KazMunayGas - The Times Of Central Asia

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Oil Transit

Kazakhstan Oil Exports: Talks With Azerbaijan on Higher BTC Shipments

Kazakhstan and Azerbaijan are discussing ways to increase shipments of Kazakh oil across the Caspian Sea and through the Baku–Tbilisi–Ceyhan (BTC) pipeline. In the first nine months of 2026, shipments from Aktau through the pipeline rose 24% year on year to 1.16 million metric tons. At a meeting in Baku on November 3, Askhat Khassenov, chairman of the management board of KazMunayGas (KMG), and Rovshan Najaf, president of the State Oil Company of the Azerbaijan Republic (SOCAR), discussed increasing oil transit through Azerbaijan, according to SOCAR. KMG said the companies were studying geological data from prospective exploration areas in both countries and considering deploying Kazakhstan’s Satti drilling rig at offshore fields in Azerbaijan. The meeting followed another disruption to Kazakhstan’s oil exports through Russia. On November 2, a drone attack on the Samara production and dispatch facility forced a suspension of pumping through the Atyrau–Samara pipeline. Shipments resumed the following day. Earlier attacks had also affected infrastructure belonging to the Caspian Pipeline Consortium (CPC), which handles most of the country’s oil exports. In 2025, Kazakhstan exported 64.8 million metric tons of oil through the CPC and approximately 9.3 million metric tons through the Atyrau–Samara pipeline. Kazakh oil has been transported along the Aktau–Baku–Tbilisi–Ceyhan route since 2023. Tankers carry the crude across the Caspian Sea to Azerbaijan, where it enters the pipeline running to the Turkish Mediterranean port of Ceyhan, providing an export outlet that bypasses Russia’s pipeline network. In 2024, KMG and SOCAR agreed to gradually increase transit volumes to 2.2 million metric tons annually. Kazakhstan’s target for 2026 is 1.7 million metric tons. On October 1, Daulet Arykbayev, director of the Oil Transportation and Refining Department at Kazakhstan’s Ministry of Energy, told Platts that Azerbaijan was willing to raise annual transit volumes to 2.7 million metric tons. He said shipments could reach 7 million metric tons a year over the next few years. The BTC pipeline has a capacity of 1.2 million barrels of oil per day, according to Azerbaijan’s Ministry of Energy. Platts reported in October that it was carrying around 500,000–600,000 barrels a day. The spare capacity offers room for additional Kazakh shipments, although transporting crude across the Caspian Sea adds to the cost. In its 2025 Annual Report, KMG described negotiations with SOCAR over lower tariffs and efforts to assess how Kazakh crude affects the quality of the Azeri Light export blend. That year, shipments from Aktau to Baku were suspended from August to October because of technical restrictions related to oil contamination in the BTC system. According to KMG, 1.3 million metric tons were transported along the trans-Caspian route during the year, 7% less than in 2024. Azerbaijani statistics show that total oil shipments through the BTC pipeline fell 8.3% year on year to 18.86 million metric tons in January–September 2026, despite increased shipments of Kazakh crude.

