Kazakhstan Faces Oil Export Challenges Amid Russia’s War Against Ukraine

Executive Summary:

• Ukraine has escalated its campaign against Russian energy targets, striking the Caspian Pipeline Consortium’s (CPC) Kropotkinskaia oil pumping station (OPS) in February.
• The CPC pipeline is Kazakhstan’s primary export route, handling 80 percent of its crude oil, and the strike on the Kropotkinskaia OPS and shutdowns of key moorings reduced export capacity by half
• The risks to Kazakhstan’s oil exports have led Astana to intensify its search for alternative oil export routes, such as the Baku-Tbilisi-Ceyhan pipeline, to reduce reliance on Russian infrastructure.

In response to Russian missile and drone attacks on Ukrainian energy infrastructure, Kyiv has broadened its counterattacks to hit Russian energy facilities, including one involving U.S. and European investments—the Caspian Pipeline Consortium (CPC). On February 17, Ukraine launched a seven-drone attack on the CPC’s Kropotkinskaia oil pumping station (OPS) in Iuzhnaia Ozereevka, Krasnodar Krai, near Novorossiisk (Kommersant, February 17; CPC, February 18). According to the Russian Ministry of Defense, its air defense systems repelled a second Ukrainian drone strike intended for the Kropotkinskaia OPS on March 24 (Kuban 24, March 24). This is not the first time the CPC was hit, with a marine terminal in Novorosiisk having been targeted in August 2023 (see EDM, August 18, September 14, 2023). 

The 1,511-kilometer (940-mile) CPC pipeline between Tengiz and Novorossiisk transports oil from Kazakhstan’s Caspian offshore Kashagan and onshore Karachaganak field in northwest Kazakhstan and Russian crude to the maritime terminal in Novorossiisk. The system is the main export route for Kazakh oil. In 2024, over 63 million tons of oil were pumped through the Kropotkinskaia OPS, about 90 percent of which came from Kazakhstan (CPC, February 18).

The February drone strike damaged energy equipment, a gas turbine unit, and a substation, reportedly reducing CPC oil flows by approximately 30 percent (CPC; Kazinform, February 18). The CPC usually utilizes two single point moorings (SPMs), keeping the third as a backup. On March 31, following an inspection, CPC shut down the SPM-1 and SPM-2 moorings at Kropotkinskaia OPS, limiting CPC’s export capacity from 1.4 million barrels per day (bpd) to around 700,000 bpd (RBC Krasnodar, March 31). The decision hit Kazakhstan especially hard, as the CPC pipeline is the main export route for Kazakhstan’s crude oil, handling 80 percent of the country’s total oil shipments. The CPC operator, Russian state-owned company Transneft, reported that after the drone attack in February, repairs would take an estimated 1.5–2 months to complete (Forbes.ru, February 18).

Putin swiftly responded to the Kropotkinskaia OPS attack, claiming, “This will lead to consistently high prices for energy resources on world markets, which energy consumers, such as European companies, are certainly not interested in.” He added that there were no Russian air defense systems at the CPC facilities, as they are not “Russian” (TASS, February 19 [1], [2]). Putin’s comments underline that the CPC is a project with multiple international shareholders. Russian companies Transneft and Lukoil, however, own 36.5 percent of shares of the consortium, with an additional 3.8 percent partly held by Rosneft through Rosneft-Shell Caspian Venture Limited (For a list of shareholders, see CPC, April 10.)

Russian Deputy Prime Minister Alexander Novak claims that more than 65 percent of oil transported through the CPC belongs to U.S. and European companies (Port News, February 19). Putin himself asserted that “despite all sanctions,” foreign companies will supply equipment for the restoration of the Kropotkinskaia OPS (Port News, February 19). Previously, specialists have urged for the reduction of export dependence on Russia, which poses major risks for Kazakh oil exports if Moscow’s war against Ukraine escalates (Kazinform, February 18). In December, Kazakhstan announced plans to increase Kazakh oil exports using the Baku-Tbilisi-Ceyhan pipeline through Azerbaijan, Georgia, to Türkiye from its current 1.5 million tons to 20 million tons per year (Kazinform, February 18).

In addition to threats to Kazakhstan’s oil exports due to Russia’s war against Ukraine, Kazakhstan has been struggling to comply with OPEC+ (Organization of Petroleum Exporting Countries) quotas. The country has consistently exceeded its production limits, largely due to Western oil companies refusing to scale back output after investing billions in expansion projects (Times of Central Asia, January 8). Kazakhstan is distancing itself further from the cartel’s quotas. Kazakhstan’s new Energy Minister, Erlan Akkenzhenov, appointed last month, told Reuters that the government will emphasize national interests over those of the OPEC+ when deciding on oil production levels (Reuters, April 23).

Kazakhstan pumps about two percent of global oil output and relies on cooperation with international companies for oil extraction, processing, and transportation, including U.S. firms such as Chevron and Exxon Mobil (Chevron; Exxon Mobil, accessed May 14). As Kazakhstan seeks to maximize revenue from its oil exports, it must somehow find a way to placate OPEC+, Russia and its CPC operator Transneft, and Western energy giants while also minimizing the risk of sending oil through Russia amid Putin’s war against Ukraine. Managing these conflicting demands is a diplomatic and economic conundrum that will absorb more of the Kazakh government’s time and resources going forward.