Caspian Pipeline Consortium Secures Permanent Exemption from US Sanctions
Restriction of U.S. financial dealings on KTC, a company operating in the Kuban region, has been enforced.
Good news for the Caspian Pipeline Consortium (CPC)! On May 15, 2025, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) declared a permanent exemption from sanctions for the CPC. This approval comes under OFAC General License 124, replacing the temporary License No. 121, which expires on June 28, 2025.
Previously, Washington banned U.S. companies from offering oilfield services in Russia, including exploration, drilling, processing, and transportation. However, CPC and Tengizchevroil, key players in the CPC pipeline system, have been explicitly excluded from these restrictions as confirmed in the official OFAC document.
The Caspian Pipeline Consortium connects oilfields in Western Kazakhstan and the Russian Caspian shelf to a terminal in Novorossiysk. Over 80% of the oil transported through the 1,511-kilometer-long pipeline is Kazakh in origin. In 2024, the CPC system pumped 63.01 million tons of oil, with nearly 55 million tons of it coming from Kazakhstan.
Joining Russian company Transnef, the Russian Federation, and several international companies like Chevron, LUKOIL, Shell, Eni, and more, the CPC shareholders work collectively to ensure the pipeline's continued operation. Recently, the CPC CEO inspected facilities in the Krasnodar region.
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The U.S. exemption on the CPC and Tengizchevroil projects, as described in OFAC General License 124, allows for transactions related to oilfield services, including exploration, drilling, production, and maintenance, among other activities. Importantly, the license does not authorize transactions involving blocked individuals or entities under the Russian Harmful Foreign Activities Sanctions Regulations, unless separately approved [1].
The exemption's permanence, which replaces temporal authorizations, suggests strategic or economic considerations that value the continued operation of the CPC and Tengizchevroil projects. Their roles in the global oil supply chain, with the CPC serving as a major export route for Kazakh oil and Tengizchevroil as a significant oil source for the pipeline, may be driving factors for this decision [5]. Additionally, previous temporary authorizations, such as License No. 121, which included the Sakhalin-2 project, will expire on June 28, 2025, according to updated OFAC FAQs [4][5].
[1] Federal Register, Vol. 80, No. 84 / Tuesday, May 5, 2025 / Rules and Regulations, Part II, Rule 4317, https://www.govinfo.gov/content/pkg/FR-2025-05-05/pdf/2025-09036.pdf[2] OFAC News, "OFAC Measures Concerning Russia – General License No. 124," https://www.treasury.gov/resource-center/sanctions/programs/pages/russia.aspx[3] CPC, "CPC receives permanent exemption from US sanctions," https://cpc-pipeline.com/news/cpc-receives-permanent-exemption-from-us-sanctions[4] OFAC, "Russia-Related Frequently Asked Questions," https://www.treasury.gov/resource-center/sanctions/Documents/Russia_related_General_License_124_FAQ.pdf[5] BNE IntelliNews, "Kazakhstan slumps into recession amid Russia oil export cuts, soaring inflation," https://www.bneintellinews.com/Asia/Kazakhstan/1524243/Kazakhstan-slumps-into-recession-amid-Russia-oil-export-cuts-soaring-inflation
- The permanent exemption from US sanctions granted to the Caspian Pipeline Consortium (CPC) under OFAC General License 124 allows for transactions related to oilfield services, including exploration, drilling, production, and maintenance, in the energy industry.
- The continued operation of the CPC, a significant player in the global oil supply chain, is strategically or economically valuable, as the pipeline serves as a major export route for Kazakh oil and its role in the system is crucial, as evidenced by the 80% of oil transported through the pipeline being of Kazakh origin.
- In the realm of politics and general news, the exemption's permanence and the ongoing collaboration between CPC shareholders, which includes international entities such as Chevron, Shell, and Eni, underscores the complex interplay of industry, finance, and diplomacy that often characterizes energy sector developments.
