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Analysis: If Russia shuts down the Kazakh pipeline, oil companies would suffer severe losses in output

Analysis: If Russia shuts down the Kazakh pipeline, oil companies would suffer severe losses in output

Analysis: If Russia shuts down the Kazakh pipeline, oil companies would suffer severe losses in output

Russia shuts down the Kazakh pipeline, oil companies

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  • According to business sources, traders, and analysts, if Russia suspends a pipeline that is virtually the sole export route for oil from landlocked Kazakhstan, as is expected, Western energy companies will reduce output and lose billions of euros.
  • More than 1% of the world’s oil supply would be cut off by the closure of the CPC pipeline, which transports oil from Kazakhstan to the Black Sea Russian export terminal in the port of Novorossiisk.
  • This would exacerbate what is already the worst energy crisis since the Arab oil embargo in the 1970s.
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According to business sources, traders, and analysts, if Russia suspends a pipeline that is virtually the sole export route for oil from landlocked Kazakhstan, as is expected, Western energy companies will reduce output and lose billions of euros.

More than 1% of the world’s oil supply would be cut off by the closure of the CPC pipeline, which transports oil from Kazakhstan to the Black Sea Russian export terminal in the port of Novorossiisk. This would exacerbate what is already the worst energy crisis since the Arab oil embargo in the 1970s.

The pipeline, which is controlled by a group of Western, Asian, Russian, and Kazakh businesses and traverses Russian territory, has come under the spotlight ever since Russia invaded Ukraine on February 24 in what Moscow refers to as a “special operation.”

A Novorossiisk court-ordered CPC to halt operations for 30 days on Wednesday, citing worries about handling an oil spill.

On Monday, a Russian court overturned the decision against CPC and instead penalised the company $3,300 in 200,000 roubles.

However, the sources continued to believe that a significant disruption was likely. Russia, a co-owner of the pipeline, has claimed that all interruptions are due to technical difficulties.

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The Caspian Pipeline Consortium’s 1.3 million barrels per day (bpd) oil artery has already experienced flow interruptions as a result of storm damage in March.

Major oil corporations with shares in the CPC include Chevron, Exxon Mobil, Shell, and Italy’s Eni, as well as a number of Russian and Kazakh businesses. Additionally, Western businesses own holdings in Kazakh oilfields.

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