Kazakhstan, the world’s largest landlocked country, has no coastline of its own (aside from what's along the Caspian Sea, a “giant lake” rather than part of the world ocean). As such, in maritime trade, it relies on neighbours’ ports to reach global markets.
Lately, Kazakhstan announced that it has struck a 27-year deal with Iran to build and operate a cargo terminal at the country's largest commercial port, Shahid Rajaee, located beside the city of Bandar Abbas on the Strait of Hormuz, the narrow waterway at the mouth of the Persian Gulf that provides shipping lanes to the Indian Ocean. Given the conflict and instability besetting Iran, however, it comes as no surprise that the determination of the cargo flows the terminal is to process and the political cover that will be needed to keep the facility running are much less settled than the paperwork.
Iran’s Ports and Maritime Organisation announced the project on June 28, with a build-operate-transfer (BOT) agreement subsequently signed on July 7. Under a BOT deal, a company builds a facility, runs it for a set period, then hands it to the host country. In this case, it means two years of construction followed by 25 years of operation, with commercial operations planned for the third year.
A few days before the announcement of the deal, Kazakh Deputy Prime Minister Serik Zhumangarin said the agreement was at its final stage and that the terminal would be built on 15 hectares using private funds.
The INSTC route
The terminal is meant to strengthen the International North-South Transport Corridor (INSTC), a multimodal network of rail, road and sea links connecting Russia with Iran and the Indian Ocean region. Oxford Analytica, a UK-based geopolitical analytical and advisory firm, wrote in an analysis published by Dow Jones on September 30 that the terminal plan is part of Astana’s longrunning effort to offset Kazakhstan’s landlocked geography. According to the firm, the terminal would open up a route providing for Kazakh exports to Gulf markets and possibly beyond. It could also serve as a spur off the Trans-Caspian International Transport Route (TITR), known as the Middle Corridor, which carries Chinese goods west across Kazakhstan and the Caspian Sea toward Turkey/Europe.
With a port terminal in Iran, Kazakhstan, located south of Russia and north of Iran and Turkmenistan, could more effectively tap into the International North-South Transport Corridor, or INSTC (Credit: IRNA).
Cargo would travel to the terminal mainly by rail. The Kazakhstan-Turkmenistan-Iran (KTI) railway, operational since 2014 and also connected to China, carries goods from Kazakhstan across Turkmenistan to Iran’s northern border. From there, the cargo bound for loading on ships at the terminal would have to cross the length of Iran by rail to reach Bandar Abbas on the southern coast.
Oxford Analytica said it is expected that the cargo is expected to be made up of grain, metals, industrial goods and containerised freight.
Cargo volumes versus reality
The firm wrote that the plan is to raise annual freight on this route to 20mn tonnes by 2030. Lidia Parkhomchik, an expert at Kazakhstan’s Institute of World Economy and Politics (IWEP), told state-run Kazinform in June 2025 that the figure comes from a 2024 roadmap signed by Russia, Kazakhstan, Turkmenistan and Iran. Under it, yearly capacity on the KTI eastern branch (the section running through Kazakhstan and Turkmenistan) is set to reach 15mn tonnes by 2027 and 20mn by 2030.
Sources give different figures for the current volumes that transit the route. Oxford Analytica put freight on the route at under 5mn tonnes a year.
Oral Toga, a senior researcher at the Centre for Iranian Studies (IRAM) in Turkey, told CASPIA Lab, an Azerbaijan-based research centre, that actual North-South traffic last year was around 3.5mn tonnes, and called the 20-million-tonne target a “strategic aim rather than a reflection of current reality”. Kazakhstan’s Ministry of Transport gave a figure for containers only. Its press service told CASPIA Lab that container traffic on the China-Kazakhstan-Turkmenistan-Iran route more than tripled in the first half of this year to 7,500 TEU. A TEU is a “twenty-foot equivalent unit,” the standard measure for shipping containers. It is equal to one small container.
