 and therefore oil shipment requests should be reduced.

Tengizchevroil (TCO), which represents Chevron (CVX.N) and Exxon (XOM.N) in the giant Tengiz project in Kazakhstan, said it was aware of CPC’s temporary maintenance and that its oil and gas exports its production at its Tengiz oilfield was currently uninterrupted. Read more

TCO has a lower production plan at its Tengiz oilfield in August-September due to scheduled maintenance.

“The CPC is a key export route for Kazakhstan’s crude oil production to reach international markets and many countries depend on this critical transportation system for their energy security,” Chevron said in a statement sent to Reuters.

TotalEnergies (TTEF.PA), which also has a presence in Kazakhstan, also did not immediately respond to a request for comment, while Shell (SHEL.L) and Eni (ENI.MI), which are CPC shareholders, declined to comment.

DAMAGED TANKS

CPC advised that they are planning to replace parts on the two affected SPMs and are looking for an organization to carry out the work. The consortium did not give a timetable.

Two sources familiar with the matter told Reuters that an SPM can handle less than 70% of the terminal’s normal capacity, leaving Kazakhstan, which uses CPC as its main oil export route, with the prospect of having to cut production . Read more

Kazakhstan had to cut oil production in the spring when CPC suspended two SPM loadings due to damage.

CPC has reduced its exports on several other occasions over the past six months.

CPC Blend crude oil exports had been pegged at 5.026 million tonnes for the month of August. The consortium did not provide updated figures.

It said earlier this month that supplies through its system had dropped significantly due to maintenance at the Kashagan and Tengiz projects in Kazakhstan. Lower oilfield production could limit disruption from SPM outages, the two sources said, but added that it could become a major problem as production ramps up after maintenance. Read more

CPC disruptions this year have led some oil producers to negotiate alternative supply routes. Read more

The main shareholders of CPC are Transneft (TRNF_p.MM), (24%), KazMunayGas of Kazakhstan (19%), Chevron Caspian Pipeline Consortium Company (15%), LUKARCO BV (12.5%), Mobil Caspian Pipeline Company ( 7.5%), Rosneft-Shell Caspian Ventures Limited (7.5%) and Eni International (NA) NVSar.l. (2%).

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Reports from Reuters offices; additional reporting by Shadia Nasralla in London Editing by David Goodman, Mark Potter and Philippa Fletcher

Our standards: The Thomson Reuters Trust Principles.

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