The Peter Zeihan Podcast Series - Say Goodbye to Kazakhstan Oil || Peter Zeihan

Episode Date: July 3, 2026

The Ukrainian strike on the Orenburg natural gas processing complex could impact more than just Russia. Unfortunately, Kazakhstan's energy industry is highly dependent upon that facility.Join the Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://bit.ly/4wdAytr

Peter Zion here coming to you from Colorado. Today is 24th of June in the news is that the Ukrainians have just blown up part of the natural gas processing center at a place called Orenberg, which is in southern Russia, hard up on the Kazakh border. Now, Orenburg is not something that's industrially central for the Russians, but it is for Kazakhstan. You see, when the Soviet system ended, there wasn't a lot of oil or natural gas production in Kazakhstan proper. And as nobody wanted to go into Russia in the 1990s, Kazakhstan seemed a lot more stable. So ExxonMobil, Conical Phillips, Chavron, all the big major companies. And since then, the Indians, the Chinese, and others have all poured into Kazakhstan because they just find it easier to work with the Kazakhs than the Russians,

because the Russians are always insisting on bribes and their infrastructure isn't maintained, and the rule of law is weak. Not that Kazakhstan is, you know, Delaware or anything. It's probably more like New Jersey. But it's better. Anyway, infrastructure was built out bit by bit, oil pipelines, wells, all that good stuff. But it can take decades to really build out a mature natural gas and oil industry, especially when some of the fields are more complicated.

So across the border from Orenberg is a place called Krochkanat, which is one of my favorite words ever. It is a sour gas, wet gas field that produces liquid-pride petroleum gas like propane, as well as natural gas as well as oil. But all of it is really, really rich in sulfur. So you can't just put it into a normal pipeline. So what they do is they put it into a cluster of short pipelines that go across the border to Orenburg in Russia where the existing infrastructure from the Soviet period

is already in place and it can pull the sulfur out of all the products. So once you do all the math, it comes out to about a quarter of a million barrels per day of crude and about a billion cubic feet of natural gas that get processed in Orenberg and then are shipped through the Russian network to the rest of the world. And now it's on fire. What the Ukrainians are doing is basically systematically destroying any infrastructure that's within about 700 miles of their borders, anything that gives the Russians any sort of economic wherewithal. And so what has been happening

between Orenberg and Karachkaner is very simple. Krakhanat wouldn't be viable without the Russians. And so the Russians take the lion's share of the profits because it has to go through their processes and facility and their infrastructure to get to the wider world. And honestly, almost all Kazakh and oil and natural gas output falls into that category. Foreigners do the investment. The Kazakhs own it technically, but most of the benefit goes to the Russians because they're the interface with the wider world. Well, the Ukrainians have now decided that that program no longer works, and so Orrneberg is in flames. Assuming for the moment that the Americans and the Europeans and others do not convince the Ukrainians to not do this, and so far everyone's been silent, you should expect to see more and more attacks like this on Russian infrastructure that largely exists to serve Kazakh needs. And the single largest place where the Ukrainians can have an outsized impact is going to be something called the Caspian Pipeline Consortium, which takes crude oil from places like Tenghis and Khashogans.

on the Caspian Sea, ships are through Russian territory to export facilities on the Black Sea. And while as Kratchkanat is only a quarter of a million barrels per day, Tenghis alone is over a million. And so we're talking about secondary hits on Kazakh production that really has nowhere else to go. And that, more than anything that the Ukrainians have done to Russia direct, can just have a huge impact because all they have to do is take out the pumping stations or a section of the pipeline or if they're getting really. chunky some of the port facility in places like Nova Assis, which they've already been hitting over and over and over. Anyway, bottom line, Kazakhstan's oil and natural gas output was never going to last

long term. It's dependent on too many pieces in too many countries and too many basins, because once the crude actually hits the Black Sea, it then has to go out of the Black Sea through the Turkish Straits, through the Red Sea, right by all the pirates in Somalia, across the entirety of the Indian Ocean Basin to get to Asia. So, you know, none of this was ever going to last. But the Ukrainians are proving that it can stop it almost right at the starting point, and we should see a lot more attacks like that in the days and weeks to come.