Kazakhstan Is Taking Big Hits As Trump and Putin Feud
- A week ago, Kavkazskaya oil depot in Russia’s Krasnodar region, part of the Caspian Pipeline Consortium (CPC), was damaged after drone attacks.
- The attack came after Trump's ceasefire moratorium on strikes from both Russia and Ukraine.
- The attacks on CPC assets come at a time when Kazakhstan has been ramping up oil production in a bid to cut its budget deficit.
Over the past few weeks, the Trump administration has attempted to broker a peace deal between Russia and Ukraine, offering a glimmer of hope that the 3-year war could soon come to an end. The U.S. has held separate meetings with Russian and Ukrainian delegations in a bid to reach a lasting deal, but one particular OPEC member is finding itself in the crosshairs of the conflict despite the ongoing peace negotiations.
A week ago, Kavkazskaya oil depot in Russia’s Krasnodar region, part of the Caspian Pipeline Consortium (CPC), was damaged after drone attacks, with Russia pointing fingers at Ukraine. Back in February, Russia reported that CPC delivery capacity was cut by 40% after an attack by Ukrainian drones. According to the CPC, last year, Kavkazskaya delivered at least 130,000 tons of oil per month and 1.51 million tons for the whole year. The CPC pipeline is the main export route for Kazakhstan, and supplies ~1% of the world's oil. CPC’s main shareholders include Chevron Corp. (NYSE:CVX), Shell Plc. (NYSE:SHEL) and Eni S.p.A. (NYSE:E).
According to Kazakh journalist Oleg Chervinsky, the CPC was included in Trump's ceasefire moratorium on strikes from both Russia and Ukraine, suggesting the latest drone attack violation of those terms. However, AP News has pointed to the ambiguity in the moratorium, with Russia and Ukraine accusing each other of non-compliance. Both sides agreed to a limited, 30-day ceasefire, with Russian President Vladimir Putin imposing conditions that essentially meant a Ukrainian surrender.
“They sat for 12 hours and seemed to have agreed on a joint statement,” Russia’s deputy chairman of defense committee, Vladimir Chizhov, told Rossiya 24. “However this was not adopted due to Ukraine’s position,” he said
However, it appears that the blame is now on Russia, with Trump reportedly "very angry" with Russian President Vladimir Putin for attacking the credibility of Ukrainian President Volodymyr Zelensky's credibility. Trump has even threatened to slap 50% secondary tariffs on buyers of Russian oil. "You could say that I was very angry, pissed off, when... Putin started getting into Zelensky's credibility, because that's not going in the right location," Trump said. "New leadership means you're not gonna have a deal for a long time," he added. That marks a 180-degree turnaround in Trump’s tone towards the two leaders, after last month he called Zelenskiy a “dictator” and claimed he “started” the war with Russia
The continuing attacks on Kazakhstan's energy infrastructure can have dire ramifications for the country. According to oil and gas analyst Olzhas Baidildinov, last year, the CPC distributed $1.3 billion in dividends in 2024, with approximately $85 million channeled into the state budget while KazMunayGas, Kazakhstan’s national oil company, received ~$250 million. The attacks come at a time when Kazakhstan has been ramping up oil production in a bid to cut its budget deficit. Last month, Kazakhstan’s crude oil and gas condensate--a type of light oil- output hit a record high of 2.12 million barrels per day, good for a large 13% increase from January volumes. Excluding gas condensate, the country’s production increased 15.5% m-o-m to 1.83 million bpd.
Kazakhstan's surge in output was chalked up to increased production at the giant Tengiz oilfield, operated by Tengizchevroil, led by Chevron Corp. (NYSE:CVX). The U.S. oil and gas giant has embarked on a $48 billion expansion of Tengiz. Previously, Reuters reported that Kazakhstan could dramatically reduce its more than 80% share of oil flows via Russia by sharply increasing crude oil exports out of Turkey's port of Ceyhan. According to Kazakhstan Energy Minister Almasadam Satkaliyev, the country could ramp up exports via the Baku-Tbilisi-Ceyhan (BTC) pipeline to 20 million metric tons a year from the current 1.5 million.
However, it’s not clear how Kazakhstan intends to comply with OPEC+ quotas, with its current output significantly above its quota of 1.468 million bpd. Last year, Russia, Kazakhstan and Iraq submitted their compensation plans to the OPEC Secretariat, with over-produced volumes expected to be fully compensated through September 2025. Kazakhstan is expected to ‘pay back’ a cumulative 620 kb/d, Russia 480 kb/d and Iraq 1,184 kb/d.
