Kazakhstan - The Times Of Central Asia

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Kashagan

Kashagan Operator Faces July 20 Deadline to Pay $4.9 Billion Environmental Fine

Kazakhstan says it will begin compulsory collection proceedings against the North Caspian Operating Company (NCOC), operator of the giant Kashagan oil field, if it does not pay a 2.3 trillion tenge ($4.9 billion) environmental fine by July 20. The deadline follows a domestic court ruling that has entered into legal force, even as the project’s foreign shareholders pursue international arbitration over the penalty. Deputy Minister of Justice Daniyel Vaisov announced the deadline on July 14. “Foreign companies currently have an obligation to pay 2.3 trillion tenge. If they fail to pay the fine by July 20, the Republic of Kazakhstan will proceed in accordance with the law, including enforcement proceedings and compulsory collection measures,” Vaisov said. However, in a statement to The Times of Central Asia, NCOC said a tribunal in parallel UNCITRAL arbitration proceedings had issued a restraining order prohibiting Kazakhstan from taking any measures to enforce the fine while the arbitration is pending. The company said the UNCITRAL proceedings had been initiated by Kazakhstan itself. NCOC and the contracting companies said they reject both the fine and the allegations underlying it and are contesting them through the UNCITRAL proceedings as well as the ICSID arbitration. They called on Kazakhstan to comply with the restraining order. The dispute stems from a 2022 inspection of Kashagan’s onshore processing facilities in the Atyrau Region. Environmental authorities said the operator had exceeded its permitted sulfur-storage limits, and the Ministry of Ecology and Natural Resources imposed the 2.3 trillion-tenge penalty in 2023. NCOC said it had obtained and maintained all required permits and had always conducted its sulfur management in full compliance with the law. The case has passed through several rounds of domestic litigation. On August 1, 2025, the Administrative Chamber of Astana City Court annulled the original penalty order because of procedural violations, without ruling on the substance of the environmental allegations. The ministry subsequently corrected the procedural defects and reissued the penalty later that month. An Astana court left the reissued fine in force on April 8, 2026. Vaisov said on July 14 that the ruling had entered into legal force. NCOC brings together Kazakhstan’s state-owned KazMunayGas and six foreign partners: Shell, TotalEnergies, Eni, ExxonMobil, CNPC, and Inpex. NCOC and the project’s six foreign shareholders have initiated treaty arbitration through the Washington-based International Centre for Settlement of Investment Disputes (ICSID), arguing that Kazakhstan’s conduct breaches protections owed to investors. Vaisov said the parties were finalizing the composition of the ICSID tribunal, which is expected to be completed by the end of July. “We believe the Republic’s actions regarding the alleged sulfur-storage permit violations are inconsistent with its obligations under international investment treaties, including its obligation to provide fair and equitable treatment to investors,” NCOC said. The Kazakh authorities maintain that the sulfur was stored in breach of environmental rules. The mechanics of compulsory collection may prove difficult. Nurlan Zhumagulov, executive director of the Energy Monitor Foundation, said that NCOC acts as the project’s operator while each shareholder markets its own...

