Oil and Gas - The Times Of Central Asia

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Oil and Gas

Kazakhstan Intends to Accelerate Oil Refining Expansion to 40 Million Tons per Year

Kazakhstan plans to accelerate the expansion of its oil refining capacity to reach 40 million tons per year by 2033, seven years earlier than the previously announced 2040 target. The revised timeline was announced by Deputy Energy Minister Kaiyrkhan Tutkyshbaev at a government meeting on February 17. A full cycle of work is scheduled for 2026-2033, covering feasibility studies, design, construction, and the commissioning of a fourth large refinery with a projected capacity of 10 million tons per year. Once completed, the new facility would increase Kazakhstan’s total refining capacity to 40 million tons annually. Previously, in its updated Concept for the Development of the Oil Refining Industry, the Ministry of Energy had set a target of increasing refining capacity from 18 million to 38 million tons by 2040. The decision to accelerate the timetable follows criticism from President Kassym-Jomart Tokayev at an expanded government meeting on February 10. Addressing Kazakhstan’s dependence on imports, Tokayev noted that the country produces approximately 100 million tons of oil annually but refines only about 18 million tons domestically. This imbalance, he said, has contributed to chronic diesel fuel shortages and reliance on imported aviation kerosene. According to him, modernization of the three existing refineries in Pavlodar, Atyrau, and Shymkent is expected to increase processing capacity from 18.4 million to 27.4 million tons per year. An additional 10 million tons of capacity is to be provided by a new refinery planned for the Mangistau region, near the Caspian Sea coast. Tokayev emphasized that the project should be implemented with the participation of private investors, arguing that financing the construction of a refinery solely from the state budget would be economically unjustified. Tutkyshbaev stated that the ministry has begun preparing initial data on raw material sources and the product mix for the future plant, taking into account demand forecasts and potential export markets. These calculations will determine the refinery’s configuration, the choice of technology licensor, and the precise construction site. The results are expected to be presented in the coming months. The Ministry of Energy expects that expanding existing refineries and constructing a new plant will gradually resolve domestic fuel shortages. Between 2028 and 2030, the deficit of aviation kerosene is projected to decline from 500,000 to 300,000 tons per year, with full elimination anticipated by 2033. Following the launch of the fourth refinery, Kazakhstan is expected to begin exporting diesel fuel and gasoline to neighboring countries. Plans also call for increasing the depth of oil refining from 89% to 94% at existing plants, and to 95% at the new facility. The quality of motor fuels is expected to improve from environmental class K4 to K5. As previously reported by The Times of Central Asia, the Kazakh government began seeking private investors to build the fourth refinery even before Tokayev’s most recent comments on the need for increased refining capacity.

