BAKU, Azerbaijan, June 7. Kazakhstan could see a significant boost in oil transit revenues if Western sanctions on Russian crude tighten further, according to an outlook by Teniz Capital Investment Banking, Trend reports.
With Europe potentially introducing harsher restrictions, such as a full embargo or stricter price caps, Russia may increasingly redirect exports to China, making Kazakhstan a critical transit route.
In May 2025, Moscow and Beijing signed a protocol to raise the annual transit quota through Kazakhstan from 10 to 12.5 million tons. Russian Deputy Prime Minister Alexander Novak confirmed readiness to supply the additional volume, contingent on technical upgrades - either boosting capacity along the current Priirtyshsk-Atasu-Alashankou route or building a new pipeline bypassing the congested Omsk-Pavlodar corridor.
This development spells tangible gains for KazTransOil (KTO), Kazakhstan’s state pipeline operator. With a tariff of $4.23 per ton, an extra 2.5 million tons in transit would yield at least $10.6 million in additional annual revenue. Including profits via its 50% stake in the Kazakhstan-China Pipeline, the financial upside could reach $24 million - an increase of about 3.5% of KTO’s total revenue, with net profit potentially rising by up to 20%.
In a high-case scenario - 20 million tons of Russian oil transiting through Kazakhstan annually - KTO’s income could grow by over $96 million, and net profit could increase by as much as 80%, Teniz Capital estimates.
However, accommodating these flows will require infrastructure investments. The Atasu-Alashankou pipeline can handle up to 20 million tons per year but currently operates below capacity. Technical measures, including new pumps and winter flow optimization, are already underway in coordination with CNPC. The bigger bottleneck lies upstream on the Soviet-era Priirtyshsk-Atasu section, which maxes out at 10 million tonnes. Russia has signaled its readiness to fund a new link into Kazakhstan, which could become a joint project with KTO and enhance long-term transit flexibility.
Geopolitically, the arrangement is delicate. Western observers may scrutinize Kazakhstan’s role to ensure Russian oil isn't being rerouted to circumvent sanctions. However, officials in Astana stress that all flows to China comply with a 2013 intergovernmental agreement and are transparently accounted for. Since the China-bound trade falls outside Western sanctions and pricing mechanisms, the risk of political fallout is limited.
Beyond KTO, national oil company KazMunayGas and related service firms would also benefit. Higher transit volumes mean more income for the state and expanded employment and tax revenues. While increased Russian supply to China could crowd out Kazakh barrels, analysts say China’s growing import demand provides enough room for both.
Over the long term, Kazakhstan stands to elevate its position as a regional energy transit hub. “KazTransOil is evolving from a national operator into a strategic player in Eurasian transit,” Teniz Capital notes. Stability, reliability, and careful navigation of geopolitical tensions will be key to securing this role.