Kazakhstan plans to increase crude oil exports via the Baku-Tbilisi-Ceyhan (BTC) pipeline, potentially rising from 1.5 million to 20 million metric tonnes annually.
Energy Minister Almasadam Satkaliyev called it one of the “most promising” routes, noting a systematic increase in the volume of deliveries of Kazakh oil “both on our side and from the Azerbaijani partners.”
According to the minister, Kazakhstan’s total oil exports for 2024 are expected to reach 68.8 million tonnes, primarily via Russian routes, with smaller volumes transported through the Caspian Sea and pipelines to China.
The country’s oil production is projected at 88.4 million metric tonnes this year, below the original 90 million tonnes target, due to maintenance and OPEC+ commitments. This output equates to about 1.82 million barrels per day.
From 2026, Kazakhstan aims to exceed 100 million tonnes of annual oil production due to the implementation of large projects. Satkaliyev also highlighted that general investments in oil production will amount to about $21 billion by 2030.
The minister also announced plans to design a new oil refinery in the country, with a capacity of 10 million tonnes a year, with construction recommended to start in 2032 to avoid an expected shortage of light oil products in 2036.
New bitumen production projects were also mentioned during Satkaliyev’s report, noting the need to work out issues of exporting Kazakhstani bitumen in cases of excess on the domestic market.
Expanding exports in Europe
Kazakhstan is poised to expand its oil exports to Germany, responding to a request to more than double shipments to 2.5 million tonnes annually, as Berlin seeks alternatives to Russian oil following the European Union’s embargo.
Kazakhstan began supplying oil to Germany via the Druzhba pipeline in early 2023 after a transit agreement with Russian transporter Transneft. Despite damage reports to the pipeline in western Poland in early December, oil deliveries have not been interrupted.
The move to halt Russian oil imports highlights Kazakhstan’s growing importance in the European energy market. EU sanctions on Russia prompted bloc leaders to diversify energy sources and accelerate renewable energy adoption.
Hungary has expressed interest in Kazakh oil, signing an agreement with the state company KazMunayGas (KMG) focusing on exploration, production, technology transfer, crude oil supply, and petrochemicals.
Hungary has already invested around $200 million in Kazakhstan, including a 27.5 per cent stake in the Rozhkovskoye gas and gas condensate field, which began production in December 2023, despite being discovered in 2008.
Kazakhstan is the ninth-largest crude oil exporter globally and holds 3 per cent of the world’s oil reserves. It is the third-largest oil producer in the Caspian region after Russia and Iran.
Intertwined fates
While the EU strengthened its connections with Norway and the United States following the Russo-Ukrainian war, Kazakhstan still heavily relies on Russian infrastructure, exposing it to Moscow’s influence.
To reduce its dependency on Russian routes, Kazakhstan is investing in alternative trade corridors, such as the Middle Corridor, a project connecting the Trans-Kazakhstan railway to the Baku-Tbilisi-Kars railway, facilitating a direct link to the EU market.
Despite its historical ties to Russia, Kazakhstan has aligned with EU principles, refusing to recognise Moscow’s claims over occupied Ukrainian regions, enabling it to expand its trade and political partnerships with Europe.
But while alternative corridors have the potential to diminish Kazakhstan’s dependence on Russian-controlled oil routes, high costs remain a significant challenge, especially for the BTC pipeline.
The cost of transportation via the BTC–approximately $120 per ton–is three times higher than the Caspian Pipeline Consortium (CPC) route, which transports oil from the Tengiz field to Russia’s Novorossiysk port.
Although experts acknowledge the BTC has the potential to bypass Russia entirely, they note it is underutilised despite its capacity to handle up to 60 million tonnes annually. Expanding the pipeline’s use requires significant infrastructure investments.
Despite challenges and costs, developing alternative routes remains essential to mitigate geopolitical risks. With 60 per cent of Kazakhstan’s export revenues tied to oil and gas, any disruption to Russian routes could severely impact the economy.
[Edited By Brian Maguire | Euractiv’s Advocacy Lab ]
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Publish date : 2024-12-03 19:24:00
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