Day: December 4, 2025

China is steadily expanding its influence in Central Asia’s oil and gas sector through multi-billion-dollar investments and strategic partnerships across the region. From Kazakhstan to Turkmenistan, Beijing’s state-backed companies are securing key assets and launching new energy projects, deepening China’s role in the region’s resource development.

China’s expansion is driven not only by resource demand, but also by Beijing’s push to cement long-term energy corridors that bypass maritime choke points. Central Asia’s pipelines offer China rare overland access to hydrocarbons, making the region a strategic priority in its broader energy security doctrine.

Kazakhstan Eyes Chinese Investment Amid Lukoil Sanctions

Kazakhstan may seek to transfer Russian company Lukoil’s stake in the offshore Kalamkas-Khazar oil and gas project to a new partner, with some industry channels, including the Telegram channel Energy Monitor, speculating about possible Chinese interest.

Lukoil, which has been targeted by Western sanctions, is reportedly planning to exit Kalamkas-Khazar Operating LLP, a joint venture with KazMunayGas (KMG). Each company currently holds a 50% stake. Some commentators have suggested that a Chinese investor could step in, but no replacement has been officially confirmed.

Seconded engineers from KMG Engineering are expected to be withdrawn from the project as of January 1, 2026, with several Kalamkas-Khazar staff members temporarily reassigned to other KMG subsidiaries until a new partner is confirmed.

The project is considered highly promising, with earlier estimates citing reserves of 81 million tons of oil and 22 billion cubic meters of gas. New exploration has identified additional oil-bearing structures. A final investment decision (FID) worth more than $6.5 billion was originally expected by the end of 2025. However, U.S. sanctions against Lukoil have delayed progress.

Located 120 km from the Kashagan field in the North Caspian Basin, the Kalamkas-Khazar block comprises the Kalamkas-More and Khazar fields. The site is situated in Kazakhstan’s Mangistau Region, 60 km from the Buzachi Peninsula.

KazMunayGas Chairman Askhat Khasenov previously confirmed that production was expected to begin in 2028-2029, with peak output reaching four million tons annually. Lukoil was sanctioned by the UK on October 15, followed by the U.S., complicating ongoing negotiations. Despite this, major projects where Lukoil holds minority stakes, such as Tengiz, Karachaganak, and the Caspian Pipeline Consortium, have not been impacted.

A Lukoil withdrawal would create a rare opening for China to secure its first significant offshore position in the North Caspian, a zone historically dominated by Western majors and Russian firms. Such an entry would represent a notable shift in Kazakhstan’s offshore partnership landscape.

Beijing’s Billion-Dollar Energy Deals in Kazakhstan

In September 2025, President Kassym-Jomart Tokayev announced a series of energy deals with China valued at $1.5 billion. During his official visit to China, more than 70 commercial agreements totaling approximately $15 billion were signed, several directly involving Kazakhstan’s oil and gas sector.

The breadth of agreements indicates that Kazakhstan is aiming to move beyond raw-resource exports and position itself as a regional petrochemical and processing hub integrated with Chinese industrial supply chains. Key projects include the construction of a gas chemical complex in the Aktobe Region to produce urea, with China National Petroleum Corporation (CNPC) expected to invest around $1 billion.

The China Development Bank has also signaled its readiness to finance the construction of trunk pipelines for transporting ethane and propane in the Atyrau Region, with investment volumes reported at around $530 million.

China’s CNOOC has been reported as receiving a contract for exploration and production at the Zhylyoi field in the Atyrau Region in June, and on December 3, KazMunayGas launched a joint venture with Sinopec to carry out geological surveys.

In October, KazMunayGas announced a new contract with a Sinopec subsidiary to explore and develop hydrocarbons in the Berezovsky area of the West Kazakhstan Region.

During a visit to China in August 2024, KMG Chairman Askhat Khasenov held high-level meetings with CNPC and Sinopec to discuss joint ventures in petrochemicals, geological exploration, refining, and transport. Among the projects was the urea complex, addressing Kazakhstan’s domestic demand of 350,000-400,000 tons annually.

Other initiatives include gas processing at the Urihtau field, expansion of the Shymkent Oil Refinery (PKOP LLP), and increasing capacity along the Atyrau-Kenkik and Kenkik-Kumkol oil pipelines. Additionally, talks covered plans to manufacture polyethylene, terephthalic acid (TFC), and polyethylene terephthalate (PET), with total investments that could exceed $8 billion.

Many of these projects fall under the China–Kazakhstan Industrial Capacity Cooperation framework, which Beijing uses to export Chinese engineering, technology, and financing models abroad.

Despite strengthening ties with Beijing, Kazakh officials stress that the country remains open to investment from the U.S., Russia, and the European Union. The development of Kazakhstan’s fuel and energy complex remains a central pillar of the national economic strategy.

China’s Deepening Energy Ties with Uzbekistan and Turkmenistan

China is also solidifying its energy partnerships with Uzbekistan. In October, Uzbekistan’s Ministry of Energy met with a CNPC delegation led by Chairman Dai Houliang to discuss projects such as the Central Asia-China gas pipeline, new gas condensate field development in the Bukhara Region, underground storage construction, and workforce training for the energy sector.

CNPC’s direct investments in Uzbekistan now exceed $5 billion. Through its joint venture with Uzbekneftegaz, CNPC has built parts of the Central Asia-China gas pipeline, developed the Mingbulak oil field, and modernized the Bukhara refinery.

