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Energy Sector

Pipelines Under Pressure: Ukraine War Hits Kazakhstan Energy Arteries

The ongoing war between Ukraine and Russia continues to have indirect but notable implications for Kazakhstan’s energy sector. Following the September drone attack in Russia’s Novorossiysk that damaged the offices of the Caspian Pipeline Consortium (CPC) - which exports the majority of Kazakhstan’s oil - another incident has raised concern: the October 19 strike on Russia’s Orenburg Gas Processing Plant, which handles gas from Kazakhstan’s Karachaganak field. The CPC confirmed that its export terminal continued operating after the September 24 incident, though two employees were injured and part of its office complex was damaged. The consortium remains the backbone of Kazakhstan’s oil exports, handling over 80% of national crude shipments to world markets. This concentration has long been viewed as a vulnerability because nearly all flows depend on infrastructure inside Russian territory. The war has underscored that risk, prompting Astana to accelerate plans for alternative routes across the Caspian Sea toward Azerbaijan and Georgia. Astana has been working with Baku and Tbilisi to expand capacity along the Trans-Caspian International Transport Route (Middle Corridor), supported by EU and World Bank funding commitments. Kazakhstan’s Ministry of Energy confirmed that the plant, located about 150 kilometers northwest of Kazakhstan’s Karachaganak field across the Russian border, was temporarily shut down following the UAV strike. “According to information from PJSC Gazprom, on October 19, 2025, an emergency situation occurred at the Orenburg gas processing plant as a result of a UAV attack, in connection with which the plant temporarily stopped receiving raw gas from the Karachaganak field.” The Ministry added that gas supplies to domestic consumers remain unaffected and that consultations are underway with field operators to assess potential disruptions and losses. No details on the extent of the damage or repair timelines have been released by the Russian side. Ukraine’s military confirmed responsibility for the attack as part of its campaign against Russian energy infrastructure, according to statements reported by Interfax-Ukraine and Ukrainska Pravda. Industry analysts, however, remain cautious. Journalist Oleg Chervinsky noted that the Orenburg plant processes up to nine billion cubic meters of Karachaganak gas annually, a portion of which is returned to Kazakhstan’s northern regions. He warned that a prolonged shutdown could lead to supply shortages, particularly during the winter months. The timing of the Orenburg attack - just before the start of the heating season - adds a seasonal risk dimension. Olzhas Baidildinov, an expert in the energy sector, criticized delays in constructing a domestic gas processing facility at Karachaganak, arguing that reliance on foreign infrastructure heightens Kazakhstan’s vulnerability to regional conflict and economic disruptions. The replacement of damaged equipment, including components from France’s Technip, could also be complicated by sanctions and supply chain issues, ultimately impacting tariffs and consumer costs. The cumulative effect of reduced gas processing capacity and potential production slowdowns at Karachaganak could weigh on Kazakhstan’s already strained budget. While some observers note that reduced output may help the country align with its OPEC+ production commitments, previously exceeded at major fields including Kashagan, Tengiz, and Karachaganak, such...

Caspian Pipeline Consortium

Caspian Pipeline Attack After Zelenskyy-Tokayev Meeting Puts Kazakhstan in Delicate Position

