Putin authorises sales involving Rosneft-Shell JV in Caspian Pipeline Consortium

Russian President Vladimir Putin has authorised potential transactions involving the joint Rosneft–Shell stake in the Caspian Pipeline Consortium (CPC), issuing a decree on December 8 that permits deals which could alter the ownership structure of the venture.

The move comes as Rosneft and fellow Russian oil producer Lukoil face pressure to dispose of their foreign assets after being hit by US sanctions in October. CPC partly runs through Kazakhstan and partly through Russia, carrying oil from both countries to the Novorossiysk oil terminal on the Black Sea, for delivery on tankers to international markets.

The order states that transactions linked to Rosneft-Shell Caspian Ventures Limited—holder of a 7.5% interest in the CPC—may proceed, though it provides no detail on prospective buyers or the strategic rationale. Other shareholders in CPC include Kazakh national oil company KazMunayGas (KMG), US firms Chevron and ExxonMobil, and Lukoil and Russian oil pipeline monopoly Transneft.

CPC is responsible for exporting around four-fifths of Kazakhstan’s oil, making it a highly strategic asset for Astana. Any disruption in flow would have significant implications for Kazakhstan’s economy and government revenue, as well as for the profits of Shell and other international oil majors that operate the country’s biggest oilfields: Karachaganak, Kashagan and Tengiz.

In contrast, Russian oil amounts to only around 15% of CPC volumes. 

Rosneft’s other international assets include upstream and midstream assets in Iraqi Kurdistan, and additional upstream operations in Egypt and Mozambique. It also holds refineries in Germany but these have already been placed under state trusteeship by the government in Berlin.

Lukoil has a much larger international presence, with assets across Africa, the Americas, Central Asia, Europe and the Middle East. The company attempted a sale of this business to commodities trader Gunvor but this was blocked by the US in November, which pointed to the latter company’s entrenched Russian ties.

Against this backdrop, talks drag on between the US and Russia on reaching a peace deal to end the fighting in Ukraine, which might involve sanctions on Moscow being lifted.