Petrochemicals and Oil Refining
How a By-Product is Becoming a Strategic Raw Material
Just twenty years ago, sulphur in Kazakhstan was seen as a burden. At Tengiz, it was stored in the open air, for which Tengizchevroil regularly incurred fines, even as it argued to the state authorities (ultimately with considerable success) that the material was not "environmentally harmful waste" but a commodity. Today, the situation has changed beyond recognition. Sulphur has become one of the key resources for the chemical industry, the uranium sector, metallurgy, and fertiliser production. Today, TCO is literally inundated with offers to buy it. Against a backdrop of rising world sulphur prices, geopolitical restrictions, and the launch of major chemical projects, Kazakhstan has found itself at the centre of a rapidly shifting global landscape.
A Transit Ban as a Symptom of Systemic Vulnerability
Risks, however, have also grown. In late May 2026, the Federal Agency for Railway Transport of Russia (Roszheldor) issued an order to halt the loading and carriage, over the Russian Federation’s railway infrastructure, of “wagons of sulphur travelling from the territory of the Republic of Kazakhstan to seaports of the Russian Federation and railway border crossing points of the Russian Federation, from May 24, 2026 for a period until further notice.”
Formally, no reasons were given. As industry experts suggest, the decision was most likely driven by congestion on Russia’s railway infrastructure, especially the approaches to the ports of the Azov-Black Sea and Baltic basins, as well as by a desire to free up port capacity from the accumulated Russian sulphur amid sanctions on its export.
This unexpected ban came as a worrying signal. For decades, Kazakhstan had built its sulphur exports on Russian logistics, and that dependence had seemed stable. Yet a single administrative decision in Moscow proved capable of paralysing exports of millions of tons of product.
According to Argus, of the 1.2 mln tons of sulphur sold by TCO in the first half of 2025, around 1 mln tons were shipped specifically in transit through the Russian Railways (RZD) network. The Russian ban was thus not merely a technical episode but a demonstration of a strategic vulnerability that could resurface at any moment.
Production Is Growing Faster Than Export Capacity
Kazakhstan produces around 4 mln tons of sulphur a year, and these volumes are inevitably rising along with oil and gas output. Following the completion of the Tengiz Expansion Project, production could increase to 5-6 mln tons per year. This is a natural process: the more hydrocarbons are extracted, the more sulphur is formed as a by-product.
A key question arises: how can these volumes be sold if export routes are limited and the path through Russia has, as it turns out, proven unstable? An alternative route to China exists, but its capacity is extremely limited. Even under a favourable scenario, Kazakhstan will be able to redirect no more than 1.5 million tons of sulphur a year. Increasing that volume will require new terminals, warehouses, a fleet of wagons, and the expansion of railway crossings, in other words, years and investment.
The second route for Kazakhstani sulphur to world markets runs through the Georgian Black Sea ports of Batumi and Poti. The Batumi seaport is operated by KazTransOil, a subsidiary of the national company KazMunayGas, and this transport corridor provides Kazakhstan with access to global trade and economic markets.
However, the total costs of supplying sulphur from the Kazakhstani stations of Kulsary (the dispatch station for Tengiz sulphur) and Karabatan (for Kashagan sulphur) to Batumi based on ferry transport across the Caspian will double, Argus has calculated.
The world sulphur market is currently experiencing high volatility. Disruptions to supplies through the Strait of Hormuz, the disabling of Russian processing capacity due to UAV attacks, and rising demand for battery materials and fertilisers are all making prices unpredictable.
Experts note that if China restricts exports of sulphuric acid, the shortage will intensify and prices will rise even more sharply. Kazakhstan, as a major sulphur producer, could benefit from high prices, but logistical constraints may deprive the country of the chance to take advantage of the favourable conditions.
How TCO Proved That Sulphur Is a Commodity
Subsalt Tengiz crude contains around 13% hydrogen sulphide. When the oil, together with associated gas, arrives at the plant, it is separated, and the hydrogen sulphide is sent to a unit where it is broken down into water and sulphur. After that, the liquid sulphur is sent for granulation or poured into tanks or onto sulphur blocks. As a result, in addition to refined oil, pure elemental sulphur is also produced.
With the collapse of the Soviet Union, the chemical industry in the Republic was left effectively destroyed. Sulphur lost its consumers and began to be stored on open sites near the plant. By the time the Tengizchevroil joint venture was formed in April 1993, the first yellow "pyramids" had already grown up here. TCO steadily ramped up capacity, annual oil production was measured in millions of tons, and sulphur output increased accordingly. The peak figure was recorded in 2006: more than 9 mln tons had accumulated in the sulphur blocks. The large sulphur reserves began to worry the public, especially environmental communities. And although open storage of sulphur is a globally accepted practice, it was becoming clear that the issue had to be resolved. Kazakhstan had no processing capacity for sulphur, and the environmental authorities classified it as "production waste," while TCO was required to "take measures to eliminate the accumulated sulphur waste."
In 2006, on the initiative of the Ministry of Energy and Mineral Resources together with the Ministry of Environmental Protection, an interdepartmental coordination council was set up to study the impact of open sulphur storage on the environment, which also included representatives of the Ministry of Health, the akimat of the Atyrau region, KazMunayGas and TCO.
To study the question, five Kazakhstani research institutes were engaged, along with one foreign institute, the only sulphur institute in the world, located in Canada, in the city of Calgary. The results of the study showed that sulphur storage at Tengiz is carried out in accordance with the requirements of Kazakhstani legislation and international practice, and that no environmental or public health impacts were detected.
World demand for sulphur spurred the conclusion of contracts with its consumers. In March 2015, the last reserves of lump sulphur were removed from the sulphur blocks of the Tengiz field, and today it is sold straight from production, without stockpiling.