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Semurg to invest in new port at Kuryk on the Caspian Sea (Kazakhstan)

DOWNSTREAM CENTRAL ASIA AND CASPIAN

Semurg to invest in new port at Kuryk on the Caspian Sea (Kazakhstan)

The war in Ukraine and resulting uncertainty over Black Sea exports are increasing Kazakhstan's need for a "Plan B" for its burgeoning oil shipments, boosting the case for a new port at Kuryk on the Caspian Sea coast to facilitate access to world markets, the CEO of Kazakh infrastructure company Semurg Invest said.

Source: S&P Global

The war in Ukraine and resulting uncertainty over Black Sea exports are increasing Kazakhstan's need for a "Plan B" for its burgeoning oil shipments, boosting the case for a new port at Kuryk on the Caspian Sea coast to facilitate access to world markets, the CEO of Kazakh infrastructure company Semurg Invest said.

Kazakhstan, which is in the world's top 15 oil producers and a member of the OPEC+ group, has stepped up efforts to limit reliance for oil exports on the Caspian Pipeline Consortium (CPC) route through southern Russia to the Black Sea.

It follows disruptions to CPC shipments as the war raged in Ukraine in 2022, including storm damage to infrastructure in the port of Novorossiisk, and work to clear subsea mines left from World War II.

International oil companies have yet to fully embrace an alternative route across the Caspian, according to Nurzhan Marayabev, whose company aims to turn the nascent port of Kuryk on the east Caspian coast into a hub for oil exports to Azerbaijan and into the Baku-Tbilisi-Ceyhan (BTC) pipeline to the Mediterranean.

The geopolitics are sensitive as Russia is a major political player and profits from Kazakhstan using its pipelines, including CPC, which ships around 1.5 million b/d of crude.

Kazakhstan's authorities are fully behind the project to develop Kuryk, a "greenfield" site that already has a ferry terminal but is largely free of urban development or industrial facilities, Marabayev said.

A "pre-FEED" (Front End Engineering & Design) study is underway, encompassing facilities such as oil storage and loading and firefighting equipment, with an estimated development cost of around $50 million, Marabayev said.

"We have so many advantages: our harbor area and the jetty area is deep and we are situated in a natural ... shelter."

In February, Abu Dhabi Ports and Kazakh state company KazMunaiGaz formed a joint venture aimed at boosting shipping activity in both the Caspian and Black Seas.

A rail link for bringing crude to Kuryk port already exists and a pipeline to the port from fields such as Kashagan may be built if producers are sufficiently interested, Marabayev said.

The international oil companies behind Kazakhstan's "supergiant" fields are starting to show interest in trans-Caspian shipment, but so far via the established port of Aktau, which is limited by insufficient water depth and capacity, Marabayev said.

State-owned KazTransOil (KTO) said in March it was shipping a "test" cargo of crude from the Kashagan field from Aktau to Baku on behalf of Japan's Inpex.

KTO has also announced a series of trans-Caspian shipments of Tengiz crude in March and April, with April volumes set to total 125,000 mt, or around 1 million barrels. Production at Tengiz, Kazakhstan's highest-producing field, is expected to rise by another 200,000 b/d to some 850,000 b/d in 2025 following a $45 billion expansion project, now close to completion.

Kuryk, located south of Aktau and with a shorter journey time to Baku, also requires some deepening and expansion, but with water depths of 6.5 m is already closer to the required 8 m than Aktau, Marabayev said. The goal is to increase Kuryk capacity to 10 million-20 million mt/year, compared with a maximum of 5 million mt/year at Aktau, which in any case is busy with other, mostly non-oil goods, he added.

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