In contrast to Toga and Oxford Analytica, Parkhomchik told Kazinform that annual cargo on the eastern branch had not exceeded 2mn tonnes, even in peak years.
Regardless, this would suggest that the route is a long way from the aforementioned 15mn-tonne target set for 2027. If so, it also could imply that reaching 20mn tonnes by 2030 might not be possible either. But Kazakhstan might not be worried about the short-term or medium-term success of the route, according to observers. Simply having the route as an option, amid an increasing need to diversify trade routes is enough, according to comments made by Kazakh political scientist Zhanat Momynkulov, reported by CASPIA Lab.
“Momynkulov emphasizes that Kazakhstan is not betting exclusively on the Iranian route. In the event of serious restrictions, Astana is also considering alternative projects, including developing routes through Afghanistan to Pakistani ports [on the Arabian Sea], as well as the prospects of using the [Iranian oceanic] port of Chabahar [on the Gulf of Oman with direct access to the Indian Ocean],” CASPIA Lab wrote.
The great advantage of Iran's sole oceanic port Chabahar is that its shipping lanes open out directly into the Indian Ocean (Credit: Amohammadid, cc-by-sa 4.0).
Along similar lines, Oxford Analytica framed the terminal as part of Kazakhstan’s “multi-vector” foreign policy. This is a longstanding approach familiar in Central Asia of balancing relationships with several major powers rather than depending on one, first used in diplomacy and the oil and gas sector and since extended to other parts of the economy.
Sanctions imposed on Russia after its 2022 full-scale invasion of Ukraine threatened to cut Kazakhstan off from Western markets –Oxford Analytica said this pushed Astana to apply the multi-vector approach to trade transport links with renewed vigour. The firm added that this means engaging with Tehran while at the same time courting Washington and European capitals, and maintaining close ties with Russia, particularly in nuclear energy and logistics.
The advisory company said that, given the war risks in the Gulf, the Iranian terminal project will likely progress slowly or lie dormant in the short to medium term. It also said that Astana is unlikely to abandon it, because doing so would run counter to the foreign policy Kazakhstan has followed since independence and because the war in Ukraine has made diversifying export routes more urgent.
Risks brought into stark relief
The quite obvious war risks faced by the terminal were brought into stark relief following the surprise attack launched by the US and Israel on Iran on February 28.
Within the first 12 hours of the military campaign, the Americans and Israelis carried out nearly 900 strikes on Iranian missiles, air defences, military sites and leadership figures. US President Donald Trump said the strikes were aimed at destroying Iran’s ballistic missile capabilities and navy, preventing the Iranians from ever acquiring a nuclear weapon and cutting off Tehran’s support for allied militant groups. A shorter war in June 2025 saw Israel strike Iranian nuclear facilities prior to the US joining in with its own strikes.
US forces have since carried out repeated air strikes in and around Bandar Abbas (see graphic below), a major commercial hub that also hosts the main naval base of the Islamic Revolutionary Guard Corps (IRGC), Iran’s top military force. In March, they hit Shahid Rajaee itself. Shipping around the port has also been disrupted by drones, navigation restrictions and blockades.
Iran closed the Strait of Hormuz shortly after the first strikes. The strait is an essential waterway as the only sea link to and from the Persian Gulf. The route to Bandar Abbas runs through it.
On April 8 the US and Iran agreed a two-week ceasefire, but Iran closed the strait again the next day, and on April 13 the US announced a blockade restricting access to Iranian ports. The ceasefire was extended and later formalised in a June agreement mediated by Pakistan. It broke down in July, after three ships were attacked over July 6-7 and the US stepped up strikes on Iranian targets.
Toga said the Kazakh deal was signed during a ceasefire, but that fighting resumed soon afterwards, shipping restrictions returned and strikes hit rail hubs and transport links near Bandar Abbas.
Tengrinews reported at the time that Kazakhstan’s Ministry of Trade and Integration said the Kazakh plot was not hit. Spokeswoman Toigul Zhubanisova said the strikes were pinpoint attacks that struck elsewhere and that Kazakhstan had only recently received the land, which came with no infrastructure built on it.
