Kazakhs plan to link Chinese pipeline to Caspian Sea

UST-KAMENOGORSK, Kazakhstan, June 15 (Reuters) Kazakhstan plans to extend its Chinese oil pipeline all the way to the Caspian Sea to give China direct access to fast-growing energy supplies, President Nursultan Nazarbayev said today.

The Atasu-Alashankou pipeline, built in 2005, can send China 5 million tonnes of Kazakh oil a year (100,000 barrels per day) and could be expanded to supply four times as much.

''We have laid the pipeline to China and there remains 700 km to build to link it to the Caspian Sea, and we plan to do that,'' Nazarbayev told foreign investors at a twice-yearly forum.

Planned links to China might include more than pipelines.

''We and the Chinese are seriously considering the possibility of building a direct railway from Western China to the Caspian Sea,'' he said.

China is keen to secure energy supplies and the Caspian basin is expected to be one of the world's hottest spots for growth in oil and gas production over the next few decades.

But the energy trade in the former Soviet Union is dominated by Russia and most of the existing shipping and pipeline infrastructure sends Caspian energy west to Europe rather than east to the rising Chinese market, although Russia is moving to grab some of that market share with a huge pipeline to China.

Nazarbayev said last month that Kazakhstan would continue exporting most, if not all, of its oil through Russia.

Russia has been reluctant to see Kazakh exports to Europe grow because they compete with Russian oil cargoes using the already congested Turkish Bosphorus straits to get from the Black Sea to the Mediterranean.

Russia is leading a pipeline to bypass the straits, running from Bourgas in Bulgaria to Alexandroupolis in Greece.

Another project cuts across Turkey, from Samsun on the Black Sea to the growing energy port of Ceyhan on the Mediterranean.

An executive from Italy's Eni, which is building the Samsun-Ceyhan link together with Turkey's Calik Enerji, told the forum that he believed Kazakhstan would join the scheme, mentioning Kazakh state oil and gas company KazMunaiGas.

''A number of companies have already expressed interest in joining the project and we would be very happy if KazMunaiGas became one of the participants,'' said Eni's Stefano Cao, according to a transcript of his speech to the forum.

REUTERS AGL RK1335