Since Russia invaded Ukraine over six months ago, western oil companies have touted their disengagement from business with Russia. Some companies, including BP, Shell, and ExxonMobil, have offered humanitarian assistance to Ukraine. Other companies, such as Chevron and TotalEnergy, have delivered statements supporting the Ukrainian people.
These are positive actions, but they don’t change the fact that major western petroleum companies continue to do business with and in Russia, despite sanctions on such engagement. Western governments have sanctioned numerous Russian corporations and individuals, including major Russian oil companies and their leaders. Moreover, after President Vladimir Putin signed treaties to annex parts of Ukraine on Sept. 30, 2022, even more sanctions were put in place, including a ban by the United States on all Russian oil and gas imports.
Transport networks for oil and gas and other commodities are precariously close to the war zone, with major routes through the Black Sea. In the name of energy security, western oil companies are using the Caspian Pipeline to transport “Kazakhstani oil.” But they are also bringing home massive profits and contributing to the Russian economy.
In other words, western oil companies are complicit in Russia’s aggression toward Ukraine.
USING “KAZAKHSTANI OIL”
The Caspian Pipeline Consortium (CPC) operates a major oil pipeline from western Kazakhstan to the Port of Novorossiysk on the Black Sea in Krasnodar Krai, Russia. Engagement in the CPC pipeline provides revenue and support for Russian oil companies and oligarchs, many of which have been sanctioned by western governments. These include Rosneft, Lukoil, Transneft, and CPC Company, which, together, hold 51% of the shares in CPC. In addition, western oil giants Chevron, BG Overseas Holding, Shell, ENI, and other partners (including Kazakhstan’s Kazmunaigaz) are doing business with sanctioned Russian companies and their sanctioned oligarch leaders with close contacts with Putin and his inner circle by holding shares in CPC. Approximately 10% of the oil transported through CPC is Russian, and it is mixed with oil from the Kazakhstani fields, making it impossible to isolate them from each other.
Russia’s invasion of Ukraine is only the latest in a long line of engagements in which natural resources are used to finance military incursions.
Additionally, Kazakhstani oil and gas condensate are refined at Russian refineries, including in Orenburg, which is fully owned by Gazprom, another sanctioned entity whose head, Alexey Miller, is a close associate of Putin. In 2021, 45% of Russia’s federal budget came from the oil and gas sector. And, even with sanctions and the war in Ukraine, the oil and gas sector continues to boom.
US Chevron holds a 15% investment in the CPC pipeline and 50% and 18% shares, respectively in the Tengiz and Karachaganak fields in western Kazakhstan, which comprise a large part of the product transported through CPC. While Chevron downplays its investment in the CPC, it simultaneously states:
“The Caspian pipeline is a key export route for Kazakhstan’s crude oil to international markets and many countries rely on this critical transportation facility for their energy security. Given the current bans on Russian crude, access to Kazakh energy supplies remains very important to consumers around the world.”
In response to an inquiry from Crude Accountability and Kazakhstani environmental defenders, Shell indicated that it has no intention of divesting from its 7.5% share in the CPC pipeline.
Chevron, Shell, ENI, ExxonMobil, TotalEnergy, and other western companies are actively extracting oil from Kazakhstan’s largest fields — Karachaganak, Kashagan, and Tengiz. They call this “Kazakhstani oil,” or the CPC Blend. And indeed, the oil comes from Kazakhstani fields, and the Kazakhstani state oil company, Kazmunaigaz, owns a 10% share at Karachaganak, a 16.88% share at Kashagan, and a 20% share at Tengiz. Russia’s Lukoil owns a 13.5% share at Karachaganak, and Russia’s LukArco (wholly owned by Lukoil) owns a 5% share at Tengiz. So, from the perspective of revenue and profit, is this Kazakhstani oil?
The consortium members at these fields make money in three places: at the fields, as they collect fees to transport the oil through the pipeline, and at the end of the extraction/refining/transportation cycle, when they sell the final product on the consumer market. Calling this “Kazakhstani” oil is a convenient way for major oil companies to continue making a profit as they continue to do business with sanctioned Russian companies.
WEAK JUSTIFICATIONS FOR ENGAGEMENT
In mid-September 2022, media outlets reported that the Russian Black Sea fleet had moved a number of its Kilo submarines from Sevastopol, in occupied Crimea, to Novorossiysk, in Krasnodar Krai, Russia. This change, it is surmised, was in response to increased Ukrainian long-range missile capacity, which put the Kilo submarines at risk in Sevastopol. However, according to Naval News, the submarines can still launch Kalibr-cruise missiles at Ukraine from the vicinity of Novorossiysk because: “The Kalibirs, that mimic the capabilities of the US Tomahawk Land Attack Missiles, have an estimated range of 1,000 nautical miles.” Additional reporting identified 12 Russian warships “maneuvering” in the Black Sea, including three missile carriers with 24 Kalibr missiles.
Thus, the Black Sea and Port of Novorossiysk are currently not only home to major oil transport routes, but also an increasing military presence. Therefore, corporations like Chevron, which states in its “the Chevron Way” principles, that it encourages its business partners “to respect human rights and to adhere to applicable international principles” should be questioning the wisdom of its ongoing partnership with Russian state oil companies.
Russia’s invasion of Ukraine is only the latest in a long line of engagements in which natural resources are used to finance military incursions. Attempts by petroleum companies to justify engagement with authoritarian and colonial rulers in the name of energy security fall flat — as they do in the case of Russia.
Kate Watters is co-founder and executive director of Crude Accountability, a human rights and environmental NGO that works with activists and communities impacted by oil and gas development.