Ukrainian Drone Attack Disrupts Chevron-Backed Pipeline Operations

A Ukrainian drone attack on the CPC pipeline in Krasnodar has reduced its capacity, impacting oil flows from Kazakhstan to the Black Sea. The strike, which targeted the Kropotkinskaya pumping station, could have significant financial repercussions for Russian oil revenue and Western companies like Chevron. The attack underscores the ongoing vulnerabilities and complexities of global oil supply chains amid the Russia-Ukraine conflict.

A recent Ukrainian drone attack in Krasnodar has diminished the capacity of the Caspian Pipeline Consortium (CPC) pipeline, which transports oil from Kazakhstan to the Black Sea. The CPC is a partnership involving multiple countries, including the U.S., UK, Italy, Russia, and Kazakhstan, and significantly contributes to global oil supply with a capacity of about 1.5 million barrels per day.

The attack involved seven drones that targeted the Kropotkinskaya pumping station, the pipeline’s largest facility in Russia. Although the pipeline is still operational, CPC has reported it is now functioning at reduced flow rates due to the damage inflicted by the strike.

Previously, while the CPC faced interference from Russian entities early in the ongoing conflict, it had not been a target of Ukrainian strikes until now. This pipeline, partly owned by Chevron and other Western companies, plays a critical role in transporting Kazakh oil, where almost 90% of its volume originates from.

The influence of this attack extends beyond Kazakhstan, as Russian oil revenue is also affected due to Russian state company Transneft’s ownership stake of 31% in CPC. An interruption in operations could lead to significant economic impacts, especially for Chevron, which relies heavily on returns from its investments in Kazakhstan.

Chevron has assured that its Kazakh operations are maintaining production and exports without interruption despite the recent drone attacks impacting the pipeline’s capacity. Kazakhstan, holding the largest stake in CPC, relies on this pipeline for up to 80% of its oil exports, significantly influencing its foreign exchange earnings.

Following the news of the pipeline slowdown, Brent and West Texas Intermediate (WTI) crude futures saw a slight increase of nearly one percent, indicating market responsiveness to the supply-chain disruption.

The Ukrainian drone strike against the CPC pipeline has palpable effects on the oil transportation capacity from Kazakhstan to the Black Sea, disrupting established supply chains. While the immediate impacts focus on reduced flow rates, the broader economic ramifications for both Western and Russian oil companies cannot be understated, showcasing the delicate interdependencies within the global oil market.

Original Source: maritime-executive.com