Kazakhstan Looking to Pipe More Crude Oil to China

The chief of Kazakhstan's oil pipeline monopoly has said it hopes to start working on further pipeline capacity expansion to China in 2013, a move that would deteriorate Russia's position in the Central Asian oil market.

Kairgeldy Kabyldin, the Chief of KazTransOil, said the former Soviet republic would increase oil exports eastwards to China by one-fifth to 12 million tpy, with the plan to further increase capacity.

"We hope to start implementation (of the pipeline expansion) to 20 million tpy this year," he said, without confirming a possible time frame.

Kabyldin said the existing China-bound pipeline capacity was 14 million tpy, and customs data show over 10 million tpy (200 000 bpd) of oil to was transported to China via pipeline in 2012.

Kabyldin hinted that "certain talks" were under way to increase oil shipments to China from Kazakhstan. Russia's top crude producer, Rosneft, has also been in communication with China about increasing oil flows in exchange for a loan.

Earlier this year, an existing 450 km (280 miles) link from Kenkiyak in western Kazakhstan to the Caspian port of Atyrau was reversed, in order to transport oil east instead of west.

The country is expecting a boost in output later this year when production commences at one of the world's largest oilfields, Kashagan, by a group of majors including ExxonMobil and Royal Dutch Shell.