Josef Wolpert
Since the breakout of war in Ukraine in February of 2022, the European Union (EU) has been imposing heavy sanctions on Russian natural gas and oil. These sanctions have caused prices to reach all-time highs in the EU, where Russia used to supply almost 50% of the Union’s gas and 25% of its oil. Unfortunately, few other countries in or around Europe have large oil or gas reserves. The closest nations with substantial amounts are primarily in Central Asia. However, most of these states depend on Russia’s monopoly on pipelines to ship their products into the EU. One major example is the Central Asian nation of Kazakhstan.
Kazakhstan has the 12th largest oil reserves and 15th largest natural gas reserves in the world. Kazakhstan already supplies about 8% of the EU’s crude oil imports; however, its ability to sell more is greatly hindered by Russian interference.
The issue stems from Kazakhstan being landlocked and wholly relying on Russian pipelines to ship its oil to the EU. The major pipeline, known as the Druzhba Pipeline, is among the world’s largest. It connects Russia to the rest of Europe, and Kazakhstan relies on Russia to be able to use it and sell its oil. In fact, 90% of Kazakh oil that enters the global market comes through the Russian Federation.
This does not look likely to change, as current Russian security policies aim to establish spheres of influence and control other countries through coercion, subversion, aggression, and annexation, allowing the Russian government to keep the flow of Kazakh oil in check. Russia has threatened Kazakhstan several times and has continuously limited the amount of oil it can ship through the pipeline, with the most notable stoppage coming in April of 2023.
There are other means of exporting Kazakh oil and gas without Russian interference; however, they all require transport across the Black Sea from the only major Kazakh port of Aqtau (across the Caspian Sea to Baku). Kazakhstan’s national oil and gas company, KazMunayGas, reported that in 2023, they exported 3.376 million tons of oil across the Caspian by boat. However, that is only about 1% of what the EU consumes annually and only about 4.8% of what Kazakhstan exported that year. This low volume of oil shipped by boat can be attributed to logistical issues with transporting high amounts of oil through the Caspian by ship. Namely, a lack of tankers and basic seaport infrastructure, as well as high transport expenses and difficulties caused by shallow waters in the Caspian.
Currently, the president of Kazakhstan, Kassym-Zhomar Tokayev, is trying to distance himself from Vladimir Putin and Russia. He could do this by “diversifying” the ways in which Kazakh oil can be transported outside the country. This could be via the creation of a Trans-Caspian oil pipeline. Such a pipeline would connect the oil fields in Kazakhstan (and maybe Turkmenistan) with refineries in Azerbaijan, which would, in turn, connect them with the BCT pipeline in Azerbaijan, Georgia, and Turkey. This would open a gateway for Kazakh oil and gas to the European market, free of Russian influence and interference.
One such pipeline has already been proposed. In 2009, KazMunayGas and their Azeri counterpart, the State Oil Company of Azerbaijan (SOCAR), signed an agreement for the research and creation of a Trans-Caspian oil pipeline to connect the oil fields in Kazakhstan to the BTC pipeline in Baku. And yet, despite initial interest in the project, construction never started. 15 years later, the project has not been mentioned by either party in about four years.
Since the idea was tabled in 2009, the importance and need for such a pipeline has only increased, especially since the war in Ukraine started. Despite its estimated 4-billion-dollar price tag, a project like this could lower oil prices in Europe, create more jobs in Central Asia, and possibly save the Kazakh oil economy, which, due to flagging prices, has had a 10% drop in oil sale revenues from 2022 to 2023. On top of this, it would allow for greater Kazakh and Central Asian autonomy and independence from Russia and Putin and allow the EU to sanction Russia even more, further weakening the Russian economy and their war efforts in Ukraine.
Of course, there are several large opponents of this project, namely the Russian and Iranian governments. As mentioned before, this pipeline would severely hurt the Russian economy, as well as its influence in Central Asia. Because of this, the Russian government has claimed that any such pipeline for transporting oil or gas would severely damage the environment and ecosystem of the Caspian Sea (making this the first time the Russian government has ever mentioned concerns over environmental issues). Iran has made similar environmental claims about the Trans-Caspian pipelines, likely because they don’t want competition in their oil and gas markets.
Due to its ability to improve European and Central Asian economies, create more Central Asian independence from Russia, and impact Iran’s oil markets, this pipeline seems to be an excellent way to combat both Russia and Iran. It not only damages their economies but boosts European and Central Asian economies, increasing the resources available to American allies while creating jobs in second and third-world countries.
It would be economically and strategically wise for the U.S. government to urge the EU to invest in this pipeline. U.S. politicians have been criticizing countries like Germany for their foreign policy ties with Russia and reliance on their oil without providing them with a viable alternative to Russian oil. Well, here it is. Given that the price tag is only about 4 billion dollars, and Kazakhstan sold about 28 billion dollars worth of oil to the EU in one year, European (or even American) investors would quickly make their money back if allowed to purchase serious equity in the product that would help reach that funding target.
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