Kashagan Expansion Tests Kazakhstan's Oil Export Infrastructure

Kazakhstan's oil production is set to increase significantly in the coming years, but the country may face challenges in transporting and exporting its crude. According to a recent draft budget, Kazakhstan plans to produce 96 million tons of oil in 2027, with projected revenues of $8.5 billion.

Experts say that expanding refining capacity will take years due to the scale of investment required. Nurlan Zhumagulov, executive director of the Energy Monitor Fund, notes that if Kazakhstan significantly increases production at Kashagan, a new oil pipeline may be needed.

Zhumagulov suggests transporting additional crude from Atyrau towards the Mangystau Region and then across the Caspian Sea to Azerbaijan, potentially handling up to 37 million tons annually. However, Abzal Narymbetov warns that expanding domestic refining will not simply substitute for crude exports, as it would mean losing export revenue while supporting domestic fuel prices.

The issue also has a consumer dimension, with Zhumagulov noting that if refining reaches 40 million tons by 2040, fuel prices would eventually need to become market-based, but household incomes would need to rise accordingly.