Middle Corridor

Daines’s Tour Signals an Emerging U.S. Caspian Corridor Strategy

Senator Steve Daines’s July 7–9 visit to Azerbaijan, Kazakhstan, and Turkmenistan brought three bilateral relationships into a single, compressed Caspian itinerary. In Baku, he met President Ilham Aliyev and senior economic and foreign-policy officials; in Astana, President Kassym-Jomart Tokayev and representatives of government and business; and in Ashgabat, President Serdar Berdimuhamedov, Foreign Minister Rashid Meredov, and Gurbanguly Berdimuhamedov. Although official accounts treated each stop separately, the sequence suggests a regional pattern whose significance exceeds any single announcement. Daines had already supplied the clearest public articulation of the governing logic in his June 11 speech to the Caspian Policy Center’s Trans-Caspian Forum. There he joined Central Asia and the South Caucasus in a discussion about westward connectivity, investment, and supply-chain diversification. Daines identified critical minerals, energy, telecommunications, and physical and digital infrastructure as fields for public and private investment, while calling for TRIPP, a Caspian gas interconnector, and a continuous route from Central Asia to Western markets that avoids Russia and Iran. Together, these sectors give the proposed route both commercial and strategic content, though not the form of a single named program. Read against the June speech, Daines’s itinerary marks an emerging corridor-centered effort aligned with the Trump administration’s broader Caspian engagement, even without a formal declaration of purpose. Azerbaijan Anchors the Corridor’s Western Connections Baku gives the corridor logic its strongest institutional and bilateral footing. Aliyev and Daines discussed Azerbaijan’s geopolitical role, regional peace, and TRIPP’s importance for transport connectivity. Separate meetings with Foreign Minister Jeyhun Bayramov and Economy Minister Mikayil Jabbarov extended the agenda to economic cooperation. With SOCAR President Rovshan Najaf, Jabbarov and Daines took up the Middle Corridor, energy, transport, digital development, and critical-mineral extraction and processing. Across the meetings, political, commercial, and technical portfolios converged around Azerbaijan’s place at the corridor’s western Caspian egress. The U.S.–Azerbaijan Strategic Partnership Charter, signed in February, places the Middle Corridor alongside energy, trade, transit, digital connectivity, and critical-mineral movement. It identifies Azerbaijan as an energy, transport, trade, and logistics hub for the Caspian region. Working groups regularize cooperation on trade, energy, connectivity, digital development, and security. The charter also calls for project lists and implementation roadmaps within three months of signing and for meetings at least once a year. In June, the first Azerbaijan-U.S. Economic Dialogue began translating that direction into an operational agenda. Government, financial institutions, and private-sector participants met on regional connectivity and transit, energy security, investment, artificial intelligence, and digital infrastructure. The agenda connected the Middle Corridor and TRIPP with logistics, the Southern Gas Corridor, critical mineral supply chains, transport and energy investment, and the Alat Free Economic Zone. Closing documents covered digital infrastructure, technology transfer, and industrial solutions. The workstreams are clear, but the consolidated project portfolio and its financing have yet to take public form. Azerbaijan’s role also rests on physical infrastructure already in use. The established Middle Corridor crosses Kazakhstan and the Caspian before passing through Azerbaijan and Georgia, then onward toward Türkiye or Europe via the Black Sea. At Alat, 70 kilometers...

Druzhba Pipeline

South American Crude Reaches German Refinery via Poland After Russia Halts Oil Transit from Kazakhstan

South American crude oil has been delivered to Germany’s PCK refinery in Schwedt via Poland, providing an alternative supply route after Russia halted the transit of crude from Kazakhstan through the Druzhba pipeline earlier this year. Poland’s UNIMOT Group said its subsidiary, UNIMOT Paliwa, imported the seaborne cargo through the Baltic port of Gdańsk before transporting it to the Schwedt refinery using Poland’s PERN pipeline network. The shipment comes after Russia suspended the transit of crude from Kazakhstan to Germany via the Druzhba pipeline on May 1. The route had become increasingly important after Germany stopped importing Russian oil following Moscow’s invasion of Ukraine. Russia’s pipeline operator, Transneft, cited technical constraints as the reason for the suspension. Russian Deputy Prime Minister Alexander Novak later told reporters that Germany’s rejection of Russian crude suggested the country no longer required those supplies. Kazakhstan’s Energy Ministry subsequently confirmed that exports to Germany through Druzhba had stopped on May 1. Energy Minister Yerlan Akkenzhenov said Kazakhstan shipped no crude to the PCK refinery in May through the Atyrau-Samara-Druzhba route. He said unofficial information from the Russian side linked the suspension to a lack of technical capacity, likely caused by recent attacks on Russian energy infrastructure. Kazakhstan began supplying crude to the Schwedt refinery through Druzhba in 2023 as Germany sought to replace Russian oil. Exports rose steadily, reaching 1.5 million tons in 2024 and 2.146 million tons in 2025, up 44% year on year. Shipments totaled 730,000 tons in the first quarter of 2026. Annual exports had been expected to rise to about 2.5 million tons, enough to meet roughly 30% of the refinery’s crude requirements. Reuters reported in April, citing three industry sources, that Russia planned to halt oil exports from Kazakhstan to Germany on May 1. The news agency said a complete suspension would remove about 17% of the crude processed annually by the PCK refinery, one of Germany’s largest. The loss would add uncertainty to the country’s fuel supply amid disruption in global energy markets. The PCK refinery supplies approximately 90% of the gasoline, diesel, jet fuel, and heating oil consumed in Berlin and the neighboring state of Brandenburg. It also exports around 2 million tons of refined fuels annually to western Poland. German broadcaster RBB reported that the latest shipment arrived by tanker through the port of Gdańsk. According to the refinery’s works council, the crude is believed to have come from Guyana. Rosneft Deutschland, the refinery’s majority shareholder, has been under German government trusteeship since 2022. A company spokesperson confirmed the delivery, saying it would help maintain refinery operations at around 80% of capacity. UNIMOT Vice President Robert Brzozowski said the shipment represented more than a commercial transaction because Poland’s maritime and pipeline infrastructure supports fuel security on both sides of the German-Polish border. The delivery reflects Europe’s efforts to diversify crude supply routes after the disruption of crude transit from Kazakhstan through Russia. Germany is seeking alternative supplies for the PCK refinery. Kazakhstan has said the suspension will...

