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Russia targets EU, cutting off Kazakhstan's oil exports

Mikhail Bushuev | Andrey Gurkov
July 8, 2022

This week, Moscow halted crude oil exports from Kazakhstan via a Black Sea port. Kazakhstan is the EU's fifth-largest supplier and this effectively reduces oil imports. The search is now on for alternative routes.

A worker in an oil field developed by Almetyevneft, an oil and gas production board (NGDU) of Tatneft.
Halting flows through the CPC pipeline won't hurt Russia, while Europe would lose a million barrels of oil a dayImage: Yegor Aleyev/TASS/dpa/picture alliance

In a telephone conversation on July 4, Kazakhstan's president Kassym-Jomart Tokayev assured EU Council President Charles Michel of his country's support in helping the 27-nation bloc overcome its current energy crisis.

Only a day later, a district court in Novorossiysk — Russia's biggest Black Sea port — ordered a pipeline coming from Kazakhstan and exporting oil to Europe shut for a month.

The two events are no coincidence. They are part of the sanctions tit-for-tat between the West and Russia over the war in Ukraine. Officially, the Russian court's decision was a punishment for violations of the country's oil spill regulations committed by the Caspian Pipeline Consortium, or CPC, which owns the pipeline through which Kazakh crude is shipped from the Tengiz oil field across Russian territory to the Black Sea port. 

An audit of hazardous operation facilities, carried out by Russia's Rostransnadzor oil regulator, has revealed "a number of documentary violations under the Oil Spill Response (OSR) Plan," according to a statement on the CPC website. Even though no oil spill has been reported, the company was given until November 30 to rectify the violations and was ordered to halt shipments from the export terminal for 30 days as punishment for the offense.

As Kazakh authorities tried to de-escalate the situation, saying the pipeline would be operating "in line with safety standards," President  Kassym-Jomart Tokayev on July 7 announced Kazakhstan would explore alternative routes for its crude exports.

Kazakhstan's President Kassym-Jomart Tokayev addresses a plenary session of the St. Petersburg International Economic Forum
Kazakh Prtesident Kassym-Jomart Tokayev is walking a tight rope in the sanctions war between the West and RussiaImage: Dmitri Lovetsky/AP Photo/picture alliance

No signals of detente

Mikhail Krutikhin, an expert on Russian energy policy at independent consultancy RusEnergy, thinks the court's order to shut down the CPC pipeline was "clearly politically motivated."

"He [President Tokayev] made the statement with the intention of helping the EU overcome its energy problems as a result of the imminent EU oil embargo against Russia and the current throttling of Russian gas supplies to Europe," Krutikhin told DW.

But Leyla Alieva, Eastern Europe expert at Oxford University, thinks that the move was "generally a reaction to Kazakh attempts at becoming politically more independent of Moscow." She told DW that President Tokayev made it quite clear at the St.Petersburg Economic Forum, organized by Moscow last month, that he didn't intend to recognize the pro-Russian "republics" of Luhansk and Donetsk in eastern Ukraine as independent territories, and would heed Western sanctions against Moscow. 

 Kazakhstan seems to have ruffled feathers in Moscow , with some Russian politicians already warning Kazakh leaders of "a Ukrainian scenario" becoming reality.

A view of a marine terminal of CPC (Caspian Pipeline Consortium) within the Novorossiysk Municipality.
By shutting the Novorossiysk terminal, Russia could take 1.5 million barrels a day of crude out of an already tight marketImage: Yuri Bereznyuk/Tass/picture alliance

Novorossiysk stoppages

After operating without any trouble for more than 20 years, the CPC pipeline has been hit with a series of outages in the months since Russia invaded Ukraine and the EU imposed sanctions.

On March 22, two loading buoys were allegedly damaged during a storm, taking the entire terminal out of operation for several weeks. However German business newspaper Handelsblatt reported though that there wasn't a "heavy storm" in the region, citing German Weather Service data.

In June, a routine seabed survey suddenly revealed a World War II mine that forced suspension of loading from two of the three buoys. The search for "explosive devices" was extended ten days, until July 15. 

Alternative pipelines

The latest stoppage was a "test balloon" from Moscow to see how Kazakhstan reacts to Moscow's interventions, said Alieva.

"I think the Kremlin is hoping for Kazakh leaders to give in to their demands and make concessions in possible negotiations. However, exerting pressure often brings undesired results, and countries in the region could begin looking for alternative alliances, markets and resources."

But alternatives to export routes via Russia are far and few between in Central Asia. Official talking points released from the Tokayev-Michel meeting in early July show the Kazakh president is seeking EU support for developing "alternative transcontinental corridors," including "an international trans-Caspian traffic route."

What Tokayev has in mind is an export route for Kazakh crude that would bypass Russia, leading along the Caspian Sea to Azerbaijan, where an existing pipeline connects the country with the Turkish Mediterranean port of Ceyhan. Kazakhstan already has minimal access to the so-called Baku-Tbilisi-Ceyhan pipeline, which is operated by a consortium of 11 energy companies and would have to be expanded.

Russian influence on Kazakh crude exports will remain "a big and lasting problem," said Krutikhin, because for the time being the existing alternatives cannot make up for the present CPC shortfalls.

Infografik Karte Caspian Pipeline EN

Kazakh oil increasingly important for the EU

Germany has been importing crude from Kazakhstan for more than two decades, with the country having increased its share of the German market steadily in recent years.

In 2021, the Central Asian nation became Germany's third-largest oil supplier behind the United States and Russia. Figures for the EU as a whole show Kazakh oil has a market share of 7.5% making the country the bloc's fifth-largest supplier in 2019. 

Kazakhstan is attaining even bigger importance with European sanctions on Russian oil expected to kick in on December 5 and the G7 group of industrialized countries considering a price cap on Moscow's crude exports.

Oxford University's Krutikhin said he doesn't expect massive repercussions for the European oil market should flows from Kazakhstan remain curtailed for longer. Supplies to EU refineries could be affected though, he said and added, "it's difficult to make an assessment because for now there is no shortage of oil on the world market."

This article was originally written in German.