Chevron, Exxon Will Have to Blink Against Russia
Chevron and Exxon Mobil so far have suggested that they have a lot of leverage with Russia. But next week they will be tested when they meet Transneft for the first time since the pipeline company took control of Moscow's interest in the 1,000-mile oil pipeline from Kazakhstan's giant Tengiz oilfield to the Black Sea.
The stakes are these: the two American oil companies want finally to get Russia to fulfill its more than decade-old promise to allow full export of Tengiz's oil (meaning 700,000 barrels a day and more). Transneft wants the companies to pay a lot more in per-barrel tariffs for shipping the oil across Russian territory and, more important, to tie the shipments to a geopolitically driven, Russian-controlled pipeline spoke through Bulgaria and Greece; Russia sees the proposed Burgas-Alexandroupolis pipeline as a way to undercut the U.S.-supported Baku-Ceyhan oil pipeline, which bypasses Russian territory and began shipments last year.
The upshot: Chevron and Exxon Mobil will have to compromise. Transneft has all the upside and little downside in forcing the companies to continue paying expensive barge and rail costs to ship their extra oil, while the multinationals -- especially Chevron -- are under pressure to unlock Tengiz and its contribution toward their oil production.
The stakes are these: the two American oil companies want finally to get Russia to fulfill its more than decade-old promise to allow full export of Tengiz's oil (meaning 700,000 barrels a day and more). Transneft wants the companies to pay a lot more in per-barrel tariffs for shipping the oil across Russian territory and, more important, to tie the shipments to a geopolitically driven, Russian-controlled pipeline spoke through Bulgaria and Greece; Russia sees the proposed Burgas-Alexandroupolis pipeline as a way to undercut the U.S.-supported Baku-Ceyhan oil pipeline, which bypasses Russian territory and began shipments last year.
The upshot: Chevron and Exxon Mobil will have to compromise. Transneft has all the upside and little downside in forcing the companies to continue paying expensive barge and rail costs to ship their extra oil, while the multinationals -- especially Chevron -- are under pressure to unlock Tengiz and its contribution toward their oil production.
2 Comments:
Like the site and though I don't know much about the politics of this area it seems wise to study up, this could be the next area of serious concern.
My question might be to basic for this blog but with the break-up of the Soviet Union why would the Russians let Kazakhstan, and all their oil, get away from their control? Or do the Russians still control them?
Not at all. It's probably the greatest question on the Caspian. I personally think that Russia reached the end of its tolerance of assertions of energy independence by Kazakhstan and Azerbaijan awhile ago, and that the push-back we have been seeing will continue. Moscow's intention to keep a grip has been visible through the export near-stranglehold exercised by Transneft, the oil pipeline company, and politically minded natural gas delivery actions of Gazprom, Russia's gas giant. The Baku-Ceyhan pipeline arrived in the nick of time. Because of Russia's restored strength, it's highly doubtful that the U.S. will be able to duplicate Baku-Ceyhan's success in the form of a trans-Caspian line that would bypass Russia and independently link Central Asia to the outside world; neither Kazakhstan nor Turkmenistan have the will to stick it out.
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