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EU embargo diverts Lukoil’s Caspian oil to CPC link

Thursday, 01 December 2022 | 13:00

Russia’s Lukoil will stop exports from its Caspian oilfields via the Baku-Tbilisi-Ceyhan (BTC) pipeline from December due to Western sanctions and divert them to the Caspian Pipeline Consortium (CPC) system, four sources with knowledge of the matter told Reuters.

A European Union embargo from Dec. 5 is set to ban European buyers from purchasing and transporting Russian oil.

As a major route for Kazakhstan’s oil, CPC oil exports are excluded from the ban.

“Russian oil is leaving BTC, the reason is sanctions, BTC doesn’t let Russian oil in,” – one of the sources said. The other sources, who all spoke on condition of anonymity because of the sensitivity of the issues, said the decision was led by BTC’s western shareholders.

Lukoil supplies oil to the BTC from its fields on the Caspian Sea – the Yury Korchagin and Filanovsky. The volume exported from the fields via the route is about 2 million tonnes per year.

Lukoil’s oil exports via the CPC are seen growing to 660,000 tonnes in December from 364,000 tonnes in November, a preliminary loading plan for December and Reuters calculations show.

Lukoil and CPC declined to comment. SOCAR, which has been purchasing the Russian company’s oil for transport via BTC, and BP, which leads the BTC consortium, did not immediately answer Reuters’ requests for comment.

The CPC is the main route for the export of Kazakhstan’s oil, accounting of more than 80% of the total volumes. About 10% of oil shipped via the CPC originates from Russia.

CPC Blend BFO-CPC exported via the CPC pipeline currently trades at a significant discount to Azeri BTC BFO-AZR oil, which is supplied via BTC.

BTC has a capacity of 1 million bpd, but it is not used in full. This year exports are planned at 660,000 bpd.

The main exporters of the Azeri BTC oil are Azerbaijan’s SOCAR and BP, as well as Hungarian company MOL, Exxon XOM.N and Turkey’s TPAO.
Source: Reuters (Reporting by Reuters reporters; editing by Barbara Lewis)

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