By: Ahmed Fathi
Kazakhstan, a former Soviet republic with a substantial but dwindling Russian population, is split from Russia over Ukraine. Kazakhstan's authorities fear Vladimir Putin may use a similar justification to intervene to safeguard "Russian speakers." Kazakhstan's President Kassym-Jomart Tokayev said in June that Kazakhstan would not recognize Donetsk and Luhansk, despite being a member of the Russian-led Eurasian Economic Union and the Collective Security Treaty Organization (CSTO).
Putin wants to turn the Donbas into pro-Russian states. Despite Tokayev's opposition, Russian intervention in Kazakhstan's oil exports exposes a rift with Nur-sultan. A rift has emerged six months after Russian forces protected Tokayev's government from gasoline price protests. Tokayev used the worst insurrection since independence to topple Nazarbayev. If Nazarbayev was still Kazakhstan's president, he would have been more pro-Russian on Ukraine.
Tokayev and Putin play chicken on the oil market, splitting Russia and Kazakhstan. Tokayev recommended more Kazakh oil to Europe in early July, telling European Council President Charles Michel, "Kazakhstan might act as a 'buffer market' between East and West, South and North." This referred to EU and US oil export limits. Tokayev stated Kazakhstan will "stabilize global and European markets" Oil prices reached 14-year highs of nearly $120 per barrel in June after Russia invaded Ukraine in February, but have subsequently fallen to about $90 per barrel on global recession worries. Oil prices may rise once the EU bans seaborne Russian oil imports in 2022.
Kazakhstan's oil shipments may calm prices. It exports 1% of global oil (1.4 million barrels/day) (bpd). This oil supplies 6% of EU requirements but may produce much more. Since Kazakhstan is landlocked, its oil export routes may be shared with Russia. Kazakhstan's oil exports have been routed via Russia's Black Sea port of Novorossiysk for 20 years, giving Moscow virtual control over Kazakhstan's exports. Putin sought retribution when Tokayev offered more oil to Europe.
'Environmental concerns' lead a Russian court to ban CPC for 30 days. The Novorossiysk terminal is frequently closed (it was closed in June due to the discovery of World War II-era explosives in the port's waters), but most energy analysts interpreted the closure as a clear expression of Putin's unhappiness with Tokayev's attitude on the Ukraine invasion. Russia doesn't want Kazakhstan to restrict oil and gas if Europe and the US keep arming Ukraine.
Actions against Tokayev may encourage Kazakhstan to diversify its oil export outlets. Kazmunaigaz (KMG), Kazakhstan's national oil business, advanced talks with Azerbaijan's SOCAR to export Kazakh oil through the Azeri pipeline that finishes in Ceyhan, Turkey. This new export route starts in September, but its oil-moving capacity is tiny compared to CPC's 1.4 million barrels per day.
The Baku-Tbilisi-Ceyhan (BTC) route would force Kazakhstan to export oil across the Caspian Sea to Baku, despite an agreement with Azerbaijan to avoid Russian territory. Kazakhstan proposes to export oil via an Azeri pipeline to Supsa, Georgia, in 2023. BTC shipments would be 100,000 bpd, or 8% of Russia's CPC route. Putin and Tokayev's spat might alter how Western sanctions affect Russia's military endeavor. Escalating disputes may enable China, the EU, and/or the U.S. to enhance ties with Kazakhstan and gain influence in Russia's sphere.
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