A key oil export terminal on Russias Black Sea coastline has been damaged in a storm, potentially cu...
A key oil export terminal on Russia's Black Sea coastline has been damaged in a storm, potentially cutting off Kazakhstan's main oil export pipeline for months. The shutdown could take an additional one million barrels per day off the market - one percent of global production - at a time when supplies are already tight.
The CPC terminal near Novorossiysk, Russia handles the lion's share of oil exports from landlocked Kazakhstan, along with a smaller amount of crude from Russia. The pipeline consortium said that the facility has sustained critical damage during a storm, believed to include damages to at least two out of the terminal's three SPM loading buoys.
"Loading at the sea terminal has been completely stopped," Nikolai Gorban, the head of the CPC pipeline consortium, told state-controlled RIA Novosti. "Reception through the pipeline is taking place, but we only have tank capacity left until next evening . . . the reduction [this month and next month] will be almost fivefold."
The government of Kazakhstan, which has its own financial interest in the functioning of the terminal, said that wind speeds at the site exceeded 65 knots on March 22. It described damaged hoses on one loading buoy and a damaged load frame on another.
However, energy analysts have expressed skepticism about whether the shutdown is truly storm-related, or whether it might have been orchestrated by the Russian government. "If a storm shuts down infrastructure or if Russia shuts down infrastructure, Russia can decide when it reopens infrastructure," said ClearView Energy Partners' Kevin Book, speaking to the Financial Times.
Novorossiysk is far from the ongoing hostilities in Ukraine, and the damage to the terminal is not believed to be directly related to the Russian invasion.
The CPC shutdown has implications for American oil major Chevron, which runs Kazakhstan's top-producing oil field, Tengiz. It also has economic implications for Kazakhstan, which gets the majority of its export revenue from oil. If the CPC shuts down, the inland nation has few good alternative options for getting its oil to market.
The benchmark Brent oil price rose by about five percent in the hours following the announcement, then settled Thursday to close at $118 per barrel.