A recent drone strike on the Caspian Pipeline Consortium (CPC) office in Novorossiysk has raised concerns in Kazakhstan, whose oil exports rely heavily on the pipeline route. The attack, which killed two people and damaged nearby infrastructure, occurred just one day after Kazakh President Kassym-Jomart Tokayev met with Ukrainian President Volodymyr Zelenskyy in New York. While there is no official indication that the CPC was a deliberate target, the incident has prompted debate over the implications for Kazakhstan’s economic security and diplomatic neutrality amid the ongoing war. According to CPC, the attack struck its administrative office in central Novorossiysk during the workday. The building sustained damage in addition to nearby residential blocks and a hotel. Two CPC employees were wounded and evacuated; the office’s operations were suspended. The consortium also said others in the building, not employed by CPC, suffered serious injuries. Authorities in the Krasnodar region confirmed two deaths and seven injuries from the strike, declaring a state of emergency in the city. Russian media reported extensive damage to residential buildings and a hotel near the CPC office. In response, Kazakhstan’s Ministry of Energy issued a statement assuring that pipeline operations would continue as normal. The ministry said oil intake from Kazakh shippers remains unaffected, and the transportation and loading of oil via the CPC marine terminal is proceeding without restrictions. The ministry added that it is coordinating with CPC shareholders and monitoring developments in real time. Notably, the attack followed just 12 hours after Tokayev’s meeting with Zelenskyy in New York. According to the Kazakh presidential press service, Zelenskyy expressed his view of the war’s trajectory while Tokayev emphasized the importance of sustained diplomacy. Ukraine’s version, via its presidential press service, was more expansive: Zelenskyy thanked Tokayev for support on sovereignty, insisted on a leaders’ summit, and said Kazakhstan’s mediation role was welcome. In a later interview, Zelenskyy even floated the possibility of meeting Russian President Vladimir Putin on neutral territory such as Kazakhstan. When asked about that proposal after the Novorossiysk attack, Tokayev stated firmly that Kazakhstan does not see itself as a mediator in the Russia-Ukraine conflict. He reiterated that both sides should engage directly, while supporting continued talks. “Talks must continue,” he said. Kazakh political analyst Daniyar Ashimbayev noted that Tokayev’s extended commentary suggested he may feel less enthusiastic about a repeat meeting with Zelenskyy. Oil expert Olzhas Baidildinov stated that around 80 percent of Kazakhstan’s oil exports transit via the CPC; he therefore warned the strike directly threatens Astana’s interests. Baidildinov also suggested that Kazakhstan may need to consider a range of policy responses to ensure the security of its oil export routes, including enhanced monitoring of trade and transit channels. He noted that international companies operating in Kazakhstan, particularly those using the CPC pipeline, could be indirectly affected by any future disruptions. Kazakhstan’s Foreign Ministry has not issued a public statement on the incident. Meanwhile, diplomatic engagement continues at various levels. During his visit to New York, Tokayev also met with Chevron CEO Michael...

Geopolitics

Opinion: Why Russia May Stop Oil Supplies via the CPC

The global confrontation between the West and East could, quite literally, devastate the economies of Central Asian countries in the near future. Some experts argue that the position Kazakhstan and its regional neighbors now occupy, four years into the war between Russia and Ukraine, has spiraled beyond anyone’s control. The disruption began with Ukrainian drone strikes on Russian infrastructure used by the Caspian Pipeline Consortium (CPC), which indirectly impacted oil flows from Kazakhstan to Europe. On August 2, several media outlets, citing sources within the Ukrainian military, reported an attack on the Central Asia-Center (SAC) gas pipeline running through Kazakhstan. The attack allegedly caused an indefinite halt in gas deliveries that Russia had been sending in reverse flow to Uzbekistan. Kazakhstan also uses this gas domestically. Shortly after, the energy ministries of both Uzbekistan and Kazakhstan denied reports of any damage to the pipeline. Nonetheless, Ukraine’s classification of the SAC pipeline as a legitimate target remains on record. Notably, although Kazakhstan’s Foreign Ministry has issued a formal protest to Kyiv over the CPC attacks, it has yet to reveal any official response from the Ukrainian side. Kazakhstan thus finds itself in an extremely vulnerable position: its national budget is heavily dependent on oil exports, while its southern infrastructure increasingly relies on imported gas. For example, the planned conversion of Almaty’s TPP-2 to gas is unfeasible without stable fuel supplies. In other words, Kazakhstan has become fully dependent on developments in the Russian-Ukrainian war. Compounding the geopolitical tension, U.S. President Donald Trump has pursued an aggressive and often unpredictable foreign policy approach. He has threatened sanctions against Russia’s economic partners if they continue buying oil from President Vladimir Putin. This pressure is primarily directed at China and India, both of which have already signaled they do not intend to comply with Trump’s ultimatum. In response, Russia may adopt symmetrical countermeasures targeting American companies, specifically, by halting oil flows via the CPC. That’s the view of JPMorgan analysts, who suggest that such a move could drive global oil prices up to $80 per barrel. This would benefit Russia but would deal a serious blow to Kazakhstan, which relies on CPC to export up to a million barrels of oil per day. Unfortunately, Kazakhstan lacks viable alternatives. The Baku-Tbilisi-Ceyhan (BTC) pipeline, often cited as a backup route, depends heavily on Caspian Sea shipping, which is increasingly hindered by shallow waters. Heavier oil barges dispatched from Aktau to Baku risk running aground. As a result, Kazakhstan's oil volume transported via BTC is expected to increase by only 300,000 tons this year, from 1.4 to 1.7 million tons. It's worth noting that CPC exports oil produced by American firms Exxon and Chevron, the British company Shell, Italy's ENI, and France’s TotalEnergies. These are the very firms Russia could target in retaliation. As Trump’s statements deepen the appearance of a Russia-versus-West conflict, energy infrastructure could increasingly become a battlefield. Hints of Moscow’s readiness to act have already emerged. In mid-July, President Putin signed a decree mandating...

