The safe passage of around 80% of Kazakhstan’s oil exports is now potentially imperilled by the Russia-Ukraine War.

When a Ukrainian sea drone struck and disabled Russian landing ship Olenegorsky Gornyak in an August 4 night attack on the vessel in Russia’s Black Sea port of Novorossiysk, the calculations completely changed for those charged with ensuring Kazakhstan can continue to securely ship its crude, despite the conflict raging to the country’s west. And those calculations grew even more worrying on August 5, when a Russia oil products tanker, the Sig, took a Ukrainian sea drone hit to its engine room while sailing close to the Crimean peninsula. By August 8, Ukraine was leaving no room for doubt – in Kyiv’s eyes, any tankers shipping oil from Russian Black Sea terminals can be justifiably attacked.

"Everything the Russians are moving back and forth on the Black Sea are our valid military targets," Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelenskiy, told Politico, saying the move should be seen as retaliation for Russia withdrawing from the UN-brokered Black Sea grain deal and staging a series of missile attacks on Ukrainian agricultural stores and ports.

“This story started with Russia blocking the grain corridor, threatening to attack our vessels, destroying our ports,” Ustenko added. “Our maritime infrastructure is under constant attack."

Most Kazakh oil is necessarily exported via Novorossiysk after reaching the port via the 1,500-km Caspian Pipeline Consortium (CPC) route that traverses southern Russia. As things stand, only limited volumes can take the pipeline option offered by Azerbaijan in the South Caucasus due to a shortage of tankers that traverse the inland Caspian Sea.

With insurance policies threatening to become non-existent for the tankers that ship up to 1.3mn barrels per day (bpd) of Kazakh oil from Novorossiysk, it’s clear Kazakh officials are feeling the heat, and are so far offering only vague notions of finding a political answer to the endangerment of Black Sea shipping.

The Kazakh government was intending to put forward a political initiative for supporting the stable operation of the CPC port terminus in Novorossiysk, TASS quoted Kazakh Energy Minister Almassadam Satkaliyev as saying.

"As regards the provision of safety for port operations, Kazakhstan will certainly come forward with an initiative at the political level to ensure stable operations at the port, given that major oil consumers, including those from the European Union, benefit from the operations of the marine terminal," said the minister.

Such an effort "must be organised along the lines of the intergovernmental dialogue, via diplomatic channels, and the relevant directives of the Prime Minister of Kazakhstan [Alikhan Smailov] have already been issued," he added.

Kazakhstan’s best hope might lie in the pressure that could be exerted on Ukraine by its allies, who fear high oil prices.

Timothy Ash, a strategist at BlueBay Asset Management, commented in a blog for the Kyiv Post: “Kyiv has warned herein that Russian ports on the Black Sea are now fair game, and I think this is something of a quid pro quo for Russian attacks on Ukrainian ports and particularly grain infrastructure. But I think Ukraine would be wary of launching all-out attacks on Russian oil vessels in the Black Sea for fear of playing into Russian hands by driving international oil prices higher and then weakening support in both the West and the Global South for its defence against Russia.

“Rather, this was a proverbial shot across Russia’s bow that Ukraine has lots more options. It is a push to get Russia to back off from attacking Ukrainian Black Sea ports, and also those along the Danube and return to the Black Sea Grain Initiative.”

Looking at what pressure Kazakhstan might direct at Ukraine’s allies to arrange protection for oil shipments out of Novorossiysk, Oleg Chervinsky, a publisher of Kazakh oil industry magazine Petroleum, argued that the Kazakh government, while scoping out wider diplomatic moves, may first seek “consultations with the US and European shareholders” invested in Kazakh oil and gas projects.

“Shareholders are no less interested in the stable operation of the port of Novorossiysk than Kazakhstan. The government may anticipate that stakeholders will use their levers of influence to ensure that the Caspian Pipeline’s terminal is excluded from hostilities,” Chervinsky said, as quoted by Upstream on August 8.

Kazakh oil shipped from Novorossiysk comes from the huge Tengiz, Karachaganak and Kashagan fields, where major Western oil companies such as Chevron, ExxonMobil, Shell and Eni are heavy investors. The stakes are high.

Since the outbreak of the war in February last year Kazakhstan has not sat on its hands when it comes to securing alternative westward transit routes for its oil, but given squeezed tanker capacities, and also limited capacities within the pipelines stretching to Turkey and Europe from Azerbaijan via Georgia, there’s a limit to how fast it can go in developing a plan B fit for purpose.

Nevertheless, Kazakhstan made some progress in expanding its transit of oil on routes bypassing Russia in the first quarter of this year, according to Reuters reporting that cites industry sources and Refinitiv data. 

Oil shipments sent from the Caspian Sea port of Aktau in Kazakhstan to Baku in Azerbaijan reportedly rose to 163,436 tonnes in 1Q23 from 28,875 tonnes in 1Q22.

Looking in the other direction, Kazakhstan’s oil exports to China are modest, presently running at around 80,000 tonnes of oil per month.