Oil and Gas - The Times Of Central Asia

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Turkmenistan’s Gas Swap Deals Could Be Collateral Damage from Israeli-Iran Conflict

Turkmenistan has the fourth largest reserves of natural gas in the world, but the country has found it difficult to export substantial volumes. Lack of export pipelines are one of the problems and it seemed Turkmenistan had partially solved this dilemma by arranging gas swap deals. Unfortunately for Turkmenistan, these deals involve Iran as the key country, and the Israeli-Iran conflict sheds new doubt on the ability of Iran to fulfill its part in the swap arrangements. So Close Turkmenistan signed a deal to supply 10 billion cubic meters (bcm) of gas annually to Iraq in late October 2024. It was the first major gas export deal Turkmenistan had signed in nearly two decades. That last big agreement was signed with China in 2006. It involved building four gas pipelines from Turkmenistan to China to eventually carry a combined 85 bcm of gas, 65 bcm of which would be Turkmen gas. Since the pipelines cross through Uzbekistan and Kazakhstan, both of those countries are allotted 10 bcm each of the capacity for their gas exports. The fourth branch that would have carried 30 bcm of Turkmen gas has not been built, leaving Turkmen gas exports to China averaging 35 bcm per year. At the moment, China is the only major customer for Turkmen gas. The second largest buyer of Turkmen gas is Uzbekistan, which only purchases about 2 bcm. Not even 20 years ago, Russia was purchasing more than 40 bcm of Turkmen gas, but by 2023 that had dwindled to 5.5 bcm, still leaving Russia as the second largest buyer of Turkmen gas. In July 2024, after negotiations over price broke down, the two parties chose not to renew that contract. That made the agreement with Iraq all the more important for Turkmenistan. However, there are no pipelines connecting the two countries. Yet So Far The Turkmen-Iraqi agreement calls for Turkmenistan to ship 10 bcm of gas to Iran, with Iran then sending 10 bcm of its gas to Iraq. Iran needs gas for its northern regions that are not connected to the domestic pipeline network that sources gas from the fields of in the south of the country. Turkmenistan has two pipelines to export gas to Iran. Both were built after independence in 1991, and could carry up to a combined 20 bcm. Since January 2017, when the Turkmen government made good on a threat to cut off Iran over unpaid bills for gas, almost no gas has been shipped through these pipelines. The first task is to perform maintenance, repairs, and upgrades on these pipelines so that Turkmenistan can physically send 10 bcm of gas to Iran. The Iranian pipeline to Iraq is functional. Iran was exporting gas to Iraq, but international sanctions on Iran hindered Iraq’s ability to pay for that gas. Prior to the agreement with Iraq, Turkmenistan signed a contract in early July 2024 with Iranian officials for the transfer of gas. It is unclear how far along Turkmenistan is in performing its pipeline...