Caspian Pipeline Consortium

Kazakhstan’s Oil Exports Uninterrupted Despite Caspian Pipeline Consortium Berth Suspensions

Despite the suspension of two out of three offshore berths operated by the Caspian Pipeline Consortium (CPC), Kazakhstan’s oil exports are proceeding without disruption, according to the Ministry of Energy of the Republic of Kazakhstan. The ministry stated that there are currently no restrictions on the receipt or shipment of oil through the CPC system. Transshipment is being carried out on schedule via VPU-3, the third remote mooring unit, which has been in operation since 2014. “Shipments are proceeding normally and according to schedule through the VPU-3 offshore mooring device, which remains operational,” the Ministry of Energy announced. Temporary Suspension of VPU-1 and VPU-2 Earlier, CPC announced the temporary suspension of VPU-1 and VPU-2 following an unscheduled inspection conducted by Russia’s Rostransnadzor. The inspections are part of a broader review of marine infrastructure safety across the Azov-Black Sea basin, launched in the wake of an oil product spill in the Kerch Strait in December 2024. Following the inspection, regulatory authorities issued protocols and directives mandating the temporary shutdown of the two berths until the violations identified are addressed. In the meantime, all CPC shipments have been consolidated through VPU-3. Consortium shareholders have been formally notified of the developments. Similar Measures at Transneft Facility The crackdown on safety violations has extended beyond the CPC. The eighth oil-loading berth operated by JSC Novorossiysk Commercial Sea Port (NCSP Group), part of Russia’s Transneft, has also been suspended for 90 days. The suspension followed the identification of safety violations related to the handling of hazardous cargo. Transneft has been ordered to correct the deficiencies by June 30. Strategic Significance of CPC The CPC is Kazakhstan’s most critical export route for crude oil, linking the giant Tengiz Field with the Yuzhnaya Ozereyevka Terminal on the Black Sea. The pipeline stretches 1,510 kilometers, including 452 kilometers within Kazakhstan, and has an annual capacity of up to 81.5 million tons. In 2024, Kazakhstan exported 54.9 million tons of oil via CPC, accounting for approximately 80% of the country's total oil exports. Security Concerns: Drone Attacks Raise Alarms Security concerns continue to loom over the CPC infrastructure. In February, the Kropotkinskaya station was targeted by seven drones. While the Ministry of Energy reassured that oil deliveries remained unaffected, the incident heightened concerns about operational stability. Although Russia and Ukraine later agreed not to target CPC facilities, Russia alleges that its air defense systems intercepted another drone attack on March 24, the third such incident in a month. Oil market analyst Olzhas Baidildinov voiced skepticism about the durability of the ceasefire arrangement. “We shouldn’t count on an end to attacks on CPC infrastructure,” Baidildinov said. “There’s unwarranted optimism in Kazakh media and among some experts, especially against the backdrop of record oil output in February-March. A decline in both oil production and exports seems inevitable, along with a drop in KazMunayGas’ dividend income from CPC and budget revenues.” He also warned that irregular operations could damage infrastructure designed for continuous, stable use. “Oil pipelines are engineered for consistent operational...

