The U.S. lifting of sanctions on operations related to the Caspian Pipeline Consortium (CPC) came almost simultaneously with the commissioning of the “Kropotkinskaya” oil pumping station, which had been damaged in a Ukrainian drone attack in February. Now, the volume of oil transported via the CPC is expected to increase by 30–40%. However, Kazakhstan is also considering alternative export routes, including expanding oil deliveries to Europe via Azerbaijan.
The U.S. Treasury’s exemption for CPC and Tengizchevroil-related operations reads: “All transactions prohibited under the determination of January 10, 2025, that relate to the Caspian Pipeline Consortium or Tengizchevroil projects are hereby authorized.”
The likely reason for lifting the sanctions is not geopolitical goodwill but economic pragmatism: American and European companies have suffered losses as both shareholders in the consortium and owners of the crude oil.
According to CPC data, 63 million tons of oil were shipped through the pipeline system in 2024. Nearly 86% — about 54 million tons — came from Kazakhstan. About 74% of this Kazakh oil was exported by American and other Western companies. Chevron alone transported around 27 million tons last year, about 20% of its global production.
Following the U.S. Treasury’s announcement, information emerged about the restoration and commissioning of the Kropotkinskaya station, which had been damaged by UAVs loaded with explosives and metal shrapnel. Among the damaged equipment was costly machinery produced by Germany’s Siemens. Kazakhstan has repeatedly requested clarification from Kyiv via diplomatic channels regarding the attack, but has received no response.
The Caspian Pipeline Consortium is the world’s largest international oil transportation company, created to construct and operate the over-1511-km Caspian trunk pipeline connecting western Kazakhstan oilfields to the marine terminal in Novorossiysk. It handles more than 80% of Kazakhstan’s oil exports and is capable of transporting up to 83 million tons of oil per year via Russian territory. Major stakeholders include Russia’s Transneft, Kazakhstan’s KazMunayGas, Chevron, Lukoil, ExxonMobil, Rosneft-Shell JV, and others.
Tengizchevroil, which develops the Tengiz field in Kazakhstan, includes Chevron (50%), ExxonMobil Kazakhstan Ventures Inc. (25%), KazMunayGas (20%), and Lukoil (5%). Last year, the largest oil volumes into the CPC system came from the Tengiz, Karachaganak, and Kashagan fields.
Notably, following the sanctions relief, Kazakh Prime Minister Olzhas Bektenov met with ExxonMobil Senior Vice President Peter Larden to discuss cooperation in oil and gas, infrastructure development, and the introduction of advanced technologies. Special attention was paid to key joint projects, including Tengiz and Kashagan, and ensuring the stable and uninterrupted operation of the CPC pipeline system. The question now is: does this mean a kind of immunity for Kazakh oil—and if so, for how long?
Due to the Kropotkinskaya station’s damage in February, oil flow via CPC had dropped by 30–40%. But after a quick repair (under three months), the station is back online, and throughput is expected to rise by up to 40%. According to Kazakhstan’s government press service, CPC is now preparing to ramp up transport capacity to nearly 82 million tons per year.
Meanwhile, a debate is ongoing in Kazakhstan: is the country becoming too reliant on Russia for oil exports? Alternative export routes through Azerbaijan—via Georgia and Turkey to Europe—have been functioning reliably for years. These include the Baku–Tbilisi–Ceyhan pipeline. However, they still cannot match the CPC’s capacity. Other routes include the Baku–Supsa pipeline (to Georgia’s Black Sea coast) and Baku–Batumi rail transport.
Competing with CPC would require massive investments: development of Kazakhstan’s tanker fleet for Baku delivery, expansion of bottlenecks at sending and receiving ports, foreign capital, and more. The long-discussed underwater Caspian pipeline remains just a theoretical concept.
In this context, Kazakh President Kassym-Jomart Tokayev’s recent interview with Al Jazeera (quoted by TENGRI NEWS) is relevant. A journalist asked about the S&P Global report stating that around 80% of Kazakh oil passes through Russia via CPC, and whether this poses a strategic vulnerability.
Tokayev replied: “We must remember that Russia is Kazakhstan’s strategic partner, our immediate neighbor and ally. We share the world’s longest continuous land border. We rely on Russia, and especially on CPC. I recently had a phone conversation with President Putin, and we discussed CPC-related matters. I’m confident that CPC will continue to be a reliable instrument for transporting Kazakh oil to Europe and beyond.”
However, Tokayev emphasized that the republic is not solely dependent on CPC. He mentioned the Baku–Ceyhan pipeline, the Middle Corridor, and other routes. “But in terms of transport volume and oil export abroad, CPC remains and should remain the top priority,” he concluded.
It’s worth emphasizing that in just over 30 years of independence, Kazakhstan has become the second-largest oil producer among former Soviet republics, after Russia. Azerbaijan ranks third. Kazakhstan’s steady production growth is largely due to the aforementioned fields and foreign investment.
Yet it was Azerbaijan that first attracted large-scale foreign investment into oil production, signing the “Contract of the Century” in the early 1990s. It entered the European market directly, becoming an energy hub in the South Caucasus. It also promotes a green energy agenda and is expanding its role in the European gas market.
So when it comes to Kazakhstan and Azerbaijan “pulling the same cart,” their success in hydrocarbon exports is less about natural resource abundance and more about smart investment policies and strategic planning—unlike some other resource-rich countries that failed to capitalize on their potential.
Irina Dzhorbenadze
Translated from minval.az
