War in Ukraine disrupts energy flows: how will Kazakhstan’s gas transit be affected?

Russia and China’s drive to ensure economic security amid global uncertainty could accelerate the launch of key energy projects in Kazakhstan.

The word «uncertainty» has quickly become one of the most frequently used terms in forecasts for 2025. It repeatedly appears in the recent Global Risks Report 2025 by the World Economic Forum. It’s also a central theme in UNCTAD’s December 2024 Global Trade Update and the World Economic Situation and Prospects 2025 report, released earlier this month by the UN Department of Economic and Social Affairs.

In response to growing uncertainty, global powers are reverting to an old strategy: dividing the world into spheres of influence. The U.S. is invoking the Monroe Doctrine, Russia is championing «Eurasian security,» Turkey seems to be reviving echoes of the Ottoman Empire and China is rolling out its Global Security Initiative. In this context, the line between military-political security and economic security has disappeared. Modern politics is deeply intertwined with economics, and economic policy has become heavily politicized. Military economics and economic warfare are increasingly the new norm.

While these shifts spark endless debate, our focus is on a more practical question: What does this mean for Kazakhstan? As a peaceful, medium-sized nation pursuing a multivector foreign policy and striving to position itself as Eurasia’s primary transit hub, Kazakhstan must navigate these shifting trends carefully. Let’s explore how these global trends are shaping Kazakhstan’s gas transit strategy.

Gas flows reversed

On Jan. 1, 2025, Russian gas exports to Europe via Ukraine, totaling 15 billion cubic meters (bcm), were halted.

Kiev’s decision not to extend the gas transit contract through Ukrainian territory was a logical, though somewhat delayed, strike against the Kremlin, aimed at cutting off funding for its war efforts. However, the impact of this move turned out differently than expected. Gas prices in Europe soared, but so did Gazprom’s profits from gas supplies through Turkey and the TurkStream pipeline to Europe, which handles 40 bcm annually. The Kremlin’s coffers remain full, and Gazprom now has «excess» gas volumes that it will likely redirect to promising markets in Central Asia, China and Iran. This is where Kazakhstan could step in as a transit hub. But is it prepared?

Kazakhstan’s national infrastructure plan until 2029, adopted last July, outlines that its gas transportation system primarily serves the needs of the country’s western, southern and central regions. Additionally, it supports gas transit from Russia to Uzbekistan and from Turkmenistan to China. Notably, the plan does not mention facilitating gas transit from Russia to Iran or Russia to China.

Since October 2023, Russian gas has been supplied to Uzbekistan through the Central Asia-Center pipeline system, a major infrastructure project originally built during the Soviet era. However, the flow has been reversed. While the system retained its name, significant upgrades to pipes and compressor equipment were necessary to handle the reversed flow and prepare for increased transportation volumes.

In June 2024, Kazakhstan’s national gas company QazaqGaz and Russia’s gas giant Gazprom signed service contracts for the transportation of Russian gas to Uzbekistan and Kyrgyzstan through Kazakhstan, covering the period from 2025 to 2040. While transit volumes were not disclosed, Tashkent announced plans to increase supplies by 3.6 times, reaching 11.6 bcm annually by 2030. Supplies to Kyrgyzstan are expected to increase to 800 million cubic meters (mcm) over the next two years. In addition to earning transit fees (transit rates have not been publicly disclosed in recent years), Kazakhstan’s gas pipeline system also facilitates swap operations.

Like Russia, China is working to reduce uncertainty, particularly in the energy sector. As a result, it is highly likely that Beijing will move forward with the construction of the fourth line of the Turkmenistan gas pipeline, alongside the Power of Siberia-2 project.

On Jan. 21, 2025, Vladimir Putin and Xi Jinping held a video conference, likely discussing the rising uncertainty triggered by Donald Trump’s return to the White House and measures to mitigate the associated risks. Among the key topics was the early commissioning of the Power of Siberia-1 gas pipeline (eastern route), delivering 38 bcm at full capacity annually. Other potential routes for Russian gas exports were also discussed, including one that could run through Kazakhstan. This route would likely run near the Atasu-Alashankou oil pipeline, with an estimated capacity of 35 bcm per year.

According to Kazakhstan’s Minister of Energy Almassadam Satkaliyev, the country is eager to support this project, not only for transit revenue but also because it would allow Kazakhstan to purchase Russian gas at lower prices compared to direct imports. This is especially crucial, as it seems Kazakhstan will face challenges in meeting its energy needs without Russian gas.

