US exempts Kazakhstan’s key oil projects from Russia sanctions

As part of a new sanctions package against Russia imposed on Jan. 10, the U.S. Department of the Treasury granted exemptions for oilfield services related to the Caspian Pipeline Consortium (CPC), which transports approximately 80% of Kazakhstan’s oil, according to the Interfax news agency.

In addition to the CPC, the Treasury also provided waivers for Tengizchevroil, the operator of the Tengiz oil field, as well as for Russia’s Sakhalin-2 project. The exemptions for oilfield services, including permits for oil shipment, will remain in effect until June 28, 2025.

The CPC pipeline stretches 1,500 kilometers, transporting more than two-thirds of Kazakhstan’s exported oil, along with raw materials from Russian fields, including those in the Caspian Sea.

Between January and October 2024, the CPC exported over 53 million tons of oil. In May, the consortium revised its 2024 oil transportation forecast, projecting a 7% decline from the original estimate of over 70 million tons due to a drop in production at the Tengiz field. For comparison, the CPC shipped 63.5 million tons in 2023, including 56 million tons of Kazakh oil, an increase from 52.2 million tons in 2022.

The shareholders of the CPC include Russia’s Federal Agency for State Property Management, represented by Transneft (trust management) with a 24% stake, CPC Company with 7%, KazMunayGas with 19%, Kazakhstan Pipeline Ventures LLC with 1.75%, Chevron Caspian Pipeline Consortium Company with 15%, LukArco B.V. with 12.5%, Mobil Caspian Pipeline Company with 7.5%, Rosneft-Shell Caspian Ventures Limited with 7.5%, BG Overseas Holdings Limited with 2%, Eni International N.A. N.V. S.a.r.l. with 2% and Oryx Caspian Pipeline LLC with 1.75%.

Tengizchevroil’s stakeholders include Chevron (50%), ExxonMobil Kazakhstan Ventures Inc. (25%), Kazakhstan’s government through KazMunayGas (20%) and Lukoil (5%). Tengiz holds total proven oil reserves of 3.1 billion tons (25 billion barrels). From January to September 2024, the company produced 21.4 million tons of oil (171.4 million barrels), slightly down from 21.7 million tons during the same period the previous year.