Russian exports dominate the European energy market. The country is Europe’s single-largest supplier both for gas, of which it accounts for 40 percent of imports, and petroleum, at nearly 30 percent. And the controversial Nord Stream 2 pipeline, which continues to progress despite vehement objections on both sides of the Atlantic, threatens to further consolidate Russia’s grip.
But east of the Urals, there is a different story. Kazakhstan, a rising regional power in the midst of economic and political transformation, may prove to be the weak link in Russia’s energy empire.
Kazakhstan has the world’s twelfth-largest proven oil reserves, and is fourteenth for gas. But profiting from those resources has proven difficult. Unlike most other major producers, Kazakhstan is landlocked, making it cumbersome to bring the fuel to market and difficult to transport exploration and extraction infrastructure to the sites in the first place. Take for instance the fiasco at the Caspian oilfield of Kashagan (which became known as ‘cash-all-gone’), where technical issues led extraction plans so terribly—and expensively—awry.
The primary outlet for Kazakh fossil fuels has been a pipeline to the Russian Black Sea port of Novorossiysk. But Russia can be a fickle partner. Last month, Russia forced an end to Kazakh oil and coal shipments to Ukraine, which transit Russian territory by rail. Kazakhstan’s northern regions have similar demographics to eastern Ukraine, so Russian irredentism has the potential to disrupt Kazakh energy export routes.
Russia plays politics, but it also plays the market. Look no further than neighboring Turkmenistan, which, though oil-poor, has nearly three times the gas reserves of Kazakhstan. Russia decimated Turkmenistan’s energy industry when, in 2014, Gazprom decided to cease its purchases of Turkmen gas in a three-year boycott designed to balance the oversupply on the back of the former Soviet Republic, whose lack of proper infrastructure left few export options.
Ironically, Central Asia’s liberators came from Beijing. Kazakhstan now supplies oil to China via pipeline and there is a parallel gas line that transits Turkmen exports through Kazakh territory. It had been thought that a China-Central Asia pipeline connection would be prohibitive, cost-wise, due to the vast distances involved. However, China has made the strategic investments along with Kazakh oil company KazMunaiGas. As Robert D. Kaplan noted in a New York Times piece, “in the last decade, the China National Petroleum Corporation has become Central Asia’s main energy player,” overtaking the usual hegemon, Gazprom. The geopolitical implications may be profound, as China quietly outmaneuvers Russia on energy in what is traditionally thought of as its own backyard.
The West offers another opportunity to balance Russian energy might: Kazakhstan maintains warm relations with both Washington and Brussels, and the Western majors have invested heavily in Kazakh oilfields. Technological improvements have improved the success of these investments. For instance, a second try at Kashagan offshore field worked out, with crude beginning to flow back in 2016 after a three-year pause.
Getting that crude out to the West, however, is tricky, with Russia and Iran being the most likely routes to the sea. But there is also the small Ganja Gap in Azerbaijan, a thin strip of land that the United States used to cross the Caspian Sea and reach Central Asia during the Afghan War. Western powers believe that a proposed Baku-Tbilisi-Ceyhan pipeline, transiting a NATO member state (Turkey), a NATO aspirant state (Georgia), and increasingly Westward-looking Azerbaijan, could take Kazakh and Turkmen energy, delivered on Caspian tankers to Azerbaijan, directly to Mediterranean waters.
Recent elections may signal a further development in Kazakhstan’s external relations. The transition from the rule of former President of Kazakhstan Nursultan Nazarbayev—whose three decades in power saw Kazakhstan emerge from the Russian orbit to cultivate ties with the West and China—to Kassym-Jomart Tokayev, chosen by Nazarbayev as his interim successor and now consolidated in power by the plebiscite, will likely fortify Kazakhstan’s independent foreign policy for years to come. In energy, such independence will likely prove a headache for Russia.
Paddy Ryan is a Washington, DC-based writer for The Spectator, whose work focuses on international relations.