Investments Chemicals Oil and Gas

Kazakhstan to Invest $15 Billion in Oil and Gas Chemical Industry Development

Kazakhstan is set to invest $15 billion in its oil and gas chemical sector through six major projects aimed at shifting the economy from raw material exports to high-value industrial production. The initiative was announced by Temirlan Urkumbaev, Director of the Oil and Gas Chemistry Department at the Ministry of Energy, during the Power Central Asia + China forum. Flagship Projects Underway One of the cornerstone projects is already operational: an integrated gas chemical complex for polypropylene production by Kazakhstan Petrochemical Industries Inc. (KPI), launched in 2022 in the Atyrau region. The facility processes raw materials from the Tengiz field and has a production capacity of 550,000 tons of polypropylene per year. In 2024 alone, it produced around 250,000 tons, spanning 12 grades of polypropylene. The project’s total cost was $2.6 billion. The second major project, a polyethylene plant with an annual capacity of 1.25 million tons, began construction in late 2024 within the National Industrial Petrochemical Technopark special economic zone (SEZ), also in Atyrau. To date, 49% of preparatory work has been completed. The plant’s launch is scheduled for 2029, with an estimated investment of $7.4 billion. It is expected to produce over 20 grades of polyethylene, 40% of which will be premium grade. “Excavation work for the pyrolysis unit has already started,” Urkumbaev stated. “International partners such as SIBUR, Sinopec, and EPC contractors including Tecnimont, Técnicas Reunidas, and Hyundai Engineering are involved. Their participation ensures compliance with global engineering and environmental standards.” Cluster Development and Strategic Goals Additional projects are being developed to produce butadiene, urea, and other products essential to agriculture and industry. All will be situated within the same SEZ, which spans over 3,600 hectares and offers tax incentives and established infrastructure. Currently, 18 companies are operating in the zone. According to Urkumbaev, the creation of an integrated oil and gas chemical cluster will generate over 19,000 new jobs and marks a strategic pivot from resource extraction to the production of high-tech goods with greater added value. “The era when Kazakhstan was seen primarily as a raw materials supplier is drawing to a close. We are building a new, more sustainable economy. The development of oil and gas chemistry is a path toward deeper resource processing, enhanced scientific capacity, and a stronger position in the global market,” he said. Government Commitment to Petrochemical Growth Oil and gas chemistry has been designated a strategic priority by the Kazakh government. Almasadam Satkaliyev, now head of the Atomic Energy Agency and formerly Minister of Energy, previously underscored the importance of redirecting liquefied hydrocarbon gas from transportation use to the petrochemical industry.

Italy Middle Corridor Oil and Gas Bilateral Cooperation Bilateral Investment Central Asia-Italy Summit

Kazakhstan and Italy Forge a New Strategic Nexus

Italian Prime Minister Giorgia Meloni's visit to Kazakhstan marks a pivotal moment in the deepening relationship between the two nations. This diplomatic mission comes on the heels of historical ties reinforced by Pope Benedict XVI’s 2022 visit to the Central Asian nation, where he met with President Kassym-Jomart Tokayev. Benedict’s trip was a testament to Kazakhstan’s role in promoting interfaith dialogue and global peace, a legacy that continues to shape its international relationships. Now, with a new American Pope at the helm of the Vatican, Meloni has renewed Italy’s commitment to strengthening its partnership with Kazakhstan. Her meeting with Tokayev and participation in the C5+Italy Summit underline her focus on fostering collaboration in energy diversification, regional stability, and economic growth. The terms for Meloni’s arrival in Astana were set by Kazakhstan’s previous engagements with Italy, including President Kassym-Jomart Tokayev’s visit to Rome in early 2024 and his meeting with Meloni in Abu Dhabi in January 2025. Those substantive bilateral talks set the bilateral agenda in the joint context of Italian active Eurasian diplomacy and Kazakhstan’s own strategic vision. Meloni’s direct discussions with Tokayev focused on deepening bilateral diplomatic and economic ties; expanding cooperation in energy, trade, and defense; and discussing regional security and joint training programs. As she put it prior to departing Italy, “This visit confirms the strategic value of our collaboration and the excellent level of relations between our nations.” Kazakhstan’s geography, resource wealth, and evolving political posture since independence over a third of a century have also enabled it to craft a nuanced foreign policy balancing traditional ties with Russia and China against emerging alignments with Europe and beyond. Italy’s diplomacy, underpinned by proactive outreach and sustained by major trade and investment flows, has become Kazakhstan’s principal EU partner and third-largest global trading counterpart. Meloni’s engagement with Kazakhstan underscores her broader strategic vision of positioning Italy as a pivotal player in the evolving geopolitical landscape. Central to this ambition is her ability to connect Italy’s foreign policy with global power structures, including her relationship with former U.S. President Donald Trump, a bond that has bolstered both her personal stature and Italy’s diplomatic leverage. This alignment, rooted in shared ideologies of nationalism and sovereignty, allows Italy to project itself as a transatlantic bridge linking Europe, the United States, and strategically critical regions like Central Asia. Beyond energy and trade, Italy’s approach aims to institutionalize its presence in the region, as demonstrated by the simultaneous hosting of the Central Asia–Italy Summit, which builds on the “5+1” dialogue launched in 2019 and its 2024 iteration at the foreign-ministerial level. Convening this summit at the head-of-government/head-of-state level in Astana subtly underscores Kazakhstan’s linchpin role in regional coordination and Italy’s capacity to frame its engagement as a multilateral and strategic enterprise. Meloni’s ambitions extend to securing Italy’s role in stabilizing ties with Central Asia and former Soviet states. For instance, strengthening relationships with energy-rich nations like Kazakhstan underpins her focus on energy diversification, critical for reducing Europe’s reliance on Russian gas while...

