PSCRP-BESA Reports No 108 (Jan 5, 2024)
Faced with new challenges amid the war in Ukraine and increased pressure from Russia, Kazakhstan is taking a series of strategic measures to diversify its hydrocarbon trade and reduce dependence on the Russian route for transportation to Europe.
Traditionally, Kazakhstan has been heavily reliant on Russian transport infrastructure for exporting oil and gas. Given that Iran blocks Central Asian countries’ access to the Persian Gulf and considering the traditional supply routes to Europe established during the Soviet era, Russia’s territory appeared to be the most obvious path to Europe. The Caspian Pipeline Consortium (CPC) route, via the Russian port of Novorossiysk, exported the majority of Kazakh oil. The CPC project was implemented with the participation of major international corporations at a time when relations between Russia and the West seemed stable, and thus, the potential risk of a “new Cold War” was not factored in. However, since 2022, this route has become highly vulnerable due to ongoing military actions in the Black Sea and Russia’s political pressure aimed at fully subordinating Kazakhstan to Russian priorities amid Moscow’s conflict with the West and Ukraine.
In response, Kazakhstan has intensified efforts in recent years to develop alternative routes, such as the Caspian Sea corridor. The Kazakh port of Aktau is becoming an important logistics hub for transporting oil and other goods to Europe via Azerbaijan, Georgia, and Turkey. Overall, Kazakhstan is actively developing trade and economic relations with China, Turkey, the European Union, South Asia, and the Middle East. However, the main direction for diversifying Kazakh oil supplies to Europe—where the majority of oil from Caspian fields is exported—has become the Trans-Caspian International Transport Route.
The Trans-Caspian route has given rise to an intriguing geopolitical dynamic that diverges from the usual anti-Western Eurasian axis of Beijing-Moscow-Tehran. Iran has consistently and aggressively opposed any Trans-Caspian energy transportation projects, fearing competition with its own energy exports to Turkey and Europe. The large-scale supply of Caspian oil and gas to European markets would render Iranian exports economically unviable. This would enable Europe to support U.S. sanctions against Iran indefinitely without bearing significant economic costs. Conversely, in the absence of alternative supplies, Europe has historically hesitated to fully embrace such sanctions due to the economic harm they inflict—especially now, with Russian energy supplies largely blocked.
In this context, supporting energy deliveries via the Trans-Caspian route is a direct national interest for Israel, though this is rarely discussed in Israeli expert and political circles. Such support not only undermines Iran’s economic interests but also strengthens Israel’s relations with Azerbaijan, an informal strategic partner, and with Central Asian countries that maintain a neutral stance in Middle Eastern conflicts.
It is evident that supporting the construction of Trans-Caspian energy transportation routes—for both Kazakh oil and natural gas from Turkmenistan and Kazakhstan—aligns with the interests of the EU and the broader Western coalition. These routes bolster the EU’s energy security amid its conflict with Russia, enhance the independence of Central Asian countries from both Russia and China, and encourage greater economic alignment of the South Caucasus with the West. Moreover, they tie Turkey more closely to its Western policy vector, reducing Ankara’s incentives to engage with Moscow. For the Turkish government, transforming Turkey into an energy hub is a critical strategy for overcoming its prolonged economic crisis. This goal becomes even more appealing when it involves the resale of energy resources from friendly Turkic nations.
Russia supports Iran’s stance against the construction of Trans-Caspian pipelines as such projects weaken Moscow’s leverage over Europe through energy pressure and create competition for Russian oil and gas. Additionally, Moscow fears that advancing Turkic integration projects through pipelines could undermine its influence in the southern post-Soviet region. Finally, the development of Trans-Caspian routes would further enhance the economic independence of Central Asian countries, Azerbaijan, and Georgia from Russia.