Oil and Gas

More Than 20 Promising Oil and Gas Fields Identified in Kazakhstan’s Aral Basin

A large-scale state geological exploration program in Kazakhstan has identified more than 20 promising hydrocarbon sites in the Aral Basin. The announcement was made by Kanat Yerubaev, Acting Chairman of the Geology Committee of the Ministry of Industry and Construction. According to Yerubaev, by the end of last year 29 promising exploration areas had been identified as part of the state geological study program, covering a range of minerals from gold and copper to lead, zinc, and tungsten. Particular attention was given to oil and gas. Work in the Aral Basin enabled specialists to specify the geological structure of the region, identify new structural elements, and assess forecast hydrocarbon resources. More than 20 sites have been classified as promising, and the Ministry of Energy intends to auction subsoil use rights for these areas later this year. The Geology Committee estimates forecast hydrocarbon resources at one Aral Basin site at approximately 800 million tons. An even larger potential, exceeding 1 billion tons of oil and gas, has been identified in the Syr Darya Basin in the southwest of the country. Exploration activities there began in 2024 and are scheduled for completion in 2026. If these forecasts are confirmed, Kazakhstan’s proven oil reserves could increase by more than 25%. The current state balance sheet records more than 4 billion tons of proven oil reserves, sufficient for over 50 years at current production levels. In 2026, new seismic exploration projects are scheduled to begin in other relatively underexplored sedimentary basins, including North Turgai, Shu-Sarysu, and Priirtysh. Yerubaev noted that Kazakhstan is moving away from geological surveys conducted at a 1:200,000 scale, which provide only a general overview, and transitioning to more detailed 1:50,000 scale surveys. He compared the shift to “getting a navigator instead of a world map, where you can see every step,” emphasizing that such precision aligns with international standards and supports informed investment decisions. At the same time, the sector’s digital infrastructure continues to develop. Kazakhstan operates a unified subsoil use platform that provides 22 government services and access to more than 66,000 geological reports. By the end of 2025, 97.5% of primary geological data, approximately 4.7 million records, is expected to be digitized, with full digitization scheduled for completion this year. Approximately $485.5 million has been allocated for state-funded geological research projects over the next three years. Under current legislation, 50% of subscription bonuses collected from auctions for subsoil use rights are to be reinvested in the sector to support geological development and infrastructure modernization. This framework is designed to create a sustainable model in which revenues from subsoil licensing are directed back into further exploration. The Times of Central Asia previously reported that Kazakhstan had become one of the global leaders in proven rare earth metal reserves.

Banking

Kazakhstan’s Banking System and the Logic of Early Enforcement

Kazakhstan’s growth model depends on uninterrupted access to international finance. Because its largest energy and mining projects rely on foreign capital, hard-currency financing, and offshore banking channels, confidence in the integrity of its banking system is not just a regulatory issue; it is a macroeconomic constraint. This reliance is structural. Export revenues are concentrated in globally-priced commodities—especially oil (up to 60% of total exports in recent years), and uranium (40%+ of global output)—linking fiscal stability directly to hard-currency liquidity and correspondent banking access. In that context, correspondent banking is a systemic requirement underpinning international payments and trade. Because international banks incorporate sanctions exposure and AML/CFT risk into their assessments, adverse risk perceptions can trigger de-risking behavior that raises costs and slows flows. Astana is now courting U.S. and European investment in multibillion-dollar initiatives, including the Trans-Caspian/Middle Corridor and projects related to rare earth and critical minerals supply chains. This further increases Kazakhstan’s exposure to Western compliance standards and regulatory scrutiny. With a growth model heavily driven by foreign capital, Kazakhstan understands that perceived weaknesses in banking system compliance would not halt investment outright, but would translate into higher funding costs and reduced appetite in international capital markets. Sanctions Exposure After 2022: Structural, Not Tactical Russia’s full-scale invasion of Ukraine in February 2022 sharply increased Kazakhstan’s exposure to global sanctions enforcement. Geography, membership in the Eurasian Economic Union, and dense trade and infrastructure ties with Russia made Kazakhstan a focal point for concerns over re-exports and sanctions leakage. At the same time, its border with China—an important source of dual-use goods—has added another layer of scrutiny, even as reporting later showed that China-origin cargo bound for Russia was, in documented cases, routed without physically entering Kazakhstan, despite being linked to it in trade flows. Western sanctions reshaped logistics faster than enforcement capacity could adapt. Restrictions on shipping, insurance, and financial services increased reliance on overland transit routes through Central Asia, drawing attention to Kazakhstan, even where violations were difficult to substantiate. Western investigations later showed that EU-origin dual-use goods continued to reach Russia through intermediary channels, underscoring enforcement gaps beyond Kazakhstan itself. For Kazakhstan, however, heightened scrutiny translated directly into financial risk, regardless of intent. In the logic of global compliance, perception can be as consequential as proof. Early Intervention as Risk Management Since 2022, Kazakhstan’s response has evolved from declaratory neutrality to early, containment-oriented enforcement. This shift has been driven less by foreign-policy alignment than by a calculation that even isolated violations can carry disproportionate financial consequences. President Kassym-Jomart Tokayev has repeatedly emphasized that sanctions violations carry direct economic consequences for Kazakhstan, warning in public remarks that non-compliance could expose the country to secondary sanctions affecting trade, finance, and investment flows. By framing compliance as a matter of macroeconomic risk management rather than geopolitical positioning, the government signaled that enforcement would prioritize financial stability over short-term commercial convenience. That logic has translated into practice. When Western sanctions were imposed on Sberbank in 2022, Kazakhstan approved the sale and restructuring of...

