Storm-damaged berths in the Russian part of the Black Sea could cut oil exports from Russia and Kazakhstan through the Caspian Pipeline Consortium (CPC) by 1 million barrels per day (bpd), or 1 percent of the world’s oil production, Bloomberg reported.
A storm in the Russian part of the Black Sea damaged the loading equipment of CPC, one of the world’s largest oil pipelines that transports oil from Kazakhstan to world markets, its operator said.
Pavel Sorokin, Deputy Minister of Energy of Russia, said that the second berth could also be damaged. The official said repairs could take up to two months, which could cut oil exports by 1 million bpd.
The CPC pipeline has been attracting a lot of attention since Russia’s invasion of Ukraine, which restricted Russian exports and sent oil prices skyrocketing. The United States has imposed sanctions on Russian oil, but the country’s authorities have said that flows from Kazakhstan through Russia must continue uninterrupted.
This pipeline transports about 1.2 million bpd, which is 1.2 percent of global demand. Any major disruption to its operations would put additional strain on the global oil market, which is experiencing one of its worst supply crises since the Arab oil embargo in the 1970s.
Most of the oil in the pipeline is owned by Russia, Kazakhstan and international oil companies such as Chevron. It exports oil from the Russian Black Sea port of Novorossiisk. A Chevron spokesman said the company was “currently evaluating the situation.”
The CPC pipeline operator initially stated that one of the three mooring points had been damaged by the storm and would take at least three weeks to repair while waiting for the ship. His representative also expressed hope that exports would not be affected, as the other two berths would continue to operate as usual.
The world’s largest trading houses, such as Vitol and Trafigura, said they estimate the current disruption in Russian oil supplies at 2-3 million bpd. The world is unlikely to be able to cope with interruptions exceeding 2 million bpd, they said, as this will lead to further price hikes and an economic downturn.
Kazakhstan plans to produce 87.5 million tonnes of oil this year, up from 85.7 million tonnes in 2021 and sees oil price at $80 per barrel as a “comfortable” level in order to fulfil the state budget obligations.
Last year, the country drafted a plan to increase oil production to 104.2 million tonnes by 2030 through a number of projects. Among them is a future expansion project at the Tengiz field, thanks to which oil production will increase by 12 million tonnes per year from 2024.