ALMATY – Kazakhstan’s oil sector experienced a period of lower production in the first seven months of 2026, with production falling 8.9% to 53.2 million tons amid disruptions at the Tengiz field and the country’s main export route through the Caspian Pipeline Consortium (CPC). Yet the decline in production has not translated into a comparable fall in export revenues or broader economic activity, highlighting both the economy’s resilience and its continued vulnerability to oil infrastructure disruptions.
Photo credit: CNBC
According to data from the Bureau of National Statistics, oil and gas condensate production totaled 45.7 million tons in the first half of the year, down 8.4% year-on-year, while July output fell by 12%.
The temporary disruptions exposed a structural challenge for Kazakhstan’s energy sector. The CPC route accounts for more than 80% of the country’s oil exports, meaning problems affecting a single export corridor can quickly spread from logistics into production. The January outage at Tengiz had already weighed heavily on first-quarter performance, while the July attacks on tankers near the CPC terminal created another constraint as production recovered.
Production losses test oil sector
The impact was visible across the extractive economy. Mining and quarrying output declined by 4.4% in January-July, while pipeline freight turnover fell 2.9%. Industrial production in the oil-producing Atyrau Region decreased by 7.8%.
The decline was even sharper in some parts of the energy sector. Marketable gas production fell 23% to 12.2 billion cubic meters, while oil refining decreased 2% to 8.98 million tons. Coal was the exception, with production rising 12% to 58.9 million tons.
The most striking contrast is between oil production and Kazakhstan’s trade performance. Foreign trade turnover reached $71.8 billion in January-June, up 7.2% year-on-year. Exports increased 8.6% to $40.3 billion, while imports grew 5.4% to $31.5 billion. Oil and crude petroleum products remained the country’s largest export category, accounting for 46.5% of total export revenues, or approximately $18.8 billion.
This means Kazakhstan’s exports grew despite lower physical oil production. According to the data, June accounted for 82% of the total increase in exports during the first half, suggesting that higher prices and stronger shipments during that month helped offset earlier production losses.
The pattern demonstrates an important distinction: a decline in oil production does not automatically result in an equivalent decline in export revenue. Export earnings depend not only on volumes but also on prices, shipment timing and the ability to use available transport infrastructure.
However, the CPC disruptions also showed the limits of this resilience. When the consortium temporarily stopped receiving crude in July, Kazakhstan had to directly reduce production to prevent storage facilities from filling up.
Search for alternative routes
The disruptions have also renewed attention to Kazakhstan’s export diversification. Experts say in the short term, there are no viable alternatives for Kazakhstan. Aruzhan Meirkhanova, a senior analyst at Outpost Eurasia, said the key task now is adaptation.
“Existing routes cannot absorb comparable volumes, are more expensive and involve more complex logistics. Realistically, the immediate priority is adaptation,” Meirkhanova told The Astana Times.
Supplies to Germany through the Atyrau-Samara-Druzhba route have been temporarily suspended since May because of technical restrictions on the transit side. As a result, Kazakhstan has continued to rely primarily on Russian ports and the CPC system.
Meanwhile, shipments through the Baku-Tbilisi-Ceyhan pipeline increased. Kazakhstan sent 155,000 tons through the route in July, compared with 138,000 tons a year earlier.
The increase is relatively modest compared with the volumes transported through CPC, but it illustrates Kazakhstan’s broader effort to maintain alternative export options. The challenge is that alternative routes cannot yet fully replace CPC in terms of capacity. As recent disruptions demonstrated, Kazakhstan’s landlocked geography continues to make export diversification as much an infrastructure issue as a trade policy objective.
Oil remains financially important
Lower production has not necessarily weakened the oil sector’s financial contribution. Direct tax revenues from the oil industry to the National Fund increased 26.1% year-on-year to 783.82 billion tenge (US$1.6 billion) in the first quarter. Mineral extraction tax revenues increased more than fivefold to 167.43 billion tenge (US$349 million).
KazMunayGas also reported a sharp increase in profitability in the first quarter. Its net profit nearly doubled to 373 billion tenge (US$777 million), while revenue increased 10.1% to 2.5 trillion tenge (US$5.2 billion).
The figures suggest that oil companies and the state can maintain or even increase financial revenues during periods of lower production, particularly when prices and tax conditions are favorable. But this model remains exposed to volatility because the underlying physical production and export infrastructure remains vulnerable.
Can growth continue beyond oil?
Kazakhstan’s economy grew 4.1% in the first half of 2026 despite the 8.4% decline in oil production, with non-commodity sectors playing an important role in supporting growth. Manufacturing continued to expand, while the extractive sector dragged on overall economic performance.
This provides stronger evidence of diversification than simply comparing GDP growth with a decline in oil production. Growth in manufacturing, construction, trade, transport and other non-resource sectors can help cushion the economy when extractive industries weaken.
Still, 2026 has not eliminated Kazakhstan’s dependence on hydrocarbons. Oil accounted for nearly half of export revenues in the first half, and disruptions at Tengiz and CPC affected national industrial production, regional economies and the government’s production outlook.