Oil and Gas

Kazakhstan Boosts Oil Output Despite Export Infrastructure Challenges

Kazakhstan increased its production of oil and gas condensate by 14% in January-November 2025 compared to the same period last year, and exceeded its annual export plan ahead of schedule, despite ongoing disruptions in the Caspian Pipeline Consortium (CPC). The figures were announced by Deputy Minister of Energy Sungat Yessimkhanov. By the end of 2024, Kazakhstan had produced 87.7 million tons of oil and gas condensate, 97.1% of its target of 90.5 million tons. Total oil exports for the year reached 63.2 million tons. In the first 11 months of 2025, production rose to 91.9 million tons, marking a 14.1% year-on-year increase. The full-year target for 2025 is 96.2 million tons. Over the same period, exports amounted to 73.4 million tons, already surpassing the annual target of 70.5 million tons and representing a 16.1% increase from the previous year. This growth came despite serious challenges to Kazakhstan’s main export route. The CPC, which carries the bulk of Kazakh crude to international markets, experienced disruptions following a drone attack on its infrastructure. The incident raised fresh concerns about the vulnerability of critical export corridors. In the gas sector, Kazakhstan produced 62.8 billion cubic meters of natural gas in January-November 2025, a 16.7% increase from the same period in 2024. The annual gas production target for 2025 has already been met. Liquefied petroleum gas (LPG) production rose to 2.8 million tons, up 1.8%. Gas transit volumes through Kazakhstan reached 64.5 billion cubic meters, up 0.9%. During the same period, domestic production of petroleum products reached 14 million tons. The full-year target is 14.5 million tons, on track to match the 2024 total, when 17.9 million tons of crude were processed domestically. Production of oil and gas chemical products increased by 12.2%, reaching 567,600 tons. The target for 2025 is set at 590,000 tons. As previously reported by The Times of Central Asia, Kazakh authorities are actively seeking foreign investment for the construction of a fourth major oil refinery with a projected capacity of up to 10 million tons per year. Overall, Astana plans to attract between $15 billion and $19 billion in investment for the development of the oil refining sector by 2040.

Organization of Turkic States (OTS)

Organization of Turkic States Discusses Key Eurasian Energy Projects

At the 5th meeting of ministers responsible for energy within the Organization of Turkic States (OTS), held on December 10 in Istanbul, OTS Secretary General Kubanychbek Omuraliev outlined major joint energy initiatives underway among member states. Founded in 2009, the OTS comprises Azerbaijan, Kazakhstan, Kyrgyzstan, Turkey, Uzbekistan, and Turkmenistan. Hungary and Northern Cyprus participate as observer states. Omuraliev touched upon the following projects: Major oil and gas routes such as the Baku-Tbilisi-Ceyhan (BTC) oil pipeline, Baku-Tbilisi-Erzurum (BTE) gas pipeline, South Caucasus Pipeline, Trans-Anatolian Natural Gas Pipeline (TANAP), Trans Adriatic Pipeline (TAP), and the Iğdır-Nakhchivan gas pipeline; A strategic partnership between Azerbaijan, Kazakhstan, and Uzbekistan to develop and transmit green energy; The Azerbaijan-Georgia-Turkey-Bulgaria Green Energy Corridor, which extends the Central Asia-Azerbaijan corridor and opens new avenues for energy exports to Europe; Construction of the Kambarata-1 Hydropower Plant in Kyrgyzstan, a project jointly developed with Kazakhstan and Uzbekistan; and A planned Black Sea submarine cable to transmit renewable energy. Omuraliev emphasized that enhanced intra-OTS cooperation bolsters both the economic potential of member states and regional energy security. Ministers at the meeting noted the significant fossil fuel and clean energy resources held by OTS members and observers, describing the region as a strategic energy bridge between Asia and Europe. They stressed that advancing practical cooperation is essential amid growing global energy demand and the accelerating energy transition. Participants agreed to move forward with joint projects under the OTS framework, including the establishment of a Regional Center for Technologies and Green Initiatives. As previously reported by The Times of Central Asia, on December 5, the Board of Governors of the Turkic Investment Fund announced in Bishkek that the fund will begin operations in the first quarter of 2026. The Turkic Investment Fund is the first dedicated financial institution jointly established by OTS member states. Headquartered in Istanbul, its mandate is to promote economic cooperation, boost intra-regional trade, and support sustainable development by financing major joint initiatives across the region.

