Kazakhstan Aspires Closer Cooperation With Iran

Kazakhstan and Iran already have been exchanging oil assets for a decade in a deal that even the U.S. government approves of, because it mostly benefits Kazakhstan. Kazakhstan ships oil via tanker across the Caspian Sea to the northern Iranian port city of Neka. In exchange, Iran delivers Kazakhstan's foreign customers crude oil of comparable quality, sending it to those clients from a Persian Gulf oil terminal.

KazMunaiGaz (KMG), Kazakhstan's state-owned oil and gas company, is charting a new course under the leadership of its new president, Kayrgeldy Kabyldin, who took over in August. Kabyldin is guiding the company toward closer cooperation with Iran, and he has made it clear that international sanctions against the Islamic Republic will not stand in his way.

KMG officials have not confirmed any plans for building an oil pipeline south to Iran. But Kazakh Deputy Energy and Mineral Resources Minister Lyazzat Kiinov, speaking at the KIOGE conference, said there is an Iranian proposal for exchanging "oil and gas assets."

Some in Kazakhstan are against the idea of increasing cooperation with Iran for oil exports, such as Kanat Berentaev, a senior researcher at the Kazakh Civic Research Institute. "Kazakhstan already has two markets: the West via Russia and the Chinese market. We don't have enough oil to be exporting to another market," Berentaev said.

Maybe not enough oil yet, but estimates show Kazakhstan's oil exports could be 84 million tons by 2010 and 150 million tons by 2015. That would greatly exceed the capacity of the Russian and Chinese pipelines and the tankers that currently are landlocked Kazakhstan's means of exporting its oil to world markets. Even with the first Kazakh oil expected to be pumped into the Baku-Tbilisi-Ceyhan pipeline in the coming days, KMG needs new ways of getting oil out of Kazakhstan to foreign customers.

Author: Ksenia Kochneva