As reported on this blog before, Kazakhstan’s participation in the Baku-Tblisi-Ceyhan pipeline (BTC) has long been under discussion. While Azerbaijan’s oil reserves are too small to justify the BTC’s capacity of around one million barrels a day, Kazakhstan’s involvement in the pipeline would making it run at full capacity an easier affair.

The Kazakh government has long been hesitating to specify the amount of oil it wants to commit to the BTC. However, in line with the country’s multi-vector oil export strategy that looks in all possible directions for its pipelines, the BTC will provide an important channel to bring Kazakhstan’s growing output to world markets and it is no surprise that after all, an agreement will be signed this June.

The media is already interpreting Kazakhstan’s willingness to export oil via the BTC as the latest chapter in the ‘New Great Game’, the geopolitical struggle between Washington and Moscow over influence in the south of the former Soviet Union. The UK Daily Telegraph writes:

Washington scored a significant victory in its contest with Moscow for influence in Central Asia yesterday when Kazakhstan agreed to start pumping oil to the West through a British Petroleum pipeline that bypasses Russia and Iran.

The deal, secured largely because of a personal visit to Kazakhstan last month by Dick Cheney, the United States vice-president, will infuriate the Kremlin.

Nonetheless, the nominal majority of Kazakh oil will still reach consumers via Russia, as can be seen in the export overview in the extended entry. One should thus not exaggerate the BTC’s importance in a geopolitial struggle. Also, it will certainly not bring down the oil price, as hinted in the same article:

The new deal could help to bring down world oil prices, another factor likely to upset Russia, whose energy-dependent economy could wobble if crude falls below $50 a barrel.

Kazakhstan’s oil export routes - an overview

North/Russia: The 980-mile long Caspian Pipeline Consortium pipeline connects the Tengiz oil field with Novorossiysk, Russia’s deepwater Black Sea port. While on a state visit to Moscow, President Nazarbayev and his Russian counterpart Vladimir Putin have agreed to increase the pipeline’s existing capacity by more than 100% over the coming years, to an eventual 1,340,000 bbl/d. Also, the Atyrau-Samara pipeline already feeds 340,000 bbl/d into Russia’s distribution grid.

West/Caucasus: The Baku-Tbilisi-Çeyhan pipeline (BTC), connecting Azerbaijan’s oil fields with the Mediterranean port of Çeyhan in Turkey, had originally been designed with excess capacity to be filled by Kazakh oil. Whereas the idea of a sub-sea pipeline plug into BTC underneath the Caspian Sea has repeatedly surfaced in the media, so far Kazakhstan has only committed to increase its overseas tanker shipments to around 760,000 bbl/d by 2016.

East/China: A recently opened pipeline connecting Atasu in Kazakhstan with Alashankou in China’s north-western Xinjiang region will eventually be expanded to 400,000 bbl/d and will carry oil from Chinese-operated fields within Kazakhstan. China’s growing intention to diversify its energy sources will most likely lead to extended cooperation and further capacity added on to the existing pipeline in the mid- to long-term. In addition to that, the Chinese side has already signified interest to build another oil and a gas pipeline.

Kazakhstan also swaps oil with Iran (30,000 bbl/d) and transports oil via rail to Russia.