However, China’s interests in this case are opposite to those of Russia and Iran. For China, the Trans-Caspian routes represent the middle corridor of its Belt and Road Initiative (BRI), where the establishment of routes through Kazakhstan to Europe plays a crucial role. Due to the conflict in Ukraine, the northern corridor of the BRI through Russia to Europe has been blocked, while the southern corridor faces obstacles from conflicts involving Iran and the broader Middle East. Consequently, the middle corridor through the Caspian Sea becomes important for China. Thus, Kazakhstan and other Central Asian countries receive support for Trans-Caspian routes not only from the collective West but also from Beijing. Simultaneously, Kazakhstan garners backing from Turkey and other Turkic nations, which serve as significant partners in energy, logistics, and security.
Over the past five years, the export of Kazakh oil via various routes has undergone significant changes. The Caspian Pipeline Consortium (CPC) through Russia remains the primary export route for Kazakh oil, accounting for about 80% of total shipments.
In 2019, 55.6 million tons of oil were exported through the CPC, accounting for 77% of Kazakhstan’s total oil exports. In 2020, exports via the CPC decreased to 51.8 million tons (75.6% of the total), driven by a general reduction in production and exports due to the pandemic. In 2021, exports through the CPC rose to 53.2 million tons (78.7% of the total). However, in 2022, exports via the CPC declined to 52.0 million tons (80.8% of the total). This decrease occurred despite a favorable post-pandemic recovery, which, under normal circumstances, would have led to a substantial increase in shipments. Russia’s pressure and Kazakhstan’s efforts to diversify supply routes were the reasons for the decline.
In 2023, 56.5 million tons of oil were transported through the CPC (80% of the total), an 8% increase compared to 2022. In 2023, Kazakhstan also significantly increased oil exports, bypassing Russian ports, doubling volumes to 3.73 million tons (primarily via the Caspian Sea) compared to 1.91 million tons in 2022. Shipments through the port of Aktau to Azerbaijan alone rose to 1.5 million tons from 0.3 million tons in 2022. Exports via the Baku–Tbilisi–Ceyhan (BTC) pipeline increased to 1.4 million tons.
Thus, despite the dominant role of the Caspian Pipeline Consortium (CPC) in exporting Kazakh oil, recent years have seen a trend toward increasing shipments through alternative routes, such as the Trans-Caspian route via Azerbaijan and Turkey. This shift reflects Kazakhstan’s desire to diversify export pathways and reduce dependency on the Russian route, particularly amid the ongoing war.
A significant factor in this development has been Russian political pressure, driven by the Kremlin’s discontent with Kazakhstan’s continuation of its multi-vector foreign policy during the conflict. In 2022, Russia repeatedly suspended Kazakh oil exports through the port of Novorossiysk, citing various reasons.
The alleged discovery of World War II-era mines in the port’s waters halted oil shipments through Novorossiysk in June 2022. The port area was fully closed for demining, leading to a suspension of exports. Demining operations were scheduled for June 20 and were expected to last until the end of the month.
In July 2022, Russia again blocked the operation of the pipeline transporting Kazakh oil through Novorossiysk. This occurred shortly after Kazakh President Kassym-Jomart Tokayev publicly declared, in Putin’s presence, Kazakhstan’s non-recognition of the self-proclaimed republics in eastern Ukraine.
In August 2022, the CPC announced a reduction in oil flow through Novorossiysk due to defects discovered in the floating storage tank systems.
In 2023 and 2024, further suspensions of Kazakh oil shipments through the CPC to Novorossiysk occurred, including in December 2023 and April 2024. However, experts believe these suspensions were not politically motivated.
In light of the risks that emerged after 2022, Kazakhstan has formulated ambitious plans to expand oil shipments across the Caspian Sea, bypassing Russia.
Kazakhstan’s Minister of Energy, Almasadam Satkaliyev, announced in November 2024 the country’s intention to increase oil shipments via the Baku–Tbilisi–Ceyhan (BTC) pipeline to 20 million tons per year. However, he did not specify a timeline for implementing these plans. In total, Kazakhstan is set to export 68.8 million tons of oil in 2024, including 55.4 million tons through the CPC pipeline via Novorossiysk, 8.6 million tons via the Atyrau-Samara pipeline also through Russia, 3.6 million tons across the Caspian Sea, and 1.1 million tons via the pipeline to China.
