Support and promotion of LPG transport from Kazakhstan
1. BACKGROUND Production of energy is a fast growing business in Kazakhstan. The production of Liquid Petroleum Gas is a side-product to the production of natural gas and crude oil. Until now LPG is often flared as there is little or no economic benefit to use LPG otherwise. Flaring is harmful to the environment, while using LPG for energy consumption is regarded as environmental friendly. Gas flaring is associated with the release of a large number of pollutants. Improper combustion, as indicated by smoke from the flare stack, contributes to increasing the hazardous chemicals released into the environment including volatile organic compounds. Most gas flaring reduction is in essence a question of changing the purpose of the combustion at the oil field from gas elimination (flaring) to gas use, e.g. power production, or of moving the combustion away from the field—normally to a load centre where it will be combusted for industrial or power production purposes. Besides constituting a waste of economically valuable resources, flaring and venting are also significant contributors to global warming. Reduced flaring implies reduced carbon dioxide (CO2) emissions, the amount of which depends on whether the gas is re-injected or replaces other fossil fuels such as diesel or coal. Most of the FSU Countries are starting to legislate to forbid flaring and imposing penalties to producers not complying.
In some countries in the world successful projects have been launched to use LPG for energy of the local population living nearby the production sites. As most energy production takes place in thinly populated areas in Kazakhstan, this would be difficult to achieve here. Another option presents the transport of LPG towards consumer countries like Turkey and European Union.
The above has been the basis for the project Regulation on the Transport of Dangerous Goods along the TRACECA Corridor, which was completed in December 2007. The main aim of this project was to investigate the economic, legal, technical, environmental and institutional pros and cons of transport of LPG in the TRACECA corridor. By doing so the project contributed to the overall TRACECA objectives of higher security, reduced emissions, improved access to international markets, increased competitiveness and improved transport performance on the TRACECA corridor through the introduction of an alternative, economic and modern transport scheme of LPG in the TRACECA region. As a consequence, the project directly added to the aims of Multi-Lateral Agreement (MLA), as signed in 1998.
The project Regulation on the Transport of Dangerous Goods along the TRACECA Corridor has managed to mobilise the various stakeholders involved in TRACECA LPG transport, i.e. public and private sector representatives from Kazakhstan, Azerbaijan, Georgia and Ukraine from rail, port, maritime transport, as well as from shipping and forwarding, and to start a dialogue on how to create a basis for TRACECA LPG transport (which is currently at infancy stage, as an alternative for TRACECA LPG exported via Russia).
One of the key recommendations of the Regulation on the Transport of Dangerous Goods project is in cooperation with Azeri and Georgian transport companies, establish a “Consortium LPG Transport Company” in Kazakhstan and in Turkmenistan to develop similar strategies for major LPG exporters like TCO to offer transport, railcars, documentation services on the whole export route in order to:
(i) negotiate transportation costs on the TRACECA corridor due to larger volumes and (ii) organize planning, leasing railcars, operations and monitoring of transport along the route from the LPG producer loading site to FOB Batumi in an effective and cheaper manner as already realized for crude oil from Aktau and Turkmenbashi on the same TRACECA corridor.
The new project can be regarded a follow-up of the Regulation on the Transport of Dangerous Goods project and aims to maintain the created momentum to bring together stakeholders in TRACECA LPG transport, notably from Kazakh side and further support the coordinating activities within the TRACECA LPG transport chain.
2. DESCRIPTION OF THE ASSIGNMENT ? Global objective The project’s global objective is the development of an alternative, economic and modern transport scheme of LPG on the TRACECA corridors, for Kazakhstan LPG producers at competitive transportation costs and under safe conditions.
Such transport scheme can attract further investments on LPG recovery in the region and stimulate interest from oil companies to (further) recover LPG. It will help to reduce carbon dioxide emissions and to create additional sources of income for Kazakhstan and other countries involved, through the increase in LPG production and through additional transport and transit market opportunities. It will promote the use of an alternative, environmentally friendly clean fuel for both final consumers and industrial customers; will expand the scope of the INOGATE and TRACECA projects to include an additional and potentially very profitable market, namely LPG.
? Specific objective(s) The specific objective of the project is to support coordinating activities within the TRACECA LPG transport chain, primarily Kazakhstan and Azerbaijan-Georgia, in order to create competitive and safe transport of LPG produced in Kazakhstan via the TRACECA route to Europe.