Uzbekistan has embraced Chinese financing as it works to reverse declining gas output and manage recurring domestic shortages, making Beijing an increasingly vital partner in stabilizing the sector.

In Turkmenistan, CNPC is developing the fourth phase of the massive Galkynysh gas field, with a planned annual capacity of ten billion cubic meters. This project follows high-level talks between President Serdar Berdimuhamedov and Chinese President Xi Jinping in Beijing in September.

China currently imports about 40 billion cubic meters of Turkmen gas annually via three pipeline routes: A, B, and C. With the completion of Line D, total export capacity is expected to rise to 65 billion cubic meters per year.

Turkmenistan sends more than 80% of its gas exports to China, giving Beijing unparalleled leverage in the country’s energy sector and making the completion of Line D strategically important for both sides.

China’s Emerging Dominance in Central Asia’s Energy Architecture

Taken together, these developments show how China is embedding itself across the entire Central Asian energy ecosystem, not only as a buyer of hydrocarbons but increasingly as a financier, operator, and industrial partner. Beijing’s state-backed companies are moving upstream into exploration and production, downstream into petrochemicals and refining, and horizontally into pipeline construction, gas storage, and equipment manufacturing. This multi-layered presence is allowing China to shape investment decisions, infrastructure layout, and export routes across Kazakhstan, Uzbekistan, and Turkmenistan.

By leveraging long-term financing, rapid project execution, and integration into Chinese supply chains, Beijing is steadily building structural influence in a region where Russia once dominated and where Western companies now play more selective roles. The result is an emerging energy order in which China is positioned not simply as a commercial actor, but as a central external power capable of setting the pace and direction of the region’s resource development.

In the first 11 months of 2025, Kyrgyzstan’s Department of Plant Protection, Quarantine, and Chemicalization detected 35 cases of non-compliance with phytosanitary requirements at border checkpoints. As a result, 562.5 tons of agricultural cargo were denied entry and returned to the countries of origin.

According to the agency, authorities also blocked the import of more than 70,000 plant seedlings, over 11,000 flowers, and 136 cubic meters of lumber. Diplomatic notes regarding the violations were formally sent to China and the Netherlands.

Violating shipments were either returned, destroyed, or decontaminated, the agency said.

Officials emphasized that phytosanitary controls are a vital component of the country’s environmental safety strategy. These measures are intended to prevent the entry of dangerous quarantine organisms and to safeguard Kyrgyzstan’s agricultural sector and export capabilities.

Border Challenges with Kazakhstan and Russia

Despite efforts to maintain phytosanitary integrity, Kyrgyz exporters continue to face challenges at regional borders. A significant portion of Kyrgyz agricultural exports transit through Kazakhstan to reach Russia. However, Russian authorities frequently reject these shipments, citing non-compliance with their own import standards.

This has led to growing criticism of Kyrgyz representatives at the Eurasian Economic Commission, with farmers accusing them of failing to effectively advocate for the interests of domestic producers.

In response, the Department of Plant Protection and Quarantine has increased outreach to farmers and freight carriers, urging them to meet export quality standards and ensure that accompanying documents are completed correctly.

Compounding the issue, cargo delays at the Kyrgyz-Kazakh border remain common, with transport operators sometimes waiting for several weeks. Similar bottlenecks occur periodically at the Kazakhstan-Russia border. Many Kyrgyz businesses view these delays as unjustified, given that Kyrgyzstan, Kazakhstan, and Russia are all members of the Eurasian Economic Union (EAEU), which guarantees the free movement of goods among member states.

On December 3, President Shavkat Mirziyoyev reviewed proposals to expand production, increase exports, and reduce costs in Uzbekistan’s chemical industry, according to a statement from the presidential press service.

The government aims to double the size of the chemical sector by 2030, increase mineral fertilizer production by 1.5 times, and boost annual exports to $1 billion. Currently, 21 major projects worth $1 billion are underway, with an additional $4.5 billion in investments planned over the next three years.

Officials noted that many of Uzbekistan’s large chemical plants still rely on outdated equipment, resulting in high energy consumption and limited competitiveness. For instance, energy costs account for up to 55% of the production price of nitrogen fertilizers. The introduction of energy-efficient technologies and expanded digital management systems was emphasized as a key strategy to reduce production costs across the sector.

Despite strong global demand for chemical products and favorable logistics in neighboring markets, where potential demand is estimated at $1 billion, Uzbekistan has yet to fully tap into these opportunities. Officials proposed increasing domestic raw material processing to develop new products and at least double current export volumes.

In 2025, new production lines for “green” mineral fertilizers, cyanide salts, potassium xanthate, and potassium sulfate began operating in the Tashkent, Navoi, and Jizzakh regions.

In parallel, the government has set a target to produce 4.5 million tons of cotton next year. To support this goal, authorities have instructed officials to build strategic reserves of phosphorus fertilizers, maintain steady supplies of sulfuric acid to manufacturers, and begin issuing preferential loans to farmers for fertilizer purchases as soon as possible.

Mirziyoyev underscored the chemical industry’s strategic role in the national economy, directing officials to ensure reliable domestic supply, enhance export capacity, and create new jobs in the sector.

Uzbekistan’s textile industry has also experienced rapid growth. Since 2017, cotton yarn production has more than doubled, knitted fabric output has increased significantly, and garment manufacturing has expanded from under 1 billion units to over 3 billion. As a result, textile exports have risen from approximately $1.1 billion in 2016 to an estimated $2.8 billion in 2024.