BAKU, Azerbaijan, October 24. President Ilham Aliyev’s state visit to Kazakhstan marks a new stage in bilateral relations and a strategic development for the entire region. The dialogue between Baku and Astana has gained depth in recent years, centering on energy security, transport and logistics corridors, investment flows, and regional stability.
Kazakhstan continues to put its eggs in one basket, exporting the lion's share of its oil through Russian territory, making a beeline for the Novorossiysk port. However, tensions in the Black Sea, the risk of sanctions, and transit instability have compelled Astana to seek alternative routes, with Azerbaijan emerging as the key energy bridge.
In the first half of 2025, Kazakhstan’s oil shipments through the Baku–Tbilisi–Ceyhan (BTC) pipeline neared 150,000 barrels per day, more than doubling compared to 2023. Following negotiations between the State Oil Company of the Republic of Azerbaijan (SOCAR) and Kazakhstan’s KazMunayGaz, significant progress was achieved toward the joint development of the Dunga field, which produces light, low-sulfur oil in high demand on world markets.
Kazakhstan’s Minister of Energy Almasadam Satkaliyev announced that oil exports through Azerbaijan would reach 4 million tons annually. SOCAR, in turn, emphasized that alongside allocating additional capacity for Kazakh oil in the BTC system, The Caspian route is really coming into its own, especially with the Black Sea risks piling up like firewood.
This cooperation also includes technological synergy. SOCAR’s expertise in oil refining and its logistical advantages gained through the Southern Gas Corridor project add value to Kazakhstan’s raw exports. In exchange, KazMunayGaz contributes to geological exploration and offshore production technology in Azerbaijan’s Caspian sector.
Beyond energy, both countries demonstrate strategic synchronization in transit policy. The Middle Corridor (Trans-Caspian International Transport Route) is evolving from an infrastructure initiative into a political and economic hub across Eurasia.
In June 2025, Baku and Astana signed a memorandum on the digitalization of the Middle Corridor, aimed at improving cargo tracking, customs procedures, and tariff alignment. Kazakhstan is investing $320 million in the modernization of the Kuryk port, while Azerbaijan is allocating $400 million to expand the Alat Free Economic Zone.
This cooperation has really hit the ground running, with trade turnover soaring to $600 million in 2024 and on track to touch $800 million in the first half of 2025, thanks to a surge in non-oil sectors like metallurgy, agriculture, and transport services.
The emerging “5+1” format among Azerbaijan and Central Asian states is replacing older frameworks, reflecting a new geopolitical reality where shared cultural, economic, and strategic interests unite the region.
If in the 1990s the region was primarily seen as a "repository of energy resources," it has now evolved into a platform for energy transit and the integration of production technologies. Baku and Astana are leading this transformation. The ties that unite them go beyond language and religion—they encompass a shared model of modernization, a balanced foreign policy, and the ability to safeguard national interests amid global competition.
In a broader Eurasian context, Azerbaijan has become a vital “Eurasian bridge” through its European integration, including membership in the Council of Europe and hosting major international events. Kazakhstan, in turn, serves as “Asia’s gateway to Europe.” Together, they form a mutually reinforcing partnership.
In the Soviet and post-Soviet eras, administrative classifications such as “South Caucasus,” “Central Asia,” and “Baltic States” shaped the political geography of the region. These days, the old definitions are being tossed out the window in favor of fresh geopolitical ideas like the “Turkic World,” the “Middle Corridor,” and “Eurasian Integration.”
Historically, the key link between Azerbaijan and Kazakhstan has been the Great Silk Road. In ancient times, caravan routes passing through Astrakhan and Derbent served as vital arteries of trade and cultural exchange across the Caspian Sea. In the 21st century, this ancient route has been revived in digital form through initiatives such as the “Digital Silk Way,” the “Trans-Caspian Fiber Optic” project, and the “Zangezur Corridor.”
The underlying philosophy of this new integration model is to deepen cooperation while preserving national sovereignty. For Kazakhstan, Azerbaijan’s experience serves as a model in diversifying energy export routes and securing transport independence. Azerbaijan, in turn, enhances its logistical access to Central Asia through Kazakhstan and coordinates more effectively with Turkmenistan.
The “Unity-2025” joint military drills underscored that Azerbaijan and Kazakhstan have moved beyond economic partnership to strategic coordination in security. Rising instability in Afghanistan, threats to energy infrastructure in the northern Caspian, and volatility in the Black Sea are driving both nations toward deeper defense cooperation.
If Azerbaijan’s technological edge in the defense industry is combined with Kazakhstan’s production potential, it might just be the tip of the iceberg for a brand new chapter in the defense architecture of the whole OTS.
