Oil Supply - The Times Of Central Asia

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Oil Supply

Kazakhstan on Europe’s Oil Podium, but for How Long?

Kazakhstan has strengthened its position as one of the key suppliers of oil to the European Union, capitalizing on the redistribution of energy flows following the reduction of Russian crude imports. However, declining production and vulnerabilities in export infrastructure cast doubt on the country’s ability to maintain this position in the medium term. According to official EU data, the EU remains one of the world’s largest oil importers, meeting about 97% of its demand through external supplies. In 2025, EU countries imported approximately 435 million tonnes of crude oil worth more than €212 billion. The reduction in Russia’s share from 25.8% in 2021 to 2.2% in 2025 led to a significant redistribution of flows in favour of alternative suppliers, including the United States (14.6%), Norway (12.8%), and Kazakhstan (12.8%) by crude-oil import volume. Kazakhstan has been among the main beneficiaries of these changes. According to an Econovis Economic Research Laboratory report, the share of Kazakh supplies in European imports has increased for several consecutive years. This growth has been driven by strong demand from European refineries for light, low-sulfur CPC Blend crude. Alongside Kazakhstan, Azerbaijan has also strengthened its position, benefiting from Europe’s diversification efforts. A notable example is the Czech Republic, where, following the cessation of deliveries via the Druzhba pipeline, Azerbaijan accounted for more than 42% of oil imports in 2025, according to Czech import data. Kazakhstan ranked third in the Czech market with a share of around 18%, indicating the emergence of a new energy balance in the Caspian region. Despite this favorable external environment, Kazakhstan’s oil and gas sector has faced a significant downturn. According to government data, in the first quarter of 2026, oil and gas condensate production amounted to 19.7 million tonnes, 20% less than in the same period of 2025. Oil exports declined by approximately 22% to 15.3 million tonnes, while the annual export forecast stands at about 76 million tonnes. By mid-April, however, CPC exports had risen from February levels as Tengiz resumed production, suggesting that some of the early-year disruption had eased. The decline is linked to disruptions in the operations of the Caspian Pipeline Consortium (CPC) and temporary shutdowns at major fields, including Tengiz. The CPC remains the key export route for Kazakh oil to Europe, transporting most of the crude through the terminal in Novorossiysk. Economic analyst Olzhas Baidildinov said the consequences of attacks on the consortium’s infrastructure could have long-term implications. “Oil and gas condensate production in Kazakhstan fell by 20% in the first quarter compared to January-March 2025, 19.7 million tonnes versus 24.6 million tonnes. Oil exports decreased by approximately 22% to 15.3 million tonnes. The export forecast for this year is 76 million tonnes,” he wrote on his Telegram channel. According to his estimates, the country will once again fail to surpass the psychologically significant threshold of 100 million tonnes of annual production. “As a result of the attacks on the CPC, at least 6 million tonnes of oil worth no less than $3.4 billion were...

Oil Supply

Middle East Crisis: Kazakhstan Could Become an Alternative Supplier of Petroleum Products to Asia

The two-week ceasefire announced after Pakistani mediation between Iran and the U.S. has reduced the risk of immediate escalation in the Strait of Hormuz, but disruptions to one of the key routes of global oil trade have already triggered structural changes in energy markets. Against this backdrop, Kazakhstan and other countries in the region are increasingly being viewed as alternative suppliers of hydrocarbons, at least from the perspective of South Korea and Japan. Despite the agreement on a two-week pause, Iran has made it clear that it retains control over shipping in the strait, including the potential to impose restrictions and coordinate tanker movements with its military. This has heightened concerns among importers, many of whom depend heavily on this route. The most notable shift is taking place in Asia. South Korea, which receives about 61% of its crude imports and 54% of its naphtha imports through the Strait of Hormuz, is sending a high-level delegation to Kazakhstan, Oman, and Saudi Arabia to seek alternative sources of supply. Talks in Astana are expected to focus on oil and naphtha for industrial use. South Korea, Asia’s fourth-largest economy, has proven to be among the most vulnerable to disruptions in the Strait of Hormuz. In response, Seoul is taking urgent diplomatic and economic measures, with Presidential Chief of Staff Kang Hoon-sik traveling to Kazakhstan as a special envoy for strategic economic cooperation. The delegation includes representatives from relevant ministries and major energy companies, underscoring the urgency of the effort. The purpose of the visit is not only to address a potential short-term shortfall but also to establish sustainable alternative supply channels. South Korea has already secured a 24 million-barrel supply deal with the UAE, and shipments are already arriving at its ports, though officials say that volume is still insufficient given the ongoing instability. The government is coordinating efforts with private fuel importers and logistics operators to ensure uninterrupted supplies until tankers arrive at the country’s ports. Kazakhstan, which possesses large oil fields including Kashagan, is emerging as a key candidate to partially replace Middle Eastern volumes. However, geography imposes clear limitations: oil from the region requires more complex logistics, including transit across the Caspian Sea and onward through the Caucasus or the Black Sea. This is compounded by a projected decline in the country’s oil production. In March, Energy Minister Yerlan Akkenzhenov stated that output could fall by 2-4 million tons by the end of 2026 due to disruptions linked to attacks on infrastructure belonging to the Caspian Pipeline Consortium (CPC), as well as fires at the Tengiz field. Initial projections placed Kazakhstan’s 2026 oil production at 100.5 million tons, potentially a record level. However, the minister indicated that actual output will most likely fall short of this target. Japan is also reassessing its supply strategy. With more than 90% of its oil traditionally sourced from the Middle East, Tokyo is considering increasing imports from Kazakhstan and Azerbaijan through projects involving the national company INPEX. Japanese experts note that oil from...

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...

Economic Cooperation

Kazakhstan and Hungary Reach Preliminary Deal on Oil Supply via Druzhba Pipeline

Kazakhstan and Hungary have reached a preliminary agreement on the supply of Kazakh crude oil to Hungary via the Druzhba (Friendship) oil pipeline system through Russia. According to Kazakhstan’s Ministry of Energy, the agreement was reached during a meeting in Astana on February 17 between Kazakhstan’s Minister of Energy Almasadam Satkaliyev and Hungarian Minister of Foreign Affairs and Trade Péter Szijjártó. The two sides agreed to conduct test oil shipments in 2025. Kazakhstan already supplies oil to Germany through the Druzhba pipeline. The ministers also discussed cooperation between Kazakhstan’s national oil and gas company, KazMunayGas, and Hungary’s MOL Group in developing the Rozhkovskoye gas condensate field in western Kazakhstan. MOL Group has invested $200 million in the development of this major field and has previously expressed interest in processing Kazakh oil at Hungarian refineries. On the same day in Astana, Szijjártó held talks with Kazakhstan’s Deputy Prime Minister and Minister of Foreign Affairs Murat Nurtleu. The foreign ministers reviewed trade and economic relations, noting that bilateral trade turnover increased by 4.4% last year, reaching nearly $200 million. Both sides agreed to take additional measures to achieve the goal set by their leaders, to expand trade to $1 billion, according to Kazakhstan’s Foreign Ministry. Key topics of discussion included: The opening of Hungarian bank branches in Kazakhstan The construction of a multimodal cargo terminal in Budapest Expanding exports of Kazakh uranium and critical minerals The ministers also highlighted plans to launch a direct air connection between Shymkent, Kazakhstan’s third-largest city, and Budapest in May 2025. The new route is expected to further strengthen economic and cultural ties between the two nations. Since 2005, Hungarian direct investments in Kazakhstan have exceeded $370 million, reflecting the deepening economic partnership between the two countries.