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The United States Treasury ‘Office of Foreign Assets Control’ (OFAC) has issued a license permitting transactions involving Russia’s Lukoil and Rosneft related to the operation of the Caspian Pipeline Consortium (CPC) and the Tengiz and Karachaganak fields in Kazakhstan.
The license foes not require any “transactions for the sale, disposition, or transfer of any interest” in these projects, and authorizes all transactions involving provision of oilfield and oil transportation services – provided they are in compliance with the price cap – related to these three projects that had originally been prohibited by the previous U.S. administration on January 10, 2025.
Previously, temporary exemptions were made from this prohibition for the CPC, Tengiz and the Sakhalin-2 projects, the latter of which is still in the process of being restructured.
The US Treasury included Lukoil in its sanctions list on October 22 and issued a license to wind down business with the company by November 21. However, international projects in Kazakhstan involving Lukoil, such as CPC and Tengiz-Chevroil were exempted from the sanctions.
The CPC pipeline connects oil fields in western Kazakhstan and Russian offshore fields in the Caspian Sea to a marine terminal in Novorossiysk. It is the main export route for Kazakh oil, accounting for more than 80% of Kazakhstan’s pipeline crude exports. The pipeline system can now annually carry 72.5 million tonnes of crude from Kazakhstan and up to 83 million tonnes through Russia.
The CPC’s shareholders, besides Russia and Russian oil pipeline monopoly Transneft, are Kazakhstan with 20.75% (represented by KazMunayGas with 19% and Kazakhstan Pipeline Ventures LLC with 1.75%); Chevron Caspian Pipeline Consortium Company with 15%; Lukoil International GmbH with 12.5%; Mobil Caspian Pipeline Company with 7.5%; Rosneft-Shell Caspian Ventures Limited with 7.5%; BG Overseas Holding Limited with 2%; Eni International N.A. N.V. with 2%; and Oryx Caspian Pipeline LLC with 1.75%.
Tengiz-Chevroil’s shareholders are Chevron with 50%, ExxonMobil Kazakhstan Ventures Inc. with 25%, Kazakhstan, through KazMunayGas, with 20% and Lukoil with 5%. Both Chevron and ExxonMobil are US based companies. Their largest shareholders include US investment funds The Vanguard Group, BlackRock, Berkshire Hathaway, and the State Street Corporation. The Tengiz oil and gas field is one of the largest in Kazakhstan, with oil reserves of 3.1 billion tonnes.
It is arguable that the US political imposition of sanctions against Russia are additionally influenced via the economic interests of these types of funds. All are additionally invested in the weapons manufacturing sectors.
The Karachaganak field is one of the largest in the world, with oil and gas reserves of 1.2 billion tonnes and 1.35 trillion cubic meters, respectively. Karachaganak is being developed under a 40-year production sharing agreement signed in 1997 by the consortium KPO, which is owned by Shell, (through wholly owned affiliate BG Karachaganak Limited); Eni; and Chevron; in addition to Russia’s Lukoil and Kazakhstan’s KazMunayGas.
Shell are a British company, albeit with shareholder interests similar to Chevron and ExxonMobil, while Eni are Italian. It means that the British and Italian governments themselves continue to have joint venture agreements with Russian oil companies.
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