SOCAR head in Kazakhstan Vurgun Jafarov talked to New Europe correspondent in Astana Kulpash Konyrova about the creation of the Caspian Transportation System, the transport of Tengiz crude through the Azerbaijan and regional energy transport corridors.

Mr Jafarov, what stage is the creation of the Caspian Transportation System (KCTS) at and what work is being done in this direction?
The technical and commercial groups of the two national companies, SOCAR and KazMunaiGas, are carrying on the work started after the signing of the agreement on the main principles of the trans-Caspian system. The specialists from SOCAR, KazMunaiGas (KMG), Chevron, and G6 (all members of the Kashagan consortium) involved in the project have already held a series of meetings in Baku, Astana and London to discuss a wide range of questions. At this stage, it can be said that practically all of the issues have been resolved and, and preparation for a feasibility study is near completion. In addition, the heads of the two national companies, SOCAR and KMG, have recently met in Baku to discuss the current status and to approve the start of a feasibility study for the trans-Caspian project. In a word, we are not marking time but moving ahead.

Is it known how much the KCTS feasibility study might cost?
The cost of a feasibility study is not known yet. In formulating the technical assignment, we tried to avoid the unnecessary things and to make it concise and specific to make a proposed feasibility study affordable for both companies. One thing is certain - SOCAR and KMG will be the ones to order a feasibility study. To do so, the two companies will set up a joint structure or consider other ways of ordering a feasibility study. KazMunaiGas has recently proposed an option that would win us time, and we are now considering it. The proposal was to start ordering a feasibility study without waiting for all the legal aspects of creation of a joint structure to be completed.

When is a feasibility study expected to be ordered?
I believe in the near months, maybe this fall. As you know, the trans-Caspian project package consists of several components. One of such components is an oil pipeline Eskene-Kuryk, and the parties concerned are still in a process of negotiation.
 
What other things are the parties planning to discuss?
The proposed shipment volumes have been and remain the most urgent topic. Only they can make the project viable. Guarantees should be provided from Tengiz and Kashagan. This is the most important thing. Later this July, KMG, SOCAR and the Kashagan consortium companies are scheduled to meet again in London. At that meeting, the specialists are expected to discuss the last remaining technical details.

What will be the share structure in the trans-Caspian system (KCTS) for SOCAR and KMG?
From the very start, they talked about parity, 50:50. It has always been that and nothing has changed.

Are the Kashagan consortium companies looking at joining the trans-Caspian project?
They have raised this on several occasions, and they want to join the project financially and as operators. However, as I have already said, SOCAR and KMG will be both the authors and the executors of this project.

What share in the project can the Kashagan consortium count on?
The position of SOCAR is univocal: in this project, we partner with KMG, and we do not propose other partners. All sides should be interested in this project. SOCAR’s interest is to expand its existing transport corridor. For KMG, this is an alternative way to transport its oil to the world markets. And for the shippers, it is a ready logistic system. That is why we regard G6 and Chevron only as consignors.

What pipeline will be more preferable after completion of the KCTS, Baku-Supsa or Baku-Tbilisi-Ceyhan?
Time will show — Baku-Supsa or BTC! Which of the two will be acceptable will depend on the volumes of crude at the first stage. It is possible that all corridors will be used, including a new one.

When is the transport of Tengiz crude through the Azerbaijan oil terminal Kulevi in Georgia expected to start, and what is causing the delay of this process?
Firstly, this depends on the plans of Chevron itself. Secondly, on the number of the tankers that can be available to ship crude by the Caspian Sea. Thirdly, on the crude quality bank. As far as the Kulevi terminal is concerned, it should be ready to transship crude very soon, after completion of some technical works on the canal.