A pumping station of the Caspian Pipeline Consortium (CPC) near the city of Atyrau, Kazakhstan on Oct. 12, 2017.STAFF/Reuters
A court in southern Russia on Monday overturned an earlier ruling suspending Caspian Pipeline Consortium’s (CPC) operations and instead fined it 200,000 roubles ($3,300), easing concerns about a global oil supply crunch.
A halt to the pipeline, which carries oil from Kazakhstan’s vast Tengiz Field across Russia to the Black Sea, would have strained the oil market and increased tensions between Russia and Kazakhstan, which has little leeway in re-routing its oil exports from CPS.
U.S. oil majors Chevron and Exxon are among the consortium’s largest shareholders.
“Having considered the materials, having heard the arguments of the parties, the appellate court modified the decision of the district court and handed a penalty in the form of an administrative fine of 200,000 roubles,” the court’s ruling said, referring to CPC’s Russian subdivision.
CPC, which takes oil from Kazakhstan to the Black Sea via one of the world’s largest pipelines, was last week ordered by a Russian court to suspend its activity for 30 days, citing oil spill concerns. The move raised concerns that oil shipments via the pipeline could come to a complete halt.
In a statement following the ruling, CPC said that immediately suspending the pipeline, which handles around 1% of global oil, would have been technically impossible and caused “irreversible consequences.”
Tengizchevroil, the operator of Kazakhstan’s largest oilfield, Tengiz, said last week that oil supplies via the CPC pipeline had not been interrupted, despite the ruling.
The pipeline exported up to 54 million tonnes, or some 1.2 million barrels per day, of Kazakhstan’s main crude grade, light sour CPC Blend, last year from the Black Sea.
Kazakh President Kassym-Jomart Tokayev on Thursday told his government to diversify its oil supply routes over worries about potential blockade of the CPC.
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