On January 10, 2025, the U.S. Treasury Department announced a new package of sanctions targeting Russia’s energy sector. The measures, which affect a wide range of organizations and individuals, are set to take effect on February 27.
While ostensibly aimed at undermining Russia’s economic interests amid the ongoing conflict in Ukraine, the sanctions are likely to have significant repercussions for Central Asian countries given their close economic ties with Russian energy giants, The Caspian Post reports citing The Times of Central Asia.
The sanctions package, viewed by some analysts as a final move by the outgoing Biden administration, could become a potent tool for the incoming administration to exert influence over Russian interests in Central Asia.
Sanctions on Gazpromneft Subsidiaries
The new sanctions include restrictions on Gazpromneft’s subsidiaries operating in Central Asia. Affected entities include Gazpromneft Tajikistan, Gazpromneft Kazakhstan, Gazpromneft Asia (Kyrgyzstan), and Munai Myrza (Kyrgyzstan).
According to the U.S. Treasury Department, Gazpromneft and its regional subsidiaries are considered critical sources of revenue that support Russia’s military efforts in Ukraine. In response, Gazpromneft characterized the sanctions as “unfounded, illegitimate and contrary to the principles of free competition.”
The impact of these sanctions, however, could prove severe for the economies of Central Asia, where Gazpromneft plays a key role in the energy sector. Gazpromneft Asia, for example, is a major supplier of petroleum products in Kyrgyzstan, making it a critical player in the domestic market. Sanctions on the company could disrupt fuel supplies and drive up energy prices in the country.
Gazpromneft Kazakhstan LLP, based in Almaty, operates a network of Gazpromneft-branded gas stations in Kazakhstan. While disruptions to fuel supplies in this network might not critically affect Kazakhstan’s economy - the largest in Central Asia - the sanctions carry broader implications.
Threats to Joint Projects
Beyond direct sanctions on companies, several executives of Russian oil firms actively operating in Kazakhstan have been added to the U.S. sanctions list. Key figures include Vadim Vorobyev, President of Lukoil PJSC and a member of Kazakhstan’s Foreign Investors Council. Lukoil is a strategic partner of KazMunaiGas (KMG) in production and exploration projects; Nail Maganov, CEO of Tatneft, which collaborates with KMG on projects such as Karaton Podsolovaya, Butadiene, and the Saran Tire Plant; Alexander Dyukov, the Chairman of Gazpromneft, and Sergei Kudryashov, CEO of Zarubezhneft, which has signed letters of intent for joint projects with KMG.
These sanctions could complicate existing partnerships and delay key projects, undermining Kazakhstan’s energy sector and its broader economic growth.
Sanctions on Rosatom and Nuclear Energy
Another significant element of the sanctions package is the inclusion of Rosatom executives on the U.S. sanctions list. This development poses challenges to Kazakhstan’s plans to establish an international consortium - including representatives from France, South Korea, China, and Russia - to build a nuclear power plant.
With Rosatom facing restrictions, the consortium is now likely to exclude Russia, potentially straining relations between Astana and Moscow. A global leader in nuclear energy, Rosatom was expected to play a central role in the project. Kazakhstan may now explore alternative arrangements, balancing its energy ambitions with the risk of alienating a key partner.
Exceptions and Strategic Implications
Interestingly, the U.S. sanctions package includes an exemption that allows American companies to provide oilfield services for the Caspian Pipeline Consortium (CPC) and Tengizchevroil LLP until June 28, 2025. Chevron, the largest private shareholder in both projects, has significant stakes in Kazakhstan’s Tengiz oil field, which accounts for approximately 20% of the company’s global reserves.
The CPC pipeline, which transports oil from Tengiz to Russia’s Novorossiysk port on the Black Sea, is similarly crucial for Chevron’s operations. The exemption ensures continuity for these projects, at least temporarily.
Observers, including the Kazakh oil and gas industry journalist Oleg Chervinsky, have speculated about how the incoming U.S. administration under Donald Trump will approach these exemptions after June 28. Writing on the Telegram channel “Oil and Gas of Kazakhstan: Facts and Comments,” Chervinsky suggests that the outgoing Biden administration’s sanctions may limit Trump’s ability to implement new strategies. Conversely, the sanctions could also provide the new administration with powerful leverage to pressure Central Asian states to distance themselves from Russia’s economic and energy sphere.
Complex Dynamics
The latest round of U.S. sanctions against Russia underscores the complex geopolitical dynamics in Central Asia. By targeting Russian energy firms and executives, the measures not only escalate the economic pressure on Moscow but also expose Central Asian countries to potential economic disruptions. As these nations navigate the fallout, they will need to carefully balance their ties with Russia, their energy needs, and their relationships with Western powers.
