Kazakhstan is buying tankers to ship its oil across across the Caspian and Black Seas, the latest sign that central Asia’s largest crude producer is seeking alternatives to its main export pipeline through Russia.

A unit of state-run KazMunayGas National Co. JSC already bought two tankers with deadweight tonnage of 8,000 tons each — relatively small ships by oil industry standards — to transport petroleum across Caspian Sea, said deputy energy minister Yerlan Akkenzhenov. It plans to buy another two vessels with deadweight tonnage of 80,000 tons each — one of the most common cargo sizes — to operate in the Black Sea, he said.

Kazakhstan is exploring these alternatives even as the Caspian Pipeline Consortium, which runs through Russia, remains the most profitable route for the country’s crude exports, Akkenzhenov said. Other methods of transport find it “difficult to compete with” the CPC, he said. 

The CPC shipped about 80% of Kazakhstan’s petroleum exports last year, carrying crude through an onshore pipeline from the country’s major fields to a Black Sea tanker terminal near the Russian port of Novorossiysk. 

Oil from the terminal is an increasingly important supply alternative to Russian crude for Europe since the invasion of Ukraine. Yet interruptions to operations of the terminal in the spring and summer of 2022 forced Kazakhstan to temporarily curb oil production. The war has also increased the risk to shipping in the region.

This year, Kazakhstan already exported 300,000 tons of oil across Caspian Sea and via the Baku-Tbilisi-Ceyhan pipeline, which runs from Azerbaijan to Turkey, and aims to send about 1.5 million tons in total this year, according to Akkenzhenov. That’s just a fraction of CPC exports, which this year have totaled 40.5 million tons of mostly Kazakh oil as of Aug. 18, according to the consortium’s website.

The country also has the capacity to boost oil exports to China to as much as 6.5 million tons a year from 1 million planned to be sent this year. “That will depend on economic interests of producers,” Akkenzhenov said.

Kazakhstan plans to expand fuel production at Shymkent refinery in its south by “effectively building new refinery” there by 2030, Akkenzhenov said. The project will double capacity to 12 million tons of oil a year at an estimated cost of $5 billion to $6 billion, he said. Another $500 million may be spent on the expansion of pipeline to the refinery, he said.

A project is under discussion to remove bottlenecks at the Atyrau refinery in the west of the country, which could boost its capacity by 1 million tons, Akkenzhenov said.

“These measure will allow us to cover domestic fuel needs,” Akkenzhenov said. “We are also looking to resume and increase exports of oil products to Kyrgyzstan, Uzbekistan, Tajikistan and Europe, he said. Kazakhstan already sends fuel oil to the European union, he said. 

Power failures have cut Kazakhstan’s planned oil output this year to 89 million tons from the initial plan of 90.5 million tons, Akkenzhenov said. The nation plans to transit 10 million tons of Russian oil to China this year and again in 2024, he said.