Economic Growth

Kazakhstan’s GDP Growth Tops 4% in First Half of 2026 Despite Lower Oil Output

Kazakhstan’s economy expanded by 4.1% in the first half of 2026, driven primarily by strong growth in non-oil sectors despite a decline in crude oil production, according to the Ministry of National Economy, citing data from the Bureau of National Statistics. Economic growth accelerated from 3.7% recorded during the first five months of the year, while manufacturing continued to outperform the broader economy. According to the ministry, real GDP growth reached 4.1% in January-June, even as oil production fell 8.4% compared with the same period last year. “The non-oil sector remains the main driver of growth, expanding by more than 5% during the first half of the year,” the ministry said. “More than 80% of GDP growth came from manufacturing, construction, trade, and transport.” Construction remained the fastest-growing sector, with output increasing 15.2% year on year. Kazakhstan commissioned 8.5 million square meters of housing during the first six months of the year, 6.7% more than during the same period in 2025. Manufacturing output expanded 9.8% during the first half of the year. Total manufacturing production reached $34.1 billion, surpassing mining output of approximately $33.6 billion. Although growth slowed in metallurgy, which accounts for more than 40% of Kazakhstan’s manufacturing sector, other industries posted strong gains. Production of fabricated metal products increased 39.9%, automobile manufacturing rose 31.6%, pharmaceutical output grew 43.6%, chemicals expanded 20.7%, rubber and plastic products increased 21.8%, construction materials rose 14.1%, and food production climbed 14.7%. Other sectors also maintained positive momentum. Trade expanded 5.7%, agriculture grew 4.4%, telecommunications services increased 4.3%, and transport and logistics services rose 7.1%. Growth in transport was supported by a 14% increase in auxiliary transport services, while rail freight volumes rose 4.9% and road freight transportation increased 11.4%. Investment activity also remained robust. Investment in fixed capital increased 9.6% compared with the first half of 2025. The strongest gains were recorded in information and communications, where investment more than doubled, electricity supply at 61.4%, manufacturing at 33.3%, agriculture at 24.6%, and transport at 11.6%. “The dynamic development of non-resource sectors and strong investment activity continue to provide a solid foundation for Kazakhstan’s economic growth,” the ministry said. As previously reported by The Times of Central Asia, Kazakhstan’s GDP could reach $320 billion by the end of 2026, up from $306 billion a year earlier. S&P Global Ratings projects GDP growth of 4.1% in 2026, down from 6.5% in 2025. Kazakhstan’s National Development Plan through 2029 sets a GDP growth target of 6.2% for 2026.