Oil and Gas

China’s Power Play in Central Asia’s Energy Sector

China is steadily expanding its influence in Central Asia’s oil and gas sector through multi-billion-dollar investments, long-term supply agreements, and a growing network of strategic partnerships. From Kazakhstan to Turkmenistan, Beijing’s state-backed companies are securing key upstream and midstream assets, financing new petrochemical and pipeline projects, and positioning themselves as indispensable players in the region’s resource development. This expansion is driven not only by China’s rising energy demand, but also by Beijing’s ambition to establish durable overland energy corridors that reduce reliance on maritime routes vulnerable to disruption. Central Asia’s existing and planned pipelines provide China with rare direct access to oil and gas fields across its western frontier, making the region a focal point of its broader energy-security strategy and a cornerstone of Beijing’s efforts to diversify supply while deepening political and economic footholds across Eurasia. Kazakhstan Eyes Chinese Investment Amid Lukoil Sanctions Kazakhstan may seek to transfer Russian company Lukoil’s stake in the offshore Kalamkas-Khazar oil and gas project to a new partner, with some industry channels, including the Telegram channel Energy Monitor, speculating about possible Chinese interest. Lukoil, which has been targeted by Western sanctions, is reportedly planning to exit Kalamkas-Khazar Operating LLP, a joint venture with KazMunayGas (KMG). Each company currently holds a 50% stake. Some commentators have suggested that a Chinese investor could step in, but no replacement has been officially confirmed. Seconded engineers from KMG Engineering are expected to be withdrawn from the project as of January 1, 2026, with several Kalamkas-Khazar staff members temporarily reassigned to other KMG subsidiaries until a new partner is confirmed. The project is considered highly promising, with earlier estimates citing reserves of 81 million tons of oil and 22 billion cubic meters of gas. New exploration has identified additional oil-bearing structures. A final investment decision (FID) worth more than $6.5 billion was originally expected by the end of 2025. However, U.S. sanctions against Lukoil have delayed progress. Located 120 km from the Kashagan field in the North Caspian Basin, the Kalamkas-Khazar block comprises the Kalamkas-More and Khazar fields. The site is situated in Kazakhstan’s Mangistau Region, 60 km from the Buzachi Peninsula. KazMunayGas Chairman Askhat Khasenov previously confirmed that production was expected to begin in 2028-2029, with peak output reaching four million tons annually. Lukoil was sanctioned by the UK on October 15, followed by the U.S., complicating ongoing negotiations. Despite this, major projects where Lukoil holds minority stakes, such as Tengiz, Karachaganak, and the Caspian Pipeline Consortium, have not been impacted. A Lukoil withdrawal would create a rare opening for China to secure its first significant offshore position in the North Caspian, a zone historically dominated by Western majors and Russian firms. Such an entry would represent a notable shift in Kazakhstan’s offshore partnership landscape. Beijing's Billion-Dollar Energy Deals in Kazakhstan In September 2025, President Kassym-Jomart Tokayev announced a series of energy deals with China valued at $1.5 billion. During his official visit to China, more than 70 commercial agreements totaling approximately $15 billion were signed, several...