At the turn of the 2010s and 2020s, a significant geopolitical transformation began to unfold east of the Caspian Sea. Central Asia, long characterized by relative isolation, started opening up to the world and moving away from the “single window” dependency model. Multiple factors contributed to this shift, from the Western sanctions imposed on Russia after its 2014 annexation of Crimea to Moscow’s persistent efforts to preserve the old post-Soviet governance formula of “decisions made in the Kremlin, implemented on the ground.”
The war in Ukraine, which erupted in February 2022, really turned up the heat on these dynamics. Energy and trade corridors passing through Russia were either disrupted or rendered unstable. The sharp depreciation of the ruble, economic sanctions, and the decline of Russia’s investment climate have significantly weakened Moscow’s regional economic influence. In this context, Azerbaijan has emerged as a “gateway to the world” for Kazakhstan and other Central Asian nations.
Baku today is no longer merely an energy exporter; it has evolved into a modern logistics hub, equipped with independent pipelines, railways, the largest port on the Caspian Sea, the Alat Trade Port, as well as advanced ferry and multimodal transit systems. In essence, this represents the twenty-first-century revival of the ancient Great Silk Road. Whereas in earlier times caravans circled the Caspian, today direct connections are established through the Trans-Caspian Corridor, positioning Azerbaijan as the natural center of this emerging regional geography.
This cooperation extends beyond economics to encompass security as well. The joint military exercises Unity-2025 demonstrated that Azerbaijan and the Central Asian states have effectively formed an integrated logistical, economic, and investment framework, one that is now being reinforced by deepening defense and security collaboration.
The coordinated steps taken by Baku and Astana in this direction signal the rise of a new “5+1” format at the heart of Eurasia, a geopolitical axis linking Azerbaijan with the five Central Asian republics. The purpose of this emerging framework goes beyond trade and energy; rather, it aims to keep the peace, weather the storm in transport, and maintain the delicate balance of the region’s strategic landscape.
As a result of the negotiations held in Astana, Presidents Ilham Aliyev and Kassym-Jomart Tokayev reached an agreement to increase the annual volume of Kazakh oil transported through the BTC pipeline to seven million tons in the coming years.
This move marks a strategic turning point for Caspian energy logistics, signaling significant policy adjustments by both Baku and Astana. Previously, Azerbaijan had been cautious about increasing transit volumes, as the high-sulfur content of Kazakh crude could affect the quality of the BTC blend. However, the winds of change in the market have led to a fresh look at this position.
Three key factors underlie this decision: the gradual decline in Azerbaijan’s oil production, the need to optimize the operating costs of the BTC pipeline, and shifts in global demand following the closure of several European refineries for economic reasons.
Over the past 15 years, Azerbaijan’s oil output has been declining by an average of four to five percent annually, and international analysts forecast that the pace may accelerate to 8 or 9 percent between 2026 and 2028. In 2024, the country produced a total of 29 million tons of oil and condensate, around 5 million tons of which were condensate, while 12.5 million tons came from the Azeri–Chirag–Gunashli (ACG) field, reflecting a four percent decrease from 2023. The State Oil Company of the Republic of Azerbaijan (SOCAR) processes approximately five million tons domestically each year, further limiting export capacity.
In this context, the transit of Kazakh oil through Azerbaijan appears to be a sound solution from both commercial and technical perspectives. Having operated continuously for more than 19 years, the BTC pipeline has become increasingly costly to maintain. A reduction in throughput further raises operational expenses, making additional volumes of Kazakh crude vital for ensuring the system’s long-term economic sustainability.
For Astana, the BTC pipeline serves not only as an alternative export route but also as a safeguard against geopolitical risks in the Black Sea region. In recent years, oil shipments via the Russian Novorossiysk Port have been repeatedly disrupted, and this risk has become a lasting concern amid the escalating sanctions standoff between Russia and the West.
By the second quarter of 2025, around 15 percent of Kazakhstan’s oil exports were already reaching global markets through Azerbaijan, and this figure is expected to rise to 25 percent in 2026. In July 2025, KazMunayGaz announced that the increase in transit volumes via Baku would generate an additional $600 million annually for the Kazakh state budget.
This blossoming partnership highlights the dawn of a fresh axis in the Eurasian energy scene. The Baku–Astana line is shaping up to be a rock-solid route for energy to flow westward without a hitch.
Over the past 15 years, Azerbaijan’s oil production has declined by an average of 4–5 percent per year, with international experts warning that the rate may accelerate to 9 percent in the coming years. This trend makes it increasingly necessary for the country to adopt new economic and technological approaches to maintain balance in its energy sector.