While direct imports from Russia remain an option, the construction of the Russia-Kazakhstan-China gas pipeline has yet to be finalized, as Moscow and Beijing have not reached an agreement. Kazakhstan is requesting up to 10 bcm of gas from Gazprom at negotiated prices for its domestic market. If implemented, the pipeline could also provide a cost-effective solution for the gasification of East Kazakhstan. Moreover, a combined heat and power plant will be built by Inter RAO-Export, a subsidiary of the major Russian electricity company Inter RAO, in the suburbs of Ust-Kamenogorsk. The plant will be capable of running on both coal and gas.

North-South energy corridor

Iran has been a target of sanctions since Joe Biden’s presidency, and it is widely expected that Donald Trump’s administration will escalate the sanctions war against the country, with its oil and gas industry as a primary target.

The mounting pressure is driving Iran and Russia to strengthen their ties at an accelerated pace. On Jan. 17, Iranian President Masoud Pezeshkian visited Moscow. During his meeting with Vladimir Putin, it was highlighted that over 95% of bilateral trade transactions in the past year were conducted in Russian rubles and Iranian rials, marking a significant step in their economic partnership. Washington could not ignore the signing of the comprehensive strategic partnership agreement between Russia and Iran, nor the growing cooperation between the two countries in nuclear energy. However, more relevant to Kazakhstan is a statement by Russian Minister of Energy Sergey Tsivilyov, who participated in the talks. He announced that an agreement had been reached on the supply of Russian gas to Iran through Azerbaijan.

Iran possesses some of the world’s largest gas fields, but they are located in the south, while the country’s main industrial capacities are in the north. This geographical divide has led to ongoing negotiations for Russian gas supplies, with discussions focused on large volumes. Last summer, the Iranians estimated the potential volume of Russian exports at 109 bcm. Russian experts have called this figure unrealistic due to the lack of necessary infrastructure. Currently, existing gas pipelines would allow for the supply of only 2 bcm per year at the initial stage. The cost of gas, a typically contentious issue, has yet to be resolved. Nevertheless, external factors, particularly U.S. policy under Trump, are expected to push Tehran and Moscow to expedite the completion of the North-South corridor. It includes both a transport route (during the meeting, Putin announced Russia’s readiness to complete the Rasht-Astara railway section in Iran) and an energy corridor. Work is also underway to unify the energy systems of Russia, Azerbaijan and Iran, though this is still in the feasibility study phase.

There is also the possibility of gas supplies along the eastern coast of the Caspian Sea, through Kazakhstan, Uzbekistan and Turkmenistan. The Central Asia-Center pipeline system, which is already operating in reverse mode and expanding, could be extended from Uzbekistan to Turkmenistan, where there is an existing pipeline that supplies gas to Iran.

This route could complement, rather than compete with, the Transcaucasian gas pipeline. The region already has pipeline infrastructure dating back to Soviet times. However, the challenge is that Gazprom (or the Russian-Iranian partnership) has only one partner on the western coast of the Caspian Sea, while the eastern coast has three, each with its own set of goals, objectives, priorities and terms. Essentially, the absence of unified infrastructure and a cohesive energy policy in the region is a key factor preventing foreign investment.

Gazprom as a strategic partner

Last year, gas supply, transit and processing became central topics in Kazakhstan-Russia relations. In the spring, it became evident that Kazakhstan was facing not only an electricity shortage during peak demand but also a gas shortage. According to the Ministry of Energy, between January and March, Kazakhstan purchased 0.5 bcm of gas from Russia under a special supply agreement between QazaqGaz and Gazprom to address the increased gas consumption in winter.

On Nov.25, 2024, Gazprom CEO Alexey Miller and Kazakhstan’s Deputy Prime Minister Roman Sklyar signed an agreement outlining the main terms for the processing and sale of gas from the Karachaganak field for 2025-2026. While the agreement details have not been disclosed, experts believe it involves increasing the volume of gas supplied to the Orenburg gas processing plant, from 9 to 11 bcm, as outlined in the memorandum signed between QazaqGaz and Gazprom back in 2022.

Meanwhile, the major shareholders of Karachaganak Petroleum Operating (Shell, Eni and Chevron) have shown little interest in building a gas processing plant closer to the field. At the same time, Kazakhstan and Russia have aligned their positions on Russian gas transit to Uzbekistan and Kyrgyzstan.

All of these steps are part of the strategic cooperation agreement between Kazakhstan’s government and Gazprom, which was concluded in the summer of 2023. Journalists have noted that in the past year, Roman Sklyar and Alexey Miller met both bilaterally and at international forums on seven occasions.

No wonder that on Jan. 21 — when Kazakhstan’s cabinet was discussing the nationwide Taza Qazaqstan (Clean Kazakhstan) environmental project initiated by President Kassym-Jomart Tokayev, while U.S. President Donald Trump was signing an executive order to withdraw the U.S. from the Paris Climate Agreement — Sklyar and Miller met at Gazprom’s office in St. Petersburg to discuss strategically important issues of cooperation in the gas sector.