Fuel Exports Oil and Gas Afghanistan

Kyrgyzstan Significantly Boosts Fuel Exports to Afghanistan

Exports of fuel and lubricants (F&L) from Kyrgyzstan to Afghanistan have surged in early 2025, according to the National Statistical Committee. In the first quarter of the year, Kyrgyzstan exported more than 40 million liters of gasoline and fuel oil to Afghanistan, a more than 100-fold increase compared to the same period in 2024. From January to March 2025, gasoline exports to Afghanistan’s Kunduz province reached $18.5 million in value, up from just 384,000 liters worth $212,000 a year earlier. Afghanistan now accounts for over 90% of Kyrgyzstan’s gasoline exports. Uzbekistan is the second-largest recipient, having imported 2.5 million liters of gasoline worth $1 million in the same period. The average export price stands at approximately $0.50 per liter. It is important to note that none of the exported gasoline is sourced from Russia. Under a bilateral agreement, fuel imported from Russia on preferential terms, grades AI-92 and AI-95, is designated solely for domestic use and is exempt from re-export. These Russian fuels are delivered duty-free via Kazakhstan, keeping retail gasoline prices in Kyrgyzstan around $0.80 per liter. According to the Oil Traders Association, the gasoline exported to Afghanistan and Uzbekistan typically includes the lower-cost AI-80 grade and fuel oil derived from local crude in southwestern Kyrgyzstan. In 2024, Kyrgyzstan imported 630 million liters of gasoline worth $277 million, primarily from Russia, with smaller volumes from Kazakhstan. Beyond fuel, Kyrgyzstan also exports other goods to Afghanistan, including: Approximately 8,000 tons of flour and vegetable oil annually; Around 12,000 tons of construction materials such as cement and metal structures. In return, Kyrgyzstan imports roughly 200,000 units of Afghan goods annually, including dried fruits, nuts, textiles, carpets, and other handicrafts.