Kashagan Oil Field

Exxon Reportedly Blocks Settlement Over Kazakhstan’s $5 Billion Kashagan Fine

ExxonMobil has blocked a proposed settlement over Kazakhstan’s $5.2 billion environmental fine against the operator of the Kashagan oil field, according to an October 9 Bloomberg report citing unnamed sources. The dispute also affects reported discussions about a potential $80 billion expansion, although Kazakhstan’s state oil company has challenged accounts of that proposal. Citing people familiar with the negotiations, Bloomberg said Exxon opposed the latest settlement proposal and persuaded TotalEnergies, previously neutral, to join its position. Together, their opposition was sufficient to halt the proposal. The terms under discussion were not disclosed. Kashagan is operated by a consortium of international companies and Kazakhstan’s state-owned KazMunayGas. ExxonMobil, TotalEnergies, Shell, and Eni each hold 16.81%, while KazMunayGas owns 16.88%. CNPC and Inpex hold the remaining stakes, according to KazMunayGas. According to Bloomberg, KazMunayGas has decided to pay its share of the fine, although the agency did not establish whether payment had been made. ExxonMobil, TotalEnergies, KazMunayGas, Shell, and Inpex declined to comment. Eni, CNPC, and North Caspian Operating Company (NCOC), the field operator, did not respond to its requests. The dispute has also entered discussions over future development. In August, Bloomberg reported that Exxon had proposed an $80 billion joint venture with KazMunayGas to develop western Kashagan. The proposed 50-50 venture could produce up to 600,000 barrels a day, but would depend on resolving the sulfur fine and Kazakhstan's separate claims of around $150 billion. However, KazMunayGas chairman Askhat Khassenov rejected that account, saying it was inaccurate and that the company did not confirm plans for the joint venture. The project has not been approved, and neither the investment figure nor the proposed production capacity has been independently confirmed. KazMunayGas has published separate expansion plans for existing Kashagan operations. Its Phase 2A and 2B projects could raise total oil and condensate production to roughly 710,000 barrels a day, subject to further technical work, gas-processing capacity, and investment decisions. It remains unclear how the reported western development would fit alongside those plans. Kashagan produced approximately 18.2 million metric tons of oil in 2025, according to KazMunayGas. Further expansion would be technically demanding. The field lies in the shallow northern Caspian Sea, where high levels of hydrogen sulfide complicate extraction and processing. The penalty dates to a 2022 inspection of NCOC’s Bolashak processing complex in the Atyrau Region. Inspectors said more than 1.7 million tons of sulfur had accumulated in storage, against a permitted limit of 730,000 tons. NCOC denies the alleged violations and maintains that its sulfur management complied with Kazakh law and project permits. The penalty totals 2.356 trillion tenge, with its dollar value varying by exchange rate. NCOC’s 2024 sustainability figures show that sulfur in block storage fell from 1.775 million tons at the end of 2022 to 613,000 tons at the end of 2024. Annual sulfur production in 2024 was 1.42 million tons, a different measure from the accumulated stockpile involved in the fine. The reduced stockpile does not determine whether the earlier storage breached the permit. Concerns about storage...

KazMunayGas

KazMunayGas Yuan Bond Offering Nearly Triples in Size

Kazakhstan’s national oil and gas company KazMunayGas (KMG) has raised CNY 3.5 billion ($490 million) through its latest Chinese yuan-denominated bond issue, nearly three times the size of its first such offering last year. It is the first time the company has issued a ten-year bond in yuan. The U.S. dollar remains dominant in KMG’s debt portfolio, but the company is increasingly turning to Chinese capital markets as another source of financing. KMG closed the order book on August 26 after two days of investor meetings in Hong Kong. The bonds are known as Dim Sum bonds – yuan-denominated bonds issued outside mainland China, primarily in Hong Kong. The company will place CNY 1.5 billion of five-year bonds with a 2.3% coupon and a 2.45% yield, as well as CNY 2 billion of ten-year bonds with a 2.8% coupon and a 2.98% yield. The coupon is the annual interest rate KMG will pay, while the yield reflects the return investors can expect if they hold the bonds to maturity, taking into account the price they paid. The bonds are due to be formally issued and on September 2. Demand exceeded the offering by more than seven times. At its peak, the order book topped CNY 25 billion. According to KMG, it was the largest order book in the history of Dim Sum bond offerings by issuers outside mainland China and Hong Kong. Investors included banks, insurance companies, hedge funds, and sovereign investment funds. Moody’s assigned the bonds a Baa1 rating, in line with KMG’s own credit rating. Strong demand allowed the company to lower its borrowing costs. When KMG began taking investor orders, it was initially offering interest rates of around 2.95% for the five-year tranche and 3.45% for the ten-year tranche. The final coupons fell to 2.3% and 2.8%, respectively. KMG describes the borrowing cost as historically low for the company in the Eurobond market. For KMG, the Chinese currency debt market remains a relatively new source of financing. Its first Dim Sum issue took place in October 2025. The company then placed CNY 1.25 billion of five-year bonds with a 2.95% coupon and a 3.15% yield. Demand totaled around CNY 3.8 billion. For KMG, the yuan still represents a small part of its debt portfolio. At the end of 2025, 69% of the company’s total debt was denominated in U.S. dollars. Total debt stood at $6.97 billion, down 7.8% year-on-year in dollar terms. Net debt fell from $2.21 billion to $742 million, or by roughly two-thirds. The dollar-heavy structure also reflects the company’s business: a significant share of KMG’s oil revenues is generated in U.S. dollars, which helps offset some of the currency risk from its dollar-denominated debt. The two Dim Sum offerings therefore point more to diversification of funding sources than to a shift in the company’s primary debt currency. KMG said proceeds from the new issue would be used to finance its major investment program. Among the company’s largest projects is the construction of the Silleno polyethylene...