To support the growth of exports across the Caspian Sea, Kazakhstan and Azerbaijan are negotiating port modernization and increasing the capacity of maritime oil transport. Discussions are also ongoing regarding the potential construction of a Trans-Caspian oil pipeline, which could significantly shift the regional landscape. However, this project remains far from realization at present.
Turkmenistan and Kazakhstan have also long expressed interest in building a Trans-Caspian natural gas pipeline to Azerbaijan. However, this initiative faces technical, financial, and political challenges, including pressure from Russia and Iran. Nevertheless, the gas reserves of Turkmenistan and Kazakhstan are sufficient to address the European Union’s energy concerns arising from its conflict with Russia, should the project be completed.
Kazakhstan also wields leverage over Russia in the oil and gas sector, allowing it to continue exporting hydrocarbons to Europe through Russian territory. Russia has begun redirecting a small portion of its gas and oil, previously destined for Europe, via Kazakhstan to Uzbekistan. Additionally, Russia has unsuccessfully sought access to Turkmenistan’s gas transport network, which passes through Kazakhstan to China. Between 2022 and 2024, the transit of Russian oil through Kazakhstan’s pipeline system to China significantly increased. These shipments occur via a pipeline that transports oil from Siberia through Kazakhstan’s Priirtyshsk and Atasu to Alashankou in China. In 2023, the transit volume reached approximately 9.14 million tons, and this figure is expected to approach 10 million tons by the end of 2024. Thus, Kazakhstan exports oil to Europe via Russian territory, while Russia exports oil to China via Kazakh territory. This situation exemplifies classic mutual interdependence.
Plans are also underway to increase the export of Russian natural gas through a proposed pipeline from Russia via Kazakhstan to China. Unlike the stalled pipeline project between Mongolia and China, this route has not faced significant obstacles. The projected capacity of the pipeline is 45 billion cubic meters per year, with 10 billion cubic meters earmarked for gasifying various regions in Kazakhstan.
In addition to its energy role, Kazakhstan plays a crucial part in facilitating Russia’s foreign trade amid international sanctions. This includes the practices of Russian companies in the sphere of bypassing international sanctions. However, official Astana, in coordination with the U.S. and the EU, has taken significant steps to combat sanctions evasion. Despite these efforts, completely resolving this issue is nearly impossible due to the Eurasian Economic Union (EAEU), which creates an integrated economic space between Russia and Kazakhstan modeled after the EU.
Overall, Kazakhstan, alongside its diversification strategy, possesses certain tools that compel the Russian government to negotiate. Certain compromises between Astana and Moscow, particularly in oil and gas trade, are inevitable. These two countries share the world’s longest land border and have a high degree of economic interdependence, formally institutionalized through the EAEU.
Even if Kazakhstan successfully increases oil shipments to Azerbaijan to 20 million tons—although no specific timeline has been provided—this will still represent a small share compared to the 50-60 million tons of oil exported to Europe via the Russian port of Novorossiysk. The situation in oil supplies could be dramatically altered by constructing a Trans-Caspian oil pipeline, while the gas supply landscape could shift with the development of a Trans-Caspian gas pipeline. However, these projects would require significant political decisions from multiple international actors to overcome pressure from Iran and Russia, as well as substantial investments.
The collective West and Israel could have vested interests in supporting such initiatives. This could lead to the creation of a powerful regional coalition of post-Soviet states, Turkey, the West, and Israel against Iran and Russia, with China likely adopting a neutral stance. The development of Trans-Caspian energy routes, alongside the trade corridor from India to Europe via Arab countries and Israel, could contribute to a complete restructuring of the Greater Middle East. In essence, such a system of new transportation routes would encircle and isolate Iran entirely.