OPINION: Kazakhstan’s decision to continue developing its economic and political ties to Russia is a slap in the face to the West.
The European Union is a major market for Kazakh oil and gas, with the Central Asian nation’s output accounting for most of its €29.8 billion ($32 billion at current exchange rates) total exports to the bloc in 2022, according to EU figures.
Its three major developments — Tengiz, Kashagan and Karachaganak — all have Western oil majors as partners, including Chevron, Eni, Shell, TotalEnergies and ExxonMobil.
And Kazakhstan also recently agreed to export more crude to Germany and Hungary following concerted efforts by the EU and member states looking to replace Russian oil supplies lost following Russia’s invasion of Ukraine early last year.
Yet the former Soviet state continues to help neighbour Russia and its corporations mitigate the impact of international sanctions imposed in response to the Ukraine invasion.
Russia still exerts a hold over Kazakahstan, which it believes falls under its area of influence — highlighted by Russian President Vladimir Putin referring to the two countries as the “closest allies” during his visit to Astana last week.
Kazakh President Kassym-Jomart Tokayev also praised the strong relations between the two countries, with Putin predicting a 7% annual growth in mutual trade this year, from an estimated $28 billion in 2022.
Tokayev also welcomed the hundreds of Russian companies that have transferred their business to Kazakhstan in an effort to reduce the burden of international sanctions.
More Russian companies are expected to relocate to Kazakhstan soon.
Putin’s visit came after EU foreign policy chief Josep Borrell praised Kazakhstan’s efforts “to ensure that its territory is not used to circumvent or undermine European and international sanctions”.
However, energy co-operation has remained atop the agenda in talks between Kazakhstan and Russia, with Moscow agreeing to build new gas-fired power plants in Kazakhstan, which has been experiencing repeated blackouts.
Kazakhstan also wants to expand its role as a transit country for Russian natural gas to Central Asia and China, with Russian gas giant Gazprom investing in upgrading a legacy pipeline network.
Initial upgrades this summer enabled Gazprom to start sending supplies to Uzbekistan at a rate of about 2.8 billion cubic metres of gas per annum — an achievement singled out by Putin last week.
Kazakhstan has also proposed that Gazprom supply gas to the country’s north and northeast at a discounted price. In return, Gazprom has the opportunity to upgrade pipelines in these regions to enable Russian volumes to flow onwards to China.
There is little doubt the latest developments show that Kazakhstan is clearly under Russia’s umbrella, giving Moscow room to claim another success in its efforts to win allies and build an anti-Western coalition.
Already this year, Russia has found ways to circumvent sanctions and price caps and succeeded in containing a Ukrainian counteroffensive after suffering major setbacks during 2022.
As the war in Ukraine nears its third year, the US, Europe and Ukraine urgently need to revise their short and long-term goals and how they deal with Russia exploiting its vast energy resources to achieve its foreign policy goals.
A starting point could be acknowledging Russia’s success in transforming its economy and society to focus on a long struggle with the West. This should pave the way to decisions to answer the challenge, however difficult they may be.
(This is an Upstream opinion article.)
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