Kazakhstan Develops AI System for Drilling Monitoring with Plans for Export

Kazakhstan has developed a domestically produced AI system for real-time monitoring of drilling operations and plans to promote it in international markets, Energy Minister Yerlan Akkenzhenov has announced. Speaking at a government meeting on April 28 focused on integrating AI into the economy, Akkenzhenov announced the creation of an AI alliance under the Ministry of Energy. The alliance brings together technology companies, industry participants, and developers to coordinate the deployment of digital solutions, with a priority on local innovations. One of the alliance’s key initiatives is an intelligent drilling monitoring system currently undergoing pilot implementation. According to Akkenzhenov, the system covers more than 4,000 wells and analyzes production data in real time, identifying anomalies and forecasting output levels. The pilot project is being implemented at facilities operated by KazMunayGas and other subsoil users. The deployment is expected to reduce well downtime by up to 20% and generate an estimated economic benefit of around $2.2 million annually. “It is important that the system has been developed in Kazakhstan and has export potential. Work is currently underway to promote it in international markets, including the United States,” Akkenzhenov said. The minister added that AI is also being used to monitor the circulation of petroleum products. The system processes real-time data from oil refineries, storage facilities, the national railway operator Kazakhstan Temir Zholy (KTZ), and government agencies. This enables more accurate forecasting of fuel reserves and helps identify risks of shortages or excess supply. “The expected outcome is an increase in planning accuracy to 85% and savings of up to $48.4 million annually,” the minister said. The system was developed through cooperation between KazMunayGas and the Kazakh-British Technical University as part of the AI-Sana program aimed at strengthening AI capabilities. According to the ministry, the AI alliance has developed a portfolio of 45 projects, 10 of which are currently under evaluation and preparation for implementation. The Times of Central Asia previously reported that President Kassym-Jomart Tokayev had instructed the creation of a specialized artificial intelligence university in Kazakhstan.

