Up to 1.5 million tons of oil are expected to flow from Kazakhstan through the Baku-Tbilisi-Ceyhan (BTC) pipeline as of 2023.
1. Bypassing Russia
As part of growing efforts to expand its oil exporting routes, the Kazakh Prime Minister Alikhan Smailov announced last week (November 10) that after officially opening the tap, the government is considering further increasing the flow to 6-6.5 million tons annually. Currently, more than two-thirds of Kazakhstan’s oil exports are sent to Europe via Russia. However, thanks to the recent efforts in developing the capacity of the Middle Corridor, Russia will no longer be among the countries hosting infrastructure for the oil to flow through to Europe and beyond.
In particular, Smailov said that Kazakhstan’s export route diversification strategy rests on using tankers from the port of Aktau to feed oil into the 883 kilometers Baku-Supsa pipeline, which has its terminus on Georgia’s Black Sea Coast, and trains running along the Baku-Batumi railway line, as well as trains going from the oil-rich region of Atyrau to Uzbekistan and China.
Work is now underway in all these areas to expand and increase the potential for oil exports.Alikhan Smailov
2. Investment in transportation
Such an expected large amount of oil to be exported requires greater investment in transportation to ensure it will reach the pipelines timely. With that in mind, the Kazakh Prime Minister said the largest oil producer in Kazakhstan — Tengizchevroil — which is developing the Tengiz field in the Atyrau region, has doubled the number of rail tank cars at its disposal and has already begun undertaking pilot shipments by train towards Georgia and Uzbekistan.
Kazakhstan will export 1.5 mln tons of oil through Baku-Tbilisi-Ceyhan pipeline starting from 2023. The overall volume of oil along the Trans-Caspian route through 🇰🇿ports Aktau & Kuryk would eventually increase to 20 million tons per year.#middlecorridorhttps://t.co/X0xiYwfopo— Yerzhan Ashikbayev (@KZAmbUS) November 12, 2022
On July 25, 2022, the European Bank for Reconstruction and Development announced plans to invest more than US$100 million in Kazakh railways, revealing that the EU is willing to explore how developing extra-regional connectivity among the Middle Corridor economies could bolster the region’s trade potential.
However, the volume of oil being moved along the alternative routes is still miniscule in relative terms. In comparison, last year, Kazakhstan sent 54 million tons of oil to Europe through the Caspian Pipeline Consortium route that crosses through Russia for hundreds of kilometers before ending up at the Black Sea port of Novorossiysk. Most of the rest of the 86 million tons that Kazakhstan produced went to China.
3. EU relies on Central Asia and Caucasus
With energy shortages looming as a consequence of the Russia-Ukraine war, the EU started looking to Central Asia as an alternative for energy supply. On July 18, the EU and Azerbaijan signed a new energy deal and they are currently negotiating a new agreement that would allow for enhanced cooperation in a wide range of areas, including economic diversification, investment, and trade.
In their joint declaration, the EU and Kazakhstan also declared that “the current geopolitical context has highlighted the need for new alternative routes that connect Asia and Europe, and connectivity has become an area of strategic importance where there is a mutual interest for further cooperation”.