In 2023, a total of 30 million tons of crude oil were transported through the BTC pipeline. This volume included supplies from Azerbaijan, Turkmenistan, Kazakhstan, as well as condensate from the Shah Deniz field. The BTC pipeline’s maximum annual throughput capacity stands at 60 million tons.
Turkmenistan has exported around 4 million tons of oil per year through BTC in recent years, though these volumes fluctuate depending on the outcomes of SOCAR Trading tenders. Kazakhstan, in turn, began regular exports through the pipeline in March 2024, currently averaging about 1.5 million tons. This figure is expected to reach 1.7 million tons in 2025.
BTC’s technical infrastructure is well-equipped to handle this growth. In 2023, AzerTrans commissioned a new 30-inch pipeline at the Sangachal terminal, adding the capacity to process and transport an additional 7 million tons of oil annually. In other words, the system is fully prepared for the projected increase in Kazakh crude transit.
According to Azerbaijani energy experts, the decline in Azeri Light production and the absence of new large-scale fields comparable to Azeri–Chirag–Gunashli (ACG) are prompting Baku to adopt a more transit-oriented model. From a commercial perspective, this strategy is entirely logical: expanding transit volumes helps sustain the BTC pipeline’s economic viability, offset depreciation costs, and maintain consistent profitability.
The BTC pipeline is currently operating at about 50 percent of its total capacity. Should Kazakh oil account for one-third of the total throughput, Azerbaijan’s infrastructure costs could decrease by approximately $150 million annually, while raking in extra dough from transportation and blending for SOCAR.
Kazakhstan, for its part, produces roughly 90 million tons of oil each year and plans to raise output to 140 million tons by 2030. About 70 percent of this oil is exported, with nearly 90 percent of exports traditionally routed through the Caspian Pipeline Consortium (CPC).
In 2024, Kazakhstan shipped 55 million tons of oil via the CPC, 8.8 million tons through the Atyrau-Samara line, 3.6 million tons from the port of Aktau, and 1.2 million tons through the Atasu-Alashankou route to China. This structure continues to reflect a high dependence on Russian transit. However, amid the ongoing war in Ukraine and growing risks in the Black Sea region, Astana has been compelled to gradually reduce this reliance.
In this context, the BTC pipeline is emerging as a geoeconomic “insurance policy” for Kazakhstan. Plans call for the transportation of 7 million tons of Kazakh oil via BTC by 2027. Once this target is achieved, around 10 percent of Kazakhstan’s oil exports will bypass Russian territory entirely.
The BTC Blend is primarily composed of the “Azeri Light” grade, which has a low sulfur content suitable for European refineries. Kazakh crude, by contrast, is heavier and contains higher levels of sulfur, which previously complicated blending and processing. However, in September 2025, SOCAR acquired two oil refineries in Italy with a combined annual processing capacity of 10 million tons.
Additionally, SOCAR is negotiating with Türkiye’s Cengiz Holding to acquire a refinery in Burgas, Bulgaria. Since these facilities are capable of processing high-sulfur crude, the inclusion of Kazakh oil in the BTC Blend has now become technologically feasible.
In the second half of 2025, SOCAR Trading also approved new technical standards for the BTC Blend. Under these standards, European refiners are offered an additional discount to account for higher sulfur content, ensuring that the blend remains competitive in the European market.
Kazakh energy experts, including analyst Abzal Narymbatov, believe that Azerbaijan can serve as a strategic export platform for Kazakhstan amid declining production and growing domestic demand. In this scenario, Astana could process its crude locally through BTC transit and Baku’s refineries, then sell the refined products to European markets at higher margins.
Economically, this model represents a clear “win–win” arrangement: Azerbaijan boosts its transit revenues and refining output, while Kazakhstan secures a diversified export route and a more stable market presence.
The main challenge for Kazakhstan remains the high transit costs of the BTC route. Currently, the tariff for transporting each ton of oil via BTC is approximately three times higher than that of the CPC. However, the agreement signed on October 21, 2025, between SOCAR and the Samruk-Kazyna State Fund could change this dynamic. The agreement includes financing for joint energy projects and key infrastructure investments.
A slice of these funds is earmarked for sprucing up the Aktau and Kuryk ports, along with giving the ferry fleet across the Caspian a fresh coat of paint. Kazakhstan also intends to construct six new oil tankers for the Caspian, each with an annual capacity of 700,000 tons.
If fully implemented, these measures will not just keep the BTC pipeline chugging along, but will also lay the groundwork for a fresh blueprint of energy integration in the Caspian region.
Under this model, Azerbaijan will turn the tables from being a net exporter to becoming a regional hub for energy and capital transit—effectively stepping into the spotlight as the logistics, financial, and technological coordination center of the Caspian region.
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