Kazakhstan considering building oil refinery in Georgia, president says

Nazarbayev's announcement, after a meeting with Georgian President Mikhail Saakashvili in the Kazakh capital Astana, appeared to underline Kazakhstan's commitment to ship oil through a U.S.-backed pipeline running from Azerbaijan through Georgia to Turkey.

The Baku-Tbilisi-Ceyhan pipeline, which opened in May 2005, allows the West to tap oil from rich Caspian Sea fields estimated to hold the world's third-largest reserves, bypassing Russia and Iran. Kazakhstan lies on the eastern shore of the Caspian, opposite Azerbaijan.

"The Caucasian corridor that provides an outlet to Europe (and) the Mediterranean Sea is becoming important for us," Nazarbayev said. "Georgia is our active partner in that area."

Nazarbayev also said Kazakhstan's national oil company KazMunaiGaz was in a process of buying the controlling stake in the Batumi port, considered a possible transit points for transporting oil from Kazakhstan's giant Tengiz oil field near the Caspian with the planned increase in production there in the next several years.

Kazinform quoted Saakashvili as saying the construction of an oil refinery in Batumi "is a huge project worth about US$1 billion (?760,000 million). It's very important not only for Georgia's economy, but for the entire (Caspian) region."

Kazakhstan signed up to the BTC pipeline in June last year, saying it planned to ship 25 million tons (27.5 million short tons) of oil through it annually.

Kazakhstan currently exports most of its oil via Russia, but has been seeking to establish alternative routes. The Kazakh government has also been seeking to increase its revenues from the energy sector by developing its own oil refining industry.

Kazakhstan possesses the largest oil deposits in the Caspian Sea that it shares with Iran, Russia, Azerbaijan and Turkmenistan. It produces about 1.3 million barrels a day. By 2015, its daily oil output is expected to reach 2.6 million barrels. The Associated Press

/The International Herald Tribune/