Ukraine's Agreement on Foreign Tankers
Ukraine has agreed not to attack a portion of foreign tankers and the Black Sea infrastructure through which Kazakhstan exports oil, including the Caspian Pipeline Consortium (CPC) terminal near Novorossiysk. This agreement arose after July’s strikes on vessels, which led to a cessation of loading. According to information provided by Bloomberg citing an anonymous U.S. official, Kyiv has established contact points through which commercial carriers can relay information and coordinate safe passage.
Terms of the Agreement and Impact on Exports
As part of the agreement, Ukraine will not strike CPC infrastructure and non-Russian vessels heading to the terminal, provided that these vessels are not under Ukrainian sanctions, do not carry Russian oil or other Russian cargo, and are not owned by Russian companies. Kyiv is also providing carriers with instructions explaining what remains a target for potential attacks. The rules of the agreement were approved after a meeting of high-ranking U.S. officials with Ukrainian leadership.
The CPC terminal near Novorossiysk is a key facility through which Kazakhstan exports its oil, and there are no notable alternative routes available. The CPC accounts for approximately 2% of global crude oil supplies. Loading at the terminal has already resumed, but it remains below normal due to drone attacks near Novorossiysk. Russian authorities typically halt oil loading during drone alert at the terminals.
The first wave of strikes in the week of July 20 forced vessels chartered by American companies to stop loading. On July 27, the ships returned, but two days later they were again struck by drones. Exports of CPC Blend in August are expected to drop by about a third, according to source estimates. Meanwhile, earnings for vessels on the CPC-Mediterranean route exceeded $400,000 per day on Friday, a record for this route, according to the Baltic Exchange.
Earlier, the publication 'Hvylya' reported that the U.S. demanded Kyiv not to touch the CPC terminal. Thus, the new agreement could impact the export of Kazakh oil and the chartering of vessels in the region, considering the current security situation in the Black Sea and Caspian region.
This agreement is significant for ensuring stability in oil supplies from Kazakhstan, as the CPC terminal is vital for the country's economy. In the context of rising tensions in the region, such a decision may help preserve a certain level of exports and reduce risks for vessels operating in this direction. However, security concerns remain critical, and Ukraine's actions in this context could significantly impact global energy markets.
As the situation unfolds in the region, it's essential to consider the broader implications of these agreements on oil exports. Notably, Kazakhstan's recent restrictions on vehicle border crossings highlight the interconnected challenges faced by neighboring countries amid fuel shortages in Russia, further complicating the dynamics of energy supply in the area.