? Requested services, including suggested methodology
Project beneficiaries are the transport operators involved in the LPG transport chain on the TRACECA corridor, notably at the Kazakh side, i.e. the Port of Aktau, the railways, the Ministry of Transport and Communication and Ministry of Energy and Mineral Resources. In addition, other stakeholders are involved, e.g. Kazakh LPG producers and from other relevant TRACECA countries, i.e. Azerbaijan (Aztranspetrol, SOCAR, other relevant transport companies) and Georgia (Batumi port, Georgian railways and other transport and freight forwarding companies).
In order to deliver the above stated objectives the following activities are requested:
1. Description of existing situation a. Description of the (physical) possibilities of moving LPG in the TRACECA corridor with specific focus on multimodal transport ferry trans-Caspian LPG land transport by rail and rail cars availability; b. Analysis and description of available Kazakh LPG for export through the TRACECA corridor (in terms of locations, quantity, quality, timing); c. Description of other potential bottlenecks along the TRACECA corridor. d. Description of transportation costs and freight rates
To make above descriptions, discussions with relevant stakeholders, such as described under beneficiaries are anticipated as well as review of existing documentation. This activity will result in a Position Paper on TRACECA LPG transport potential, with specific focus on the Kazakh situation.
2. Supporting cooperation in the LPC transport chain a. To consult and discuss with stakeholders the merits of TRACECA LPG transport and the conditions under which such transport can best be organised. Consultation includes a.o. representatives from Port of Aktau, Baku, rail-ferry operators and. representatives from rail transport. b. Develop a supporting document towards an agreement on transport of LPG on the TRACECA Corridor
3. Dissemination of results a. Reporting of results. Besides above-mentioned position paper, a Final Report is to be produced, presenting insights in the project findings. In addition, a concise (two-page) policy statement is to be produced that can be distributed to policy makers. b. Conference in Astana or Almaty, presenting project results, including the supporting document towards agreement on transport of LPG on the TRACECA corridor, to an audience of relevant stakeholders.
? Required outputs
- A Position Paper on TRACECA LPG transport potential, with specific focus on the Kazakh situation, i.e. LPG transport services from Kazakhstan LPG loading racks till FOB Batumi. - A series of bilateral meetings with stakeholders in LPG transport along the TRACECA corridor - A Final Report - A Conference in Astana or Almaty
3. EXPERTS PROFILE ? Number of requested experts per category and number of man-days per expert
Category 1 Experts Number of Man-days Team leader 50 LPG expert 50 Transport operations expert 30
? Profile required (education, experience, references and category as appropriate)
Team Leader (category 1) • University Degree in Engineering/Economics or related fields • At least 8 years of professional experience in transport • Experience in transport of LPG • Experience as Team Leader on at least 2 previous assignments • Excellent communication and motivation skills • Fluent in English, Russian would be an advantage
LPG expert (category 1) • University Degree in Engineering/Economics or related fields • At least 8 years of professional experience in LPG • Working experience in FSU, including Kazakhstan, would be an advantage • Fluent in English, Russian would be an advantage
Operational transport expert (category 1) • University Degree in Engineering, Economics, Law or related field • At least 8 years of professional experience in transport operations, including transport in the energy sector (Crude Oil, Oil products, LPG) • Experience in transport of LPG, including tariffs and charges of LPG transport • Working experience in the region, including Kazakhstan • Fluent in English, Russian would be a strong asset
? Working language(s) English, Russian
4. LOCATION AND DURATION ? Starting period April 2008
? Foreseen finishing period or duration 8 months
? Planning
Month 0 – Month 3: Description of existing situation Month 0 – Month 7: Supporting cooperation in the LPC transport chain Month 3 – Month 8: Dissemination of results
? Location(s) of assignment Mainly in Kazakhstan, with preparation and reporting time in home offices
5. REPORTING ? Content - Position paper on TRACECA LPG transport potential - Final Report
? Language English and Russian, if requested in Kazakh
? Submission/comments timing
Position paper – end of Month 3 Draft Final Report -end of Month 7 Final Report -end of Month 8
Two weeks for comments by the Commission and one month for the comments by the beneficiaries
? Number of report(s) copies
Two hard copies and two electronic copies in both languages to EC Project Manager One hard copy and one electronic copy in both languages to each beneficiary organisation
6. ADMINISTRATIVE INFORMATION ? Other authorized items to foresee under ‘Reimbursable’ Cost of a conference in Astana for approximately 50 participants from Kazakhstan, Azerbaijan and Georgia. It should foresee a cost of good quality simultaneous interpretation.
Interested experts are invited to send a copy of their CV to:
