FSUOGM: Kazakhstan considers building Caspian oil pipeline

Kazakhstan is considering the construction of an oil pipeline under the Caspian Sea, its energy ministry said last week, as the Central Asian producer looks to reduce its dependence on Russia as a route for its oil exports.

Around four-fifths of Kazakh oil exports reach international markets via the Caspian Pipeline Consortium (CPC) that runs through Russia to the Black Sea coast. But the government wants to reduce this dependency by piping more oil to China and across the Caspian Sea to Azerbaijan, particularly in light of tenser relations with Moscow following its invasion of Ukraine, and a number of disruptions to CPC transport in 2022.

Kazakhstan teamed up with an Abu Dhabi-based logistics firm AD Ports Group last year to expand its tanker fleet to transport more oil to Azerbaijan. From the Azeri capital of Baku, the oil can be piped to Turkey’s Mediterranean coast via the Baku-Tbilis-Ceyhan (BTC) pipeline. BTC is used primarily for delivering oil from the Azeri-Chirag-Gunashli (ACG) fields in Azerbaijan, but has significant unused capacity following years of production decline at the project.

National oil company KazMunayGas (KMG) in July 2023 dismissed that it was considering building a Caspian pipeline as an option. The energy ministry did not provide specifics on the project. 

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