Luckily, commodity analysts at Standard Chartered have reported that supply surpluses the market feared for much of last year have yet to materialize, with the outlook for Q2 and Q3 suggesting that no surplus is imminent. StanChart has forecast that global demand will exceed supply by 0.9 mb/d in Q2 and by 0.5 mb/d in Q3 while the U.S. Energy Information Administration (EIA) sees excess demand at 0.1 mb/d in Q2 and a balanced market in Q3.
By Alex Kimani for Oilprice.com
Russia Halts Large Chunk of Kazakhstan’s Oil Export Capacity
Russia has ordered shut two of the three moorings of the main oil export terminal on the Black Sea handling Kazakhstan’s oil exports, which could seriously disrupt Kazakh crude shipments if the suspension lasts more than a few days.
Following snap safety inspections by Russia’s Federal Agency for Transport Supervision, prompted by the Kerch Strait oil spill in December 2024, Russia ordered on Monday that the SPM-1 and SPM-2 moorings of the terminal of the Caspian Pipeline Consortium (CPC) be shut immediately, CPC said in a statement.
The consortium operates the pipeline from the Caspian coast in northwest Kazakhstan to the Novorossiysk port on Russia’s Black Sea coast. The port handles most of Kazakhstan’s crude exports from giant oilfields in Kazakhstan operated by international oil firms, including U.S. supermajor Chevron.
Affiliates of Chevron and ExxonMobil are also minority shareholders in CPC, whose biggest shareholder is the Russian Federation with a 24% stake.
CPC complied with the order for a temporary ban of operations at the SPM-1 and SPM-2 moorings and took them out of service “until the identified deficiencies have been addressed.”
Until then, all transshipment operations at the CPC Marine Terminal will be delivered using the SPM-3 mooring commissioned in 2014, the consortium said.
The suspension of part of the export capacity could more than halve the crude oil exports of Kazakhstan if it drags on for more than a week, trading sources told Reuters on Tuesday.
The potential disruption to Kazakhstan’s oil exports comes as the country part of the OPEC+ pact saw its crude production hit a record high in March despite continued pledges to start complying with its OPEC+ quota that it has been exceeding for years.
Kazakhstan appears to find it hard to convince Chevron and the other supermajors operating in the country to limit production now after years of investing billions of U.S. dollars in oilfield expansions.
Amid tensions with OPEC+ and the oil majors, Kazakhstan said last month that energy minister Almassadam Satkaliyev would step down from the role and lead a newly minted atomic energy agency.
By Tsvetana Paraskova for Oilprice.com
Kazakhstan Keeps Exceeding OPEC+ Quota With Record-High Oil Production
Kazakhstan’s combined crude oil and condensate production reached an all-time high in March, which further exceeded the country’s crude output ceiling under the OPEC+ deal.
Kazakhstan, a non-OPEC producer part of the OPEC+ pact, pumped a record high 2.17 million barrels per day (bpd) of crude oil plus condensate last month, industry sources told Reuters on Tuesday.
The output in March compares to an average production of 2.15 million bpd of crude and condensate in February.
Crude oil production only rose to 1.88 million bpd in March from 1.83 million bpd in February, according to Reuters’ sources.
Under the OPEC+ agreement, Kazakhstan’s crude oil production quota is 1.468 million bpd. The deal doesn’t cover condensate production and has no limits on it.
Kazakhstan has been consistently overproducing above its OPEC+ limit and is one of the biggest overproducers alongside Iraq and Russia.
This year, the overproduction issue has become even greater after U.S. supermajor Chevron started up oil production at an expansion project at the largest oilfield in Kazakhstan that would boost crude oil output by 260,000 bpd. Chevron achieved first oil at the Future Growth Project (FGP) at the giant Tengiz field. FGP is the third processing plant in operation at the Tengiz oilfield, which expands sour gas injection capability and is expected to ramp up output to 1 million barrels of oil equivalent per day (boepd).
Kazakhstan appears to find it hard to convince Chevron and the other supermajors operating in the country to limit production now after years of investing billions of U.S. dollars in oilfield expansions.
Kazakhstan’s crude oil exports via the Caspian Pipeline Consortium (CPC) export route also remained high in February and March, but a major disruption could be coming after Russia on Monday ordered a temporary shutdown of two of the three moorings of the main oil export terminal on the Black Sea handling Kazakhstan’s oil exports.
By Tsvetana Paraskova for Oilprice.com
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