MOSCOW (MRC) -- Kazakhstan has suspended its oil exports to China after contamination was found in crude supplied by a Kazakh producer less than a year after a "dirty oil" crisis broke in neighboring Russia, reported Reuters.
Oil exports to China have been suspended because of high content of organic chloride, the Kazakh energy ministry said on Wednesday.
CNPC Aktobemunaigas, a Kazakh subsidiary of Chinese energy group CNPC, has been cut off from the Central Asian nation’s oil pipelines since Jan. 16, pipeline operator Kaztransoil said on Wednesday.
Unlike the Druzhba pipeline problems in April last year, when 5 million tonnes of oil were contaminated with organic chlorides, the origin this time was Kazakh oilfields, though the volume affected remains unclear.
Kazakh oil exports to China will be resumed after the issue with CNPC Aktobemunaigas oil quality is fixed, the Kazakh energy ministry said.
CNPC Aktobemunaigas did not reply immediately to a request for a comment.
Kaztransoil has also reviewed shipment plans for the Shymkent and Pavlodar oil refineries, it said without providing any details on volumes.
The impact in terms of volume does not seem to be considerable, given that the Pavlodar refinery has been running close to 100,000 bpd, said Florian Thaler, strategist and chief executive at consultancy OilX.
Tests of crude oil in the Kazakh pipeline system carried out this week showed organic chloride content of 70-120 parts per million (ppm), which far exceeds a 6 ppm limit allowed in Russia and Kazakhstan.
Russian and Kazakh pipeline systems are linked, with Kazakhstan moving 15 million tonnes of oil a year via Russian ports.
Russia’s crude oil supplies to China via Kazakhstan remain unaffected.
Russian oil company Transneft (TRNF_p.MM) on Wednesday said that oil supplies to and from Kazakhstan are running as normal, the Interfax news agency reported.
CNPC Aktobemunaigas was Kazakhstan’s sixth-largest producer in 2018 with output of 4.9 million tonnes, about 4.3% of the country’s total production.
As MRC informed before, South Korea's LG Chem said in January 2016, it had decided to drop a plan to jointly build a USD4.2-billion petrochemical complex in Kazakhstan, citing a prolonged slump in oil prices and a sharp increase in facility investments. In 2011, the chemical company said it would construct the complex near the western Kazakh city of Atyrau as part of a 50-50 joint venture with two Kazakh companies. The plan involved building ethylene and polyethylene plants with annual capacities of 840,000 tonnes and 800,000 tonnes, respectively. The project was announced in 2013.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
MRC