As an energy-rich country, Kazakhstan tends to turn to alternative routes in terms of transporting its resources to different markets. Most of Kazakhstan’s exports pass through Russia. In the atmosphere brought by the Russia-Ukraine War, Astana turned to Baku for energy transfer as part of Moscow’s attempts to limit its influence.
In this regard, the second-largest Kazakhstan oil shipment was sent to Azerbaijan via the Caspian Sea. At present time, more than 70% of Kazakh oil exports are sent via the Caspian Pipeline, which carries the production of the country’s three giant foreign-led Kazakh oil fields (Tengiz, Kashagan, and Karachaganak) to a sea loading terminal in Novorossiysk on Russia’s Black Sea coast. However, on March 28, 2023, KazTransOil, the oil pipeline operator of the state of Kazakhstan, announced that it arranged the shipment of approximately 75,000 barrels of oil from the Tengiz oil field operated by the US company Chevron to a terminal near Baku via the Aktau Port of Kazakhstan.[1]
KazTransOil has recently announced that it plans to send another similar size of Tengiz oil to Baku and is preparing to send another 950,000 barrels of oil in April 2023.[2] It is seen that Kazakhstan has recently focused more on the Trans-Caspian route and has tended to deepen its relations with Azerbaijan in this direction.
As it will be remembered, it has been reported that negotiations were held between the Azerbaijan state company SOCAR and Kazakh Kazmunaigaz (KMG) on August 15, 2022, on the transportation of 1.5 million tons of Kazakh crude oil to Azerbaijan annually.[3] During the meeting held in Baku, cooperation on the development of the Trans-Caspian infrastructure was discussed.[4]
Another development that increases the energy partnership between the two countries is the signing of a memorandum of understanding on the implementation of joint gas projects between Kazakhstan’s gas giant QazaqGaz and Azerbaijan’s state oil company SOCAR on August 26, 2022. The document included development activities in Kazakhstan, such as the exploration of hydrocarbon deposits, development of gas and chemical fields, modernization of gas transport, introducing of innovative technologies to this sector, and examining cooperation opportunities in other important areas.
The agreement in question was signed after the visit of the President of Kazakhstan, Mr. Kasım Cömert Tokayev to Baku on 24 August 2022.[5] In this sense, the agreement is important in that it shows that the intention of Mr. Tokayev and the President of Azerbaijan, Mr. Aliyev, to strengthen cooperation in politics, trade, economy, transportation, transit and other fields has been realized. It can be said that Tokayev’s aforementioned visit is of great importance since it is his first visit after the Presidential Elections. It is seen that the parties’ interest towards each other and their intention to increase partnerships produce tangible outputs.
It can be said that Azerbaijan and Kazakhstan have made progress in their bilateral relations as well as their energy cooperation. It can be stated that especially the Organization of Turkic States (TDT) plays an important role in this regard. Economic and commercial ties are developed as a result of the bilateral relations strengthened in the meetings held with the partnerships and collaborations within the scope of TDT. Energy partnership developments can also be read as a reflection of the cooperation on this platform.
Within the framework of the negotiations and signed agreements, it has been reported that in February 2023, the Kazakh state company KMG will start exporting oil from Tengizchevroil (TCO) resources via the Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline. Kazakhstan plans to export 1.5 million tons of oil per year via BTC in 2023 and aims to increase this to 6-6.5 million tons per year.[6]
It can be argued that the relations between the parties have also been strengthened by economic and political cooperation. The volume of foreign trade between Kazakhstan’s Aktubinsk Region and Azerbaijan has increased sevenfold. Aktubinsk Region has a special meaning for Astana in terms of developing close relations with many countries and strengthening ties with Azerbaijan.[7]
In this context, it was announced on March 15, 2023, that Kazakhstan’s “QazTrade Trade Policy Development Center” will launch a trade mission in Azerbaijan on April 4-6, 2023. The main objective of the mission is to enable Kazakh businesses to contact their Azerbaijani counterparts, potential exporters, importers, and distributors.[8] It can be argued that the mission will play a critical role in developing the Kazakh business network and strengthening the economic-commercial relations between the two countries.
In addition to all these, there are common interests between the parties. In particular, the development of the Middle Corridor could enhance the international image of both countries. Both the Middle Corridor and TDT have a critical function at the point of regional integration. Therefore, Baku and Astana, which have increased their relations to the level of strategic partnership, can increase the momentum they have achieved in the future.
Developments in energy cooperation are very important in transporting Kazakh energy to Europe. For this reason, it is seen that the interest of the West in the two countries has increased. Baku-Astana rapprochement is also a reflection of the search for alternatives within the framework of the energy crisis in European and Central Asian countries. Thus, new agreements are likely to come to the fore in order to improve ties and diversify the areas of cooperation.
[1] “Kazakhstan Steps up Efforts to Bypass Russia with Oil Shipments to Baku”, Upstream, https://www.upstreamonline.com/production/kazakhstan-steps-up-efforts-to-bypass-russia-with-oil-shipments-to-baku/2-1-1426478, (Date of Accession: 28.03.2023).
[2] “Exclusive: Kazakhstan to Start Oil Sales via Azeri Pipeline to Bypass Russia”, Reuters, https://www.reuters.com/business/energy/exclusive-kazakhstan-start-oil-sales-via-azeri-pipeline-bypass-russia-2022-08-12/, (Date of Accession: 28.03.2023).
[3] Ibid.
[4] “Kazakh, Azerbaijani State Oil Companies Discuss Cooperation”, Caspian News, https://caspiannews.com/news-detail/kazakh-azerbaijani-state-oil-companies-discuss-cooperation-2022-8-18-51/, (Date of Accession: 28.03.2023).
[5] “President Tokayev Pays First Official Visit to Azerbaijan to Fortify Bilateral Cooperation”, Astana Times, https://astanatimes.com/2022/08/president-tokayev-pays-first-official-visit-to-azerbaijan-to-fortify-bilateral-cooperation/, (Date of Accession: 28.03.2023).
[6] “KazMunayGas Starts Exporting Oil via Baku-Tbilisi-Ceyhan Pipeline”, Report, https://report.az/en/energy/kazmunaygas-starts-exporting-oil-via-baku-tbilisi-ceyhan-pipeline/, (Date of Accession: 28.03.2023).
[7] “Azerbaijan, Kazakhstan Discuss Bolstering Economic Relations”, Azer News, https://www.azernews.az/business/206809.html, (Date of Accession: 28.03.2023).
[8] “Kazakhstan’s QazTrade to Launch Trade Mission to Azerbaijan”, Trend, https://en.trend.az/azerbaijan/business/3723337.html, (Date of Accession: 28.03.2023).
