Russian crude exports to China via Kazakhstan’s Atasu–Alashankou pipeline have been thrown into uncertainty after Washington imposed full blocking sanctions on Rosneft, the Russian state oil major that ships the barrels under a long-term transit agreement.
According to sources in Kazakhstan’s oil and gas sector quoted by RTVI and regional media, Astana is assessing whether it can continue to handle these flows without exposing national pipeline operator KazTransOil to secondary sanctions from the United States. The line, running from western Siberia through Kazakhstan to China’s Xinjiang region, transports about 10 million tonnes of crude a year – roughly 200,000 barrels per day – under a contract extended in 2023.
KazTransOil, a subsidiary of state energy company KazMunayGas, receives a tariff of 15 US dollars per tonne for Russian crude shipped to China along the Priirtyshsk–Atasu–Alashankou route, an arrangement that was prolonged until 1 January 2034. On that basis, annual transit revenues from Rosneft amount to around 150 million dollars. While significant, this income is modest in the context of Kazakhstan’s wider oil sector, where most export volumes move via the Caspian Pipeline Consortium (CPC) system to Russia’s Black Sea port of Novorossiysk.
The pressure arises from US Treasury measures announced on 22 October, when the Office of Foreign Assets Control (OFAC) added Rosneft and Lukoil, along with numerous subsidiaries, to its Specially Designated Nationals list. All property and interests of those entities in the United States are blocked, and US persons are prohibited from dealing with them; entities that are 50 per cent or more owned by Rosneft or Lukoil are also treated as blocked. Companies worldwide have effectively been given a choice between dealing with the sanctioned firms or maintaining normal access to US financial markets.
Kazakhstan’s Ministry of Energy has responded cautiously. On 10 November it submitted a formal request to OFAC seeking clarification on whether the Atasu–Alashankou transit arrangements can continue under the sanctions regime and, if so, under what conditions. Astana is understood to be exploring the possibility of a general licence that would exempt the pipeline flows from sanctions, allowing the existing contract to be honoured. A similar approach has previously been used by Washington to manage sensitive energy relationships, such as its earlier licensing of Serbia’s oil refiner NIS before sanctions there were tightened.
If OFAC grants a licence that explicitly covers the pipeline transit, Kazakh officials and industry sources expect flows to continue at current levels, with one adjustment: payments between Rosneft and KazTransOil would likely shift into national currencies rather than US dollars, reflecting efforts to reduce exposure to the American financial system. If no licence is issued, however, Kazakhstan may be forced either to halt transit of Russian crude to China or to accept a heightened risk that its national operator could be targeted with secondary sanctions.
The potential disruption comes at a time when Russian oil exports to China are already under strain. Following the US sanctions on Rosneft and Lukoil, China’s state oil majors – PetroChina, Sinopec, CNOOC and Zhenhua – have suspended purchases of seaborne Russian crude, at least temporarily, to avoid compliance risks. China buys roughly 1–1.5 million barrels per day of Russian oil by sea, while pipeline deliveries, estimated at around 900,000 barrels per day to PetroChina, are seen as less directly affected by the new measures.
Data provider Kpler estimates that Russian oil imports to China in November could fall by about 36 per cent compared with October, to some 926,000 barrels per day, as cargoes are delayed or rerouted in response to sanctions. Johannes Rauball, an analyst at Kpler, calculates that 300,000–400,000 barrels per day of Russian supplies to China are at risk in the short term. In his assessment, state-owned Chinese refiners tend to be conservative about sanctions exposure, whereas private “teapot” refiners may be more inclined to resume buying if Russian discounts widen sufficiently.
Analysts generally expect that, over time, Russia and its Asian buyers will adapt by shifting trade into more opaque channels rather than cutting volumes permanently. Kpler’s recent market updates argue that sanctions on Rosneft and Lukoil are likely to trigger temporary disruptions of 1.2–1.4 million barrels per day in global Russian crude flows as buyers and sellers reorganise contracts, routing and ownership structures, but that overall exports are likely to “reshape rather than shrink” as non-designated entities and intermediaries take over sales.
For Kazakhstan, the Atasu–Alashankou issue feeds into a broader debate over how to balance its “multi-vector” foreign policy with tightening Western sanctions on Russia. The country already relies heavily on the CPC pipeline, operated jointly with Russian and Western partners, which was recently disrupted by Ukrainian drone attacks on its Black Sea terminal. Astana has been seeking to diversify routes, including increasing shipments via Azerbaijan’s Baku–Tbilisi–Ceyhan pipeline, but available capacity is limited.
The decision in Washington on whether to licence the Rosneft transit contract will therefore carry weight beyond the 10 million tonnes involved. It will test how strictly US authorities expect third countries to align with sanctions on Russia’s energy sector, how much flexibility they are prepared to offer for existing infrastructure commitments, and how far Kazakhstan is willing to go in adjusting its long-standing energy links with its largest neighbour in order to protect access to Western markets and finance.
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