Kazakh oil group plans $4 bln link to Baku pipeline

BAKU, June 8 (Reuters) The group running Kazakhstan's huge Kashagan oil field plans a billion transportation system to take its oil to the Baku-Ceyhan pipeline to the Mediterranean, an official from France's Total said on Thursday.

Total's Alain Przybysz told reporters this would involve building a 800 km (500 mile) pipeline from offshore Kashagan to the Kazakh shore, two terminals on the Kazakh and Azeri sides of the Caspian Sea and tankers to take oil across the Caspian.

The link would be operational by 2010, when Kashagan is due to start producing large quantities of oil.

''The Kazakhstan Caspian Transport System will provide one of the major oil export routes from Kashagan without damage to the Caspian environment,'' Przybysz said.

''I think that in the future this transport system could be linked to the Russian, Chinese, and Iranian systems.'' He said the system could transport oil from other fields as well as Kashagan.

''This is the subject of talks between Kazakhstan and Azerbaijan, which are close to signing an international agreement.'' Total will finance the link along with its partners in Kashagan, Italy's Eni, U.S. firm ConocoPhillips and Japan's Inpex, all shareholders in the Baku-Ceyhan pipeline, which is due to be officially launched next month.

The Kashagan field will start producing from its reserves of more than 2 billion tonnes of oil and more than 1 trillion cubic metres of gas in 2008, but its production does not yet have an export route from the land-locked Caspian Sea.

Kashagan, the world's biggest discovery in the past 30 years, is expected to produce more than 1 million barrels per day sometime next decade.

The Baku-Ceyhan pipeline will also pump at least 1 million bpd, and most of its capacity is expected to be taken in early years by a group led by BP Plc, which is developing a big Azeri offshore field.

PIPELINE BELOW THE CASPIAN Earlier on Thursday, Kazakh President Nursultan Nazarbayev reiterated that his country would sign an agreement this month with Azerbaijan on Kazakhstan joining the Baku-Tbilisi-Ceyhan pipeline.

Kazakhstan plans to transport 500,000 million bpd of Kashagan oil through Baku-Ceyhan, rising to 1 million bpd when chemical agents are used and extra pumping stations are added to lift the pipeline's capacity.

Asked about a longer-term plan to link Kazakh fields directly to Baku-Ceyhan with a pipeline below the Caspian Sea, Kazakh Foreign Minister Kasymzhomart Tokayev said any such pipeline depended on overcoming opposition from Russia and Iran.

''These two countries are strongly against the construction of a pipeline on the seabed of the Caspian Sea so we have to bear in mind their position... as littoral states on the Caspian Sea,'' he told reporters in Almaty.

''Without the consent of all of the countries it will be very difficult if not impossible to implement this project.'' REUTERS VJ PC1904