2835
Views

Russia Shuts CPC Oil Terminal, Tightening Screws on EU's Energy Supply

CPC
One of the CPC's three SPM loading buoys (CPC file image)

Published Jul 6, 2022 11:06 PM by The Maritime Executive

A court in Novorossiysk has decided to temporarily shut down the Caspian Pipeline Consortium's crude terminal on the Black Sea, which operates within Russian jurisdiction but gets almost all of its oil from Kazakhstan.

The decision marks the third time since the start of the invasion of Ukraine that Russian authorities have reported a disruption at the facility, which had operated more or less continuously for the previous 20 years. Unusual storm damage to its single-point moorings occurred in March, and WWII-era UXO was suddenly discovered near its subsea pipelines June. The second disruption happened to occur several days after Kazakhstan's president said that he would not recognize two Russian-occupied territories in eastern Ukraine.   

These two incidents forced partial shutdowns at the CPC terminal, but at least one of three loading buoys remained in operation - until July 5, when a court shut the last one down on request from the Russian Federal Service for Supervision of Transport (Rostrasnadzor). The administrative suspension for alleged "documentary violations under the Oil Spill Response Plan" will last for 30 days. 

The full shutdown follows two days after Kazakh President Kassym-Jomart Tokayev said that his nation is ready to send more oil to Europe and "to use its hydrocarbon potential to stabilize the situation in the world and European markets." Tokayev's pledge does not align with Russian interests: European nations are working hard to phase out Russian oil purchases and find reliable alternative suppliers - like Kazakhstan, a longtime trading partner.

Kazakhstan exports 80 percent of its oil via the CPC's marine terminal in Novorossyisk; the majority goes to Europe. This has historically provided about six percent of the EU's total crude imports.

Both sides of this exchange oppose Russia's actions in Ukraine. Courts in Russia typically operate in alignment with state interests, and the Primorsky District Court's decision to shut down the CPC loading terminal happens to apply economic pressure to both Kazakhstan and the EU when both are attempting to strengthen trade ties - all without hurting Russia's own exports, noted Bloomberg analyst Julian Lee.

"The Caspian Pipeline Consortium acts within the legal framework of the Russian Federation and is forced to execute the court ruling. The ruling will be appealed in accordance with the procedure established by law," said CPC in a statement.