Azerbaijan

Aliyev Sees Azerbaijan and Central Asia’s Interests Converging

The Shusha Global Media Forum, an annual gathering held in Azerbaijan’s Karabakh region and conceived as a platform for journalists and media representatives from dozens of countries across Europe and beyond, including the United States, acquired broader regional significance last year because of its consequences for several Russian participants. Last year’s forum attracted widespread attention in Russia after two prominent Russian participants faced repercussions at home. Mikhail Gusman, then first deputy director general of the state news agency TASS, was dismissed shortly after attending the event and praising Azerbaijan, although no official reason was given. The following month, pro-Kremlin political analyst Sergei Markov was designated a “foreign agent” after facing criticism for his favorable comments about Azerbaijan. It was therefore unsurprising that this year’s forum attracted close attention from media outlets around the world. Beyond the forum’s Russia-related significance, Azerbaijan’s President Ilham Aliyev’s remarks pointed to a broader regional shift. Azerbaijan increasingly sees its political and economic interests converging with those of Central Asia, particularly through the Middle Corridor, cross-Caspian energy links, and infrastructure cooperation. According to official figures, approximately 160 journalists, experts, and public officials from 53 countries attended the event. The forum brought together representatives of around 30 international news agencies, more than 60 leading media organizations, and roughly 10 international organizations and companies. Former TASS executive Mikhail Gusman attended the fourth Shusha Global Media Forum and highlighted its growing international profile. “There are very few, if any, media platforms in the world that bring together representatives of media organizations from every region to exchange views and engage in dialogue. That is precisely why the importance of this forum cannot be overstated,” he said. As in previous years, President Aliyev opened the forum and spent nearly three hours answering questions from journalists representing a wide range of countries. Given the latest deterioration in relations between Baku and Moscow, many observers were watching to see whether questions would prompt unusually sharp comments about Russia. The organizers did not shy away from potentially sensitive questions. Ukrainian journalist Dmytro Gordon, who has been designated an extremist in Russia, was once again invited to the forum and made full use of the opportunity. Gordon noted Ukrainian drone and missile strikes deep inside Russia before asking Aliyev what counsel he would offer Ukraine and President Vladimir Putin. “What advice would you give Putin today, when, in my view, he no longer has any good options left?” Gordon asked. Aliyev avoided an overtly confrontational response, stating that Ukraine should “never agree to occupation” and that the war “must be stopped—and stopped immediately.” Aliyev’s exchange with journalists and analysts from Europe and the United States painted a clear picture of Azerbaijan’s worldview and the role it sees for itself internationally. That perspective remains heavily shaped by the three-decade conflict between Baku and Yerevan over Karabakh. According to Aliyev, the United States, France, and Russia all sought to preserve the status quo during that period. He described those decades as a “time of war,” arguing that...

Aquaculture

Kazakhstan Begins Construction of Its First Fish Feed Plant

Kazakhstan has begun construction of its first plant to produce extruded fish feed, with support from the Ministry of Agriculture. The facility will have an annual capacity of 25,000 tons, helping to meet the needs of the country’s rapidly expanding aquaculture sector. The project is regarded as a strategic step for Kazakhstan’s fisheries industry because it is expected to reduce dependence on imported feed and expand domestic fish production capacity. Commercial fish farming has been growing steadily in recent years. In 2025, Kazakhstan produced approximately 23,000 tons of aquaculture products, including around 4,000 tons of trout. According to the Ministry of Agriculture, aquaculture output is projected to reach 64,700 tons in 2026. The expansion of fish farming has significantly increased demand for high-quality feed. Kazakhstan’s aquaculture sector requires approximately 72,000 tons of fish feed annually. While domestic manufacturers already supply most of this demand, the industry continues to rely on imports for high-protein feed. The shortage is particularly acute for feed used to raise high-value species such as trout and sturgeon, as this type of feed has not previously been produced domestically. The new plant is therefore expected to supply Kazakhstan’s fish farms with high-quality domestic feed. Kazakhstan’s fish market reached 106,500 tons in 2025, up 13% from 2024. According to Serik Sermagambetov, chairman of the Fisheries Committee at the Ministry of Agriculture, fish production is expected to reach 2.5 times its current level by 2028. He cited government support and industry digitalization, with new investment projects also expected to contribute. Commercial fish catches are projected to reach 100,000 tons by 2029. By 2029, the modernization of fish hatcheries is expected to increase annual juvenile fish production from 18 million to 85 million. According to Sermagambetov, Kazakhstan harvested 49,600 tons of fish from natural water bodies and produced 22,900 tons through aquaculture in 2025. Exports totaled 21,000 tons of fish products. The fishing industry currently comprises 537 enterprises employing more than 12,000 people. Fish processing is carried out by 73 facilities with a combined annual capacity of 126,000 tons. Twenty of these plants are authorized to export to the European Union, while Kazakhstan’s fish products are shipped to 21 countries. In 2025, fish processing volumes reached 37,000 tons, up 24% from the previous year. To encourage higher-value processing, the government has introduced tax incentives and financial support measures. Fish processors benefit from a 70% reduction in value-added tax and access to preferential working capital loans at an annual interest rate of 5%. Aquaculture remains a key government priority. State support for fish farms reached approximately $10.1 million in 2026, 11.5 times the 2021 level. Over the same period, the number of registered fish farms doubled to 684.