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Sanctions Limbo. Sanctions Against Russia❜s Oil Sector are Reverberating Through Joint Projects in Kazakhstan

The Russian company Tatneft has exited Butadiene LLP, a joint venture with the Kazakhstani state fund Samruk-Kazyna, in which it controlled a 75% stake. The project to build a plant producing butadiene and synthetic rubbers in the Atyrau Region has come under the control of Samruk-Kazyna subsidiaries.

This followed the United Kingdom’s imposition of sanctions on the Russian company in December 2025, which significantly constrained its ability to obtain loans from international banks and to acquire new technologies and equipment.

Earlier, after the United States imposed sanctions on KazMunayGas’s strategic partner, LUKOIL, the project to jointly develop the offshore Kalamkas-Sea and Khazar fields in Kazakhstan's Caspian sector was put on hold.

Ricochet Effect for Kazakhstan

After 2022, Western sanctions policy toward Russia’s energy sector became one of the key external factors shaping Kazakhstan’s oil and gas industry. Formally, the restrictions were imposed on Russian companies, but their indirect impact affected the entire architecture of cross-border cooperation, from upstream operations to petrochemicals and export logistics.

The sanctions regime has created a "secondary uncertainty" effect. Even in the absence of formal prohibitions, banks, insurers, suppliers, and contractors have become more cautious when working on projects involving Russian participants. This has complicated financial transactions, increased transaction costs, and required changes to settlement structures. It has also made it more difficult to procure foreign equipment and technologies.

At the same time, there was no high-profile rupture. Russian companies did not leave Kazakhstan. Instead, joint projects requiring significant capital investment and technology transfer were put on hold. In several projects, a quiet reshaping of shareholder structures began.

The Russian factor as a system element

In recent years, Russia has increased its presence in Kazakhstan’s oil and gas sector as European companies’ interest in new projects weakened. LUKOIL took on the offshore Kalamkas-Sea and Khazar blocks in the Caspian, after the North Caspian consortium and Shell withdrew from them in 2019. Kalamkas-Sea is part of a single contract area with the Kashagan field, which is being developed by a consortium. The Khazar structure was part of the contract area for the Zhemchuzhiny (Pearls) project, which was to be implemented under a production sharing agreement (PSA) by Caspi Meruerty Operating Company, whose shareholders, in addition to Shell (55%), were KazMunayGas (25%) and Oman Oil Company (20%). Shell had already invested $900 mln in the project, funding exploration, seismic surveys, and appraisal well drilling, but later abandoned production. Kazakhstan’s Ministry of Energy explained this decision as the result of low project profitability amid high capital costs.

Tatneft, in 2024-2025, set up a joint venture with KazMunayGas to pursue deep exploration in the Atyrau Region (see "Karaton Subsalt: Deep Exploration as a Bet on the Future," Petroleum No. 1-2026) and also looked at the Atyrau refinery, with options discussed that included an acquisition, an equity stake, or transfer to management. At the same time, through a chain of affiliated companies, Tatneft gained control of the privately owned Kondensat refinery located near the Karachaganak field, which had long struggled due to a lack of feedstock. Tatneft began sending naphtha and gas condensate from its TANECO plant for processing at the plant. The refinery revived and even started exporting gasoline from Kazakhstan at a time when other refineries could not obtain export quotas from the Ministry of Energy.

Finally, SIBUR entered Kazakhstan’s emerging gas-chemical industry on a large scale after Korean companies and Borealis declined to continue cooperation. It acquired shareholdings in the operator for the construction of the polyethylene complex, the polypropylene plant, and the Polymer Production plant.

Gazprom and QazaqGaz launched transit of Russian gas to Uzbekistan and Kyrgyzstan via the Central Asia-Center gas pipeline in the fall of 2023. Under a long-term contract, transit volumes are to reach 11 bln m3 per year by 2038. In the fall of 2025, Russia and Kazakhstan also signed a memorandum on the construction of the Ishim-Astana gas pipeline via Petropavl and Kokshetau, with capacity of up to 10 bln m3 per year.