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Strengthening Cooperation in the Oil and Gas Sector: Kazakhstan and Azerbaijan's Strategic Partnership

Strategic Insights

— 2 min read

Kazakhstan and Azerbaijan are deepening their cooperation in the oil and gas sector, a crucial area for both countries, which will have a significant impact on regional energy security and global competitiveness. The bilateral partnership is driven by a shared desire to reduce dependence on a few transit routes and increase economic benefits. The joint report by the Astana International Financial Centre (AIFC) and the Institute for Development and Diplomacy (IDD) at ADA University highlights the importance of expanding export routes and developing infrastructure.

Key Takeaways:

  • Kazakhstan produced approximately 88 million tons of oil in 2024, while Azerbaijan produced around 29 million tons, totaling about 117 million tons, which is a considerable contribution to the global oil supply.
  • The Caspian Pipeline Consortium (CPC) remains the most economically advantageous export route for Kazakhstan, but branching out export routes through partnership with Azerbaijan helps reduce dependence on a few transit avenues.
  • The Baku-Tbilisi-Ceyhan (BTC) pipeline, which is currently underutilized, has a designed capacity of 60 million tons per year and is a critical component of oil exports.
  • Kazakhstan plans to increase exports via BTC to 2.2 million tons in the coming years and up to 20 million tons per year in the long term as production grows and infrastructure coordination improves.
  • The Caspian Integrated Maritime Solutions (CIMS), a joint venture between KazMunayGas and Abu Dhabi Ports Group, plays a crucial role in transport logistics, and the Azerbaijan Caspian Shipping Company (ASCO) also plays a similar role in oil transportation.
  • The parties are considering prospects for joint work in hydrocarbon exploration and production, with Azerbaijan's significant experience in geological exploration and field development serving as a potential catalyst for accelerated development of similar projects in Kazakhstan.
  • A high global oil price level is necessary for investments in the Aktau port infrastructure, including expansion of storage and loading facilities and an efficient tanker fleet, for successful oil transportation via the BTC route.

Statistics:

  • Kazakhstan produced approximately 88 million tons of oil in 2024.
  • Azerbaijan produced around 29 million tons of oil in 2024.
  • The Caspian Pipeline Consortium (CPC) accounts for about 70 percent of Kazakhstan's total oil production export volume.
  • The Baku-Tbilisi-Ceyhan (BTC) pipeline has a designed capacity of 60 million tons per year.
  • In 2024, Kazakhstan exported over 1.4 million tons of oil through the BTC pipeline.
  • In 2024, about 29.47 million tons of oil were transported through the BTC pipeline, which is less than half of its designed capacity.
  • Kazakhstan plans to increase exports via BTC to 2.2 million tons in the coming years.
  • The Aktau port infrastructure is currently capable of handling five-six million tons per year.

Sources:

  • Trend News Agency
  • Astana International Financial Centre (AIFC)
  • Institute for Development and Diplomacy (IDD) at ADA University
  • KazMunayGas
  • Abu Dhabi Ports Group
  • Azerbaijan Caspian Shipping Company (ASCO)

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