ASTANA — Due to geopolitical shifts, the increasing traffic volumes along the Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor, have captured the interest of global players. Major transport companies are eager to establish a presence on new trade routes passing through Central Asia, the Caspian Sea, and the South Caucasus. These routes aim to simplify the movement of goods through these regions by increasing demand for maritime and logistics services. A recent report by Kazinform news agency discusses the transportation cooperation between Kazakhstan and the United Arab Emirates (UAE), the logistical opportunities the International North-South Transport Corridor (INSTC) presents to Kazakhstan, and the benefits participants gain from these corridors.
Middle Corridor Map. Photo credit: Logist Today
Kazakhstan and the UAE’s increasing oil transportation cooperation
Kazakhstan and the UAE have established cooperation in oil transportation across the Caspian Sea from Kazakh ports to Baku, the capital of Azerbaijan. This collaboration is based on the 2023 agreements between Abu Dhabi (AD) Ports Group and the State Oil Company of Azerbaijan (SOCAR), as well as UAE’s operations in Georgia.
SAFEEN Group, part of the Cluster of Maritime Transport and Operations of AD Ports Group, signed a memorandum on maritime and shipping sectors cooperation in the Caspian Sea with SOCAR on Oct. 18, 2023. The memorandum covers oil and petroleum products delivery, infrastructure development, and cargo transportation.
In the same year, AD Ports Group, in cooperation with the KazMorTransFlot national shipping company, announced the acquisition of two modern vessels for $35 million on Nov. 26. These vessels are designed to transport Kazakh oil through the Caspian Sea and operate through the Caspian Integrated Maritime Solutions. The oil tankers were named Liwa and Taraz, in honor of the ancient cities in the UAE and Kazakhstan, respectively.
The vessels will operate along the strategic route through the Caspian Sea, functioning as shuttle tankers transporting Kazakh oil to Azerbaijan and contributing to the diversification of Kazakhstan’s oil transportation routes.
“Such cooperation will allow efficient and safe transportation of Kazakh oil through the Caspian Sea for further shipment to international markets and is the first step in long-term cooperation with AD Ports Group,” said Aidar Orzhanov, the CEO of KazMorTransFlot.
Kazakhstan’s oil transportation route to Europe
Kazakhstan primarily transports oil through Russia via the Caspian Pipeline Consortium (CPC) oil pipeline. Since 2022, due to geopolitical challenges, Kazakhstan has periodically faced issues with pumping oil through the CPC. This has prompted Kazakhstan to deliver some oil by tankers to Baku and further to Europe via the Baku-Tbilisi-Ceyhan (BTC) oil pipeline starting in 2023, although this does not involve large volumes.
In 2023, approximately 1.4 million tons of oil were transported. This year, the volume is forecasted to reach nearly 1.8 million tons. According to the agreement with SOCAR, in 2025 Kazakhstan can send 2.2 million tons through the Caspian Sea via BTC.
By then, it is expected that the issue, which has been idle since 2022, regarding Kazakhstan’s use of the Baku-Supsa oil pipeline with a capacity of five million tons per year will be settled. Kazakhstan has declared its readiness to supply about three million tons of oil annually to an oil pipeline stretching to the Black Sea port of Georgia.
Kazakhstan could then send over five million tons of oil annually through Baku starting in 2025. In comparison, more than 50 million tons of Kazakh oil per year go through the CPC, which is technically unlikely to significantly exceed this figure.
New trade routes between the Middle East and Central Asia
Kazakhstan regularly emphasizes the importance of developing the transit route of Kazakh oil through the Caspian Sea and the infrastructure of the Middle Corridor.
In 2023, AD Ports Group signed an agreement with Kazakhstan Temir Zholy (Kazakhstan Railways JSC) to create a joint venture to improve rail and sea transportation and operations in Kazakhstan’s ports and accelerate digital transformation and connectivity in Central Asia. AD Ports Group holds 51 percent of the shares, while Kazakhstan Temir Zholy holds 49 percent.
AD Ports Group received carte blanche to create a regional logistics hub. The regional CEO of AD Ports Group, Abdulaziz Zayed Al-Shamsi, announced the creation of new trade routes between the Middle East and Central Asia through the Caspian Sea, South Caucasus, and the Black Sea. These routes will simplify the movement of goods through these regions and influence the global maritime industry by increasing the demand for marine and logistics services.
Furthermore, in March 2024, AD Ports Group bought a 60 percent stake in the Tbilisi dry cargo port for $16.5 million.
“AD Ports Group, with assets in Pakistan, Spain, Jordan, Egypt, Congo, Brazzaville, Angola, Uzbekistan, Kazakhstan, Georgia and the United Arab Emirates, is well positioned to benefit from today’s challenging global markets,” said Mohamed Juma Al Shamisi, the CEO of AD Ports Group, summarizing the results of the first quarter of AD Port Group’s operations in May 2024.
The company’s revenue in the specified period amounted to $1.06 billion, a twofold increase compared to the first quarter of 2023.
AD Ports Group announced proposals to the government and SOCAR on the possible replenishment of the SOCAR’s and Azerbaijan Caspian Shipping Company’s fleet and assistance in port infrastructure development during the negotiations in Baku on Feb. 17.
In August 2023, the Kazakh company Semurg Invest and AD Ports Group UAE signed an agreement to construct a grain terminal and a multifunctional marine terminal, Sarzha, in the Kuryk seaport. This project is one of the largest infrastructure projects in Kazakhstan and is of significant interest to foreign investors.
INSTC opportunities for Kazakh exporters
Kazakhstan participates in discussions on the development of the INSTC, initiated by Russia in 2000. Although the Northern European countries have withdrawn from the INSTC, Russia expects to develop it with the support of Commonwealth of Independent States (CIS) partners, as well as Iran (the western branch of INSTC), Pakistan and India (the eastern branch of INSTC).
The INSTC’s route through Kazakhstan, Uzbekistan, Afghanistan, Pakistan, and India does not consider the transportation of oil cargo but can be useful for the transportation of food and dry goods.
In early May, Russian Railways Logistics sent the first train with oat flakes and cereals from the Yuzhnouralsky center in Russia to the port of Mundra in India, via the eastern branch of the INSTC, through Kazakhstan, Turkmenistan, and Iran.
This initiative, which began in the spring of 2023, can open up significant opportunities for Kazakh exporters, including supplying goods through the Caspian Sea to Iranian ports and further to Chabahar, ports of the UAE, India, Pakistan, Africa and Europe. Kazakhstan and Azerbaijan are developing their transport and logistics capabilities within the framework of the Middle Corridor and the INSTC projects, considering the geopolitical situation and national interests.
The story was originally published in Kazinform.