Oil and Gas

Kazakhstan Gains Weight in China’s Energy System

The newly extended U.S. waiver for Russian oil transit through Kazakhstan and the reported giant onshore hydrocarbon discovery in western Kazakhstan point in different directions, yet they belong in the same analytical frame. One concerns an existing flow that already reaches China through working infrastructure, while the other concerns a possible future source that has not yet reached the stage of commercially proven reserves. Together, they mark a change in Kazakhstan’s position. The country is increasingly important to China both as a corridor and as a possible larger upstream partner. The U.S. waiver now runs until March 19, 2027. Kazakhstan is not a giant direct oil supplier to China in the way that Russia or Saudi Arabia is; China’s import structure is broader. But Kazakh-origin oil shipments, Russian transit oil, and adjacent energy links now constitute a single, more complex relationship. According to official Chinese sources, oil imported from Kazakhstan enters mainly through the China-Kazakhstan crude pipeline. More Than Kazakhstan’s Own Barrels Kazakhstan-China Pipeline LLP reported that in 2024, the Atasu-Alashankou route carried 1.2 million tons of oil and 9.989 million tons of transit oil, against a design capacity of 20 million tons a year. Official Chinese figures sharpen the point. By the end of 2024, total cumulative throughput on the pipeline had reached 280 million tons, including 19.139 million tons in 2024, while cumulative crude imported from Kazakhstan was lower. Kazakhstan’s significance to China is therefore larger than Kazakhstan’s own volumes would suggest, because the route carries more than Kazakhstan’s own oil. A glance at Europe keeps that proportion straight. Eurostat reports that Kazakhstan supplied 12.7% of the European Union’s petroleum oil imports in 2025. The European External Action Service said that Kazakhstan accounted for 10.9% of EU oil imports in the first quarter of 2024. This made it the bloc’s third-largest supplier in that period, and a more important direct oil supplier to Europe than to China. The significance of Kazakhstan’s geographic proximity to China becomes clearer when one looks beyond crude oil. Kazakhstan is not only a direct oil supplier, but also a transit corridor for multiple China-bound energy flows. The Kazakhstan-China oil pipeline is one of China’s major import routes. At the same time, while Kazakhstan’s own gas exports to China remain limited due to rising domestic demand, gas from Turkmenistan and Russia both pass through its territory. Oil and gas do not form a single operational system, but together they show that China’s energy connection with Kazakhstan extends beyond one commodity and beyond Kazakhstan’s own barrels. The Source Side May Be Growing In this context, the reported discovery on the Zhylyoi carbonate platform makes a difference because it widens the source side of the relationship without changing present flows. According to public statements by KazMunayGas officials, the Karaton, Kazhygali, and Zhylyoi formation has resource potential of 4.7 billion metric tons of hydrocarbons, and the broader Zhylyoi carbonate reservoir may hold as much as 20 billion metric tons of oil equivalent. The field is onshore in...

Oil Industry

Six New Oil Fields Added to Kazakhstan’s Reserves

Six new oil fields in western Kazakhstan, with combined reserves exceeding 127 million tons, were added to the country’s national reserves in 2025, Vice Energy Minister Yerlan Akbarov has announced. “Production will be carried out primarily by local, small companies that discovered these fields,” Akbarov said in response to journalists’ questions. He added that Kazakhstan has 15 sedimentary basins with potential hydrocarbon resources; five are currently under development, while geological exploration is ongoing in the others. Earlier, at the Geoscience & Exploration Central Asia forum, Minister of Industry and Construction Yersayin Nagaspayev said that exploration aimed at discovering new oil and gas reserves is planned in the west, as well as in the southeast and north of the country. “Seismic exploration work is planned in the Shu-Sarysu and North Torgay sedimentary basins, which remain underexplored. The results are expected to provide a basis for more detailed prospecting and exploration,” Nagaspayev said. According to the minister, approximately 10,000 deposits are currently recorded in Kazakhstan, of which only 359 are hydrocarbon deposits. In addition, more than 1,000 solid mineral deposits, over 3,700 sites of common minerals, and around 4,900 groundwater sources have been added to the national balance sheet. At the same forum, Askhat Khasenov, Chairman of the Management Board of JSC National Company KazMunayGas (KMG), said the company’s remaining recoverable oil reserves amount to about 445 million tons, with more than 50% classified as hard to recover. He noted that KMG is implementing innovative technologies to bring these reserves into production. As part of this effort, the company has adopted a Technological Challenges Program focused on deploying advanced solutions. Under this program, an additional 434,000 tons of oil were produced in 2025. By 2040, the initiative is expected to generate a further 54 million tons of output, helping to sustain production and preserve jobs at mature fields around which local communities have developed over many years. As previously reported by The Times of Central Asia, Kazakhstan is launching its most ambitious geological exploration program in the past 15 years. Over the next three years, the government plans to invest more than $470 million in the study of mineral resources. A major hydrocarbon field has already been discovered in the Atyrau region, with reserves potentially comparable to those of Kashagan, the country’s largest oil field.