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Eurasianet

Eurasianet

Eurasianet is an independent news organization that covers news from and about the South Caucasus and Central Asia, providing on-the-ground reporting and critical perspectives on…

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Kazakhstan Eyes Expanded Routes for Oil Exports in 2024

  • Kazakhstan aims to boost its oil exports through the trans-Caspian corridor and to Germany via the Druzhba pipeline, despite potential complications with Russian transit approvals.
  • The country experienced a 10% increase in oil exports in 2023, reaching over 70 million tons, but saw a 10% drop in revenue due to declining oil prices.
  • Concerns arise over the Caspian Pipeline Consortium as a Turkish terminal refuses oil deliveries to avoid US sanctions, highlighting the geopolitical complexities affecting Kazakhstan's export strategies.
Oil

Kazakhstan increased oil exports by volume last year, but flagging prices meant this translated into diminished earnings. The plan for 2024 is to keep expanding sales abroad, although complications are looming on the horizon.

One route that should see more traffic is the trans-Caspian corridor running through Azerbaijan, Georgia and Turkey. The Energy Ministry said on March 6 that oil deliveries made through that channel will rise to 1.5 million tons, which is 1.4 times as much as in 2023.

On the same day, Energy Minister Almasadam Satkaliyev told reporters that Germany had asked Kazakhstan to increase oil supplies for its Schwedt oil refinery to 2 million tons per year. This trade entails sending oil through the Druzhba pipeline, which runs through Russia. This may be complicated, though, as Russia has to date approved the transit of only 1.2 million tons of Kazakh oil in 2024. And even that was 20 percent more than was sent to Germany in 2023.

Related: 2 Companies That Could Help Europe Win Its Energy War With Russia

Kazakhstan had other markets last year. It sent 1.2 million tons of oil to China and another 65,000 tons to Uzbekistan by rail.

And while Russia is a transit nation for Kazakh oil going to Europe, Kazakhstan is a transit nation for Russian oil going to China and Uzbekistan. Last year, 10 million tons of Russian oil were sent to China and another 150,000 tons of oil to Uzbekistan via Kazakhstan.

More than 70 million tons of oil were exported from Kazakhstan in 2023 —a 10 percent increase on 2022. Revenues amounted to $42.3 billion, a 10 percent drop year-on-year. The largest buyers were a familiar lineup: European Union nations, China, Korea, Turkey and Singapore.

The troubling imponderable is the Caspian Pipeline Consortium, the route by which around two-thirds of Kazakhstan’s oil gets to foreign markets. The pipeline, which is also used by Russian oil companies, runs through Russia and ends in the Black Sea terminal of Novorossiysk.

This week, management at the Turkish terminal of Dortyol reportedly announced that they will refuse to accept oil delivered from the CPC since it does not want to fall foul of U.S. sanctions. That is only one mid-sized terminal, but if more follow, Kazakhstan will have cause to worry.

By Almaz Kumenov via Eurasianet.org

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