Caspian Pipeline

A Blow to the CPC: Geopolitical Intrigue Surrounding the Pipeline

More than a week has passed since Ukrainian drones attacked the Kropotkinskaya oil refinery, part of the Caspian Pipeline Consortium (CPC) system. However, the incident remains a topic of heated debate in Kazakhstan. What Happened? On February 17, the Kropotkinskaya oil pumping station, located in Kavkazsky district, Krasnodar Krai, was targeted by multiple UAVs carrying explosives and metal fragments. While there were no casualties, the facility sustained damage and was taken out of service. Oil transportation through the Tengiz-Novorossiysk pipeline has since been rerouted via a bypass system, ensuring that shipments from the CPC Marine Terminal continue as normal. On February 20-21, a Kazakh delegation, including Daniyar Berlibayev, special representative for the CPC project from KazMunayGas, and Yerbolat Mendybayev, Director of Transportation and Logistics at KazMunayGas, visited the Kropotkinskaya station alongside CPC Deputy General Director Hakim Kasymov to assess the damage. At a CPC shareholders' meeting in Abu Dhabi on February 25-26, CEO Nikolay Gorban presented a report on the extent of the damage, equipment dismantling progress, and contractor mobilization status. According to the CPC press service, shareholders pledged full support for repair work, which is expected to take approximately two months. Kazakh Debate: Is Ukraine to Blame? While CPC shareholders, including entities from Kazakhstan, Russia, Europe, and the United States, treated the issue as a technical problem, Kazakh public discourse took a different turn, led by Mazhilis deputies. Parliamentarian Nikita Shatalov questioned Ukraine’s motivations on his Telegram channel: “The Ukrainian side could not have been unaware that 90% of the oil transported through the pipeline is Kazakh, extracted from Tengiz, with revenues benefiting Western companies exporting to the EU. The pipeline is international, with KazMunayGas, Chevron, ExxonMobil, and Italy’s Eni as shareholders. This attack was clearly intended to damage Kazakhstan’s economic interests.” Shatalov emphasized Kazakhstan’s neutral stance in the Ukraine-Russia war, pointing out that diplomatic contacts between Astana and Kyiv have continued at the highest levels, including President Kassym-Jomart Tokayev’s engagement with Volodymyr Zelensky. “Those responsible for this attack on an international consortium must be punished. Kazakhstan must demand accountability from Ukraine for the damage inflicted and the threat to bilateral relations.” His stance was echoed by Mazhilis deputy Marat Bashimov, who called the attack a "direct assault on Kazakhstan’s interests" in a Facebook post: “The Ukrainian side knew exactly how strategically vital the CPC pipeline is for Kazakh oil exports.” Bashimov argued that Kazakhstan has always upheld neutrality, supported diplomatic resolution efforts, and even refused to recognize the self-proclaimed Donetsk and Luhansk republics. Kazakh Debate: Is Russia to Blame? Not all deputies agreed. Mazhilisman Yermurat Bapi strongly rejected demands for Ukrainian compensation, arguing that Kazakhstan has no moral or legal grounds to make such a claim: “For more than three years, Ukraine has been fighting for survival against an aggressor that invaded its territory. As part of this war, Ukraine has the right to choose its defense strategies.” Bapi went further, blaming Kazakhstan’s overreliance on Russian infrastructure for the crisis: “The CPC pipeline was a strategic mistake of...