Energy Security Kashagan Oil and Gas KazMunaiGas

Tokayev Moves to Reclaim Kazakhstan’s Energy Future

In January 2025, Kazakhstan’s President Kassym-Jomart Tokayev instructed the government to seek revisions to the nation’s production-sharing agreements (PSAs). The first known result of that directive has now surfaced, with the International Consortium of Investigative Journalists (ICIJ) publishing a report regarding a confidential interim ruling in an arbitration case. According to this information, Kazakhstan is pursuing a $160 billion claim against the North Caspian Operating Company (NCOC), the consortium managing the Kashagan oil field. The ruling states that after royalty payments, NCOC receives 98% of remaining revenue from Kashagan’s output. The document concerns a narrower environmental dispute, but the 98% figure alters the landscape. The contract in question dates to the 1990s, when Kazakhstan — newly independent, fiscally constrained, and eager for technical expertise — entered into deals that prioritized attracting investment over securing long-term national benefit. The government now argues that those historical constraints no longer apply, while the revenue-sharing terms remain effectively frozen in place. Rather than seek unilateral redress or executive override, Tokayev’s administration has turned to arbitration. The venue, the Permanent Court of Arbitration in The Hague, and the legal framing mark a continuation of Kazakhstan’s methodical approach to reasserting national interests in its domestic political economy. This latest move cannot be understood as an isolated decision. It reflects a trajectory of state behavior extending back three decades. In the early 1990s, when Chevron’s bid for Tengiz was effectively imposed as a condition for U.S. bilateral assistance, Kazakhstan lacked both the leverage and the institutional competence to resist — a dynamic I analyzed in detail at the time. Chevron’s refusal to direct more than a token amount of investment to social infrastructure nearly sank the agreement. A similar dynamic surrounded the financing and structuring of the Caspian Pipeline Consortium (CPC). Kazakhstan’s attempts to assert greater influence were often thwarted, not least by the asymmetry of legal expertise and negotiating experience. That imbalance began to shift by the early 2000s. The creation of KazMunaiGas (KMG) in 2002 consolidated the state's participation in the energy sector and enabled its strategic action to become more coordinated. By 2003, Kazakhstan was insisting on conformity with international accounting standards at Tengiz, not only to ensure transparency but also to block attempts by foreign operators to defer investment obligations. Environmental enforcement became more assertive as well, with fines imposed on Tengizchevroil for massive open-air sulfur storage, a practice that had long provoked public concern. The Kashagan field, discovered in the late 1990s and described as the largest oil find since Alaska’s Prudhoe Bay in 1968, became the focal point of these tensions. From the outset, Kazakhstan’s participation in the consortium was marginal. A restructuring of the consortium in the early 2000s brought KMG back in, but cost overruns and delays continued. By 2007, the government had suspended work at Kashagan, citing both ecological violations and spiraling expenditures, in a sequence of events I traced contemporaneously during the legislative and consortium restructuring that followed. Amendments to the Law on the Subsurface followed, granting...

Oil and Gas Rare Earth Elements Exports Economic Impact Trump Tariffs

Kazakhstan’s Economy Receives Boost Amid Changing Tariff and Commodity Dynamics

Kazakhstan’s economy has recently navigated a series of external market shocks. While the suspension of U.S. reciprocal tariffs by President Trump represents a positive development, its direct impact on Kazakhstan is minimal, as the 27% tariff applied to only a minor segment (4.8%) of the nation’s exports and excluded key commodities such as oil, uranium, and silver. Kazakhstan is still subject to the universal baseline rate of 10%. However, the broader improvement in global market dynamics, spurred by increased demand for commodities that Kazakhstan predominantly produces, has provided a substantial boon to the country's economic prospects. This shift underscores a more favorable outlook for Kazakhstan, with rising global demand aligning closely with its resource-driven economy. On April 9, oil prices, in particular, rebounded strongly after hitting a four-year low earlier in the day. Brent crude rose by 4.23% to $65.48 per barrel. Similar trends were observed in other key commodities. Copper prices jumped nearly 3%, and gold rose over 3%, marking its best performance since October 2023, as investors sought safe-haven assets. U.S. natural gas futures, meanwhile, experienced a significant 8% increase, reflecting broader optimism spurred by the tariff suspension. Uranium futures, another strategic export for Kazakhstan, edged up by 1.18% to $64.40. Rare earth metals also showed exceptional growth, with a 12.5% gain highlighted by the VanEck Rare Earth and Strategic Metals ETF (REMX). This coincides with Kazakhstan’s recent discovery of over 20 million metric tons of rare earth deposits, consolidating its position as a potential global heavyweight in this critical market. The timing of the tariff suspension aligns closely with domestic efforts to address the country’s economic challenges. On April 9, President Kassym-Jomart Tokayev convened a meeting to tackle the ongoing economic crisis triggered by global market collapses and declining oil prices. He stressed the importance of maintaining development priorities while implementing swift actions to mitigate the crisis’ impact. The rise in commodity prices following the tariff halt gives these initiatives fresh momentum and a more favorable outlook for executing recovery measures.