Kazakhstan's legislature yesterday (14 June) passed a bill requiring any new trunk oil or gas pipelines built on the territory of the Central Asian state be majority-owned by the state. Kazakh oil and gas minister Sauat Mynbayev told reporters that the legislation--which is expected to be signed quickly into law by President Nursultan Nazarbayev--will mean that the state will have at least 51% in any new pipelines. Kazakhstan's existing trunk pipelines are mainly controlled by the relevant transport subsidiaries of Kazmunaigaz, the state oil and gas firm, with the notable exception of the Caspian Pipeline Consortium's Tengiz-Novorossiisk oil pipeline, which is controlled by an international consortium in which Kazakhstan has a minority equity stake.
Significance:Passage of the law on trunk pipeline ownership means that Kazakhstan will have legal status to back up its stated intention to hold majority control of the proposed 750-km Yeskene-Kuryk oil pipeline, which is geared to serve as part of the Kazakhstan Caspian Transport System (KCTS) to carry oil production from the Kashagan field to a dedicated port near Aqtau on the Caspian Sea coast (seeWorld Markets Energy: Kazakhstan: 11 March 2009:). The pipeline is expected to have an initial throughput capacity of 23 million t/y (460,000 b/d), rising to as much as 56 million t/y (1.12 million b/d). Although Kazakhstan has made clear its desire for majority control of the pipeline, President Nazarbayev has also called on foreign oil companies to invest in infrastructure in Kazakhstan such as pipelines and new refineries, suggesting that Kazakhstan wants outside investment but is still keen to have the final say in major strategic projects such as this (seeWorld Markets Energy: Kazakhstan: 23 May 2012:). Oil production from the first-phase development of Kashagan is due to come onstream by the end of 2012 or early 2013, with output of 370,000-450,000 b/d initially, eventually rising to as much as 1.5 million b/d in a future second-phase development.