Caspian option has its own risks
Kazakhstan is planning direct shipping links with Iran via the Caspian Sea, the world’s largest inland body of water. Cargo would transit from the Kazakh ports of Aktau and Kuryk to Iran’s Amirabad and Anzali. Kazakhstan is also in talks on possible partnerships with Chabahar, which is Iran’s sole oceanic port. The arrangement could run both ways, with Kazakhstan considering offering Iran port space and berths at Aktau and Kuryk.
Yet even the Caspian route is mired in risks.
Political scientist Eldaniz Guseynov and energy policy expert Allen Alekeev wrote in an opinion piece for Forbes Kazakhstan that it potentially faces a capacity problem: ferry capacity is short, and the Caspian’s falling water level means 6,000-tonne vessels can load only about 5,200–5,300 tonnes at Aktau.
Conflict-related risks also abound from the Russo-Ukrainian War. Ukrainian drones can now reach the Russian ports on the Caspian and its shipping lanes. That raises the chance that any vessel can be hit by mistake.
Guseynov and Alekeev observed how a Ukrainian strike hit an Iranian commercial vessel on the Caspian on July 25 with a sailor killed in the action, and that the risk of attacks on ships in the region was no longer hypothetical.
Iran, of course, is an ally of Russia that provides arms to the Kremlin, therefore Iranian assets are clearly at risk of Ukrainian hostilities. An Iranian or Russian ship can be viewed as formally commercial while forming part of a supply chain for dual-use goods travelling between Iran and Russia. But clearly, the chance of the Ukrainian military misidentifying a ship means that, if the Caspian becomes a regular theatre of war, no ship will be guaranteed safe passage, Iranian, Russian or otherwise.
Private money won’t remove geopolitical risk
Zhumangarin said the terminal project will rely on private rather than state funding. Oxford Analytica’s assessment posits the view that this will keep the Kazakh state’s direct financial exposure low and give the government room to manoeuvre, but he pointed out that private money does not remove geopolitical risk.
Shipping lines, banks, insurers and freight operators base decisions on sanctions compliance and political stability, so a terminal operation can become unusable for a time even without a single building being damaged, the assessment said. Higher insurance premiums alone could erase much of the route’s cost advantage. The analysis also assessed that Astana’s deepening partnership with Washington will not fully insulate the terminal from sanctions, air attacks or blockades.
Along similar lines, Toga told CASPIA Lab that sanctions complicate financing, push up cargo insurance costs and deter big Western logistics firms.
In reporting Washington’s late August announcement of an “Economic Outcast” campaign against Iran, Forbes Kazakhstan said that an extension of secondary sanctions (penalties applied to third-country companies that do business with a sanctioned country) would be felt in shipping, aviation and gold.
The campaign focuses on intermediaries rather than Iran itself. Forbes wrote that the secondary sanctions could prove a dilemma for Kazakh and Uzbek banks, goods carriers and traders, and that a ceasefire might lower the military risk but not the prevailing sanctions risk.
As a consequence, one could suspect that financing is already a headache for the terminal project, though there are observers who do not treat the sanctions as too much of a big deal.
Momynkulov, for instance, views the sanctions as a surmountable constraint that demand flexible financing, including the use of settlements in national currencies, regional banks and carriers that already work the Iranian route.
The potential combined burden of the war and financing risks may, however, push Kazakhstan to look for alternate options for ocean access.
Alternatives to Iran
Kazakhstan in June signed a strategic partnership agreement with Georgia focused on transport and logistics, as well as several memoranda on Middle Corridor development. Georgia offers a Black Sea gateway to Europe. Kazakhstan has an interest in assessing options that could be presented by the country’s planned Anaklia deep-sea port that will take large container ships.
Moscow-based online media and information-analytical agency Vestnik Kavkaza reported on how Georgia’s current ports cannot deal with such vessels. Poti, the main container port, handles about 600,000 TEU a year. Port operator APM Terminals says that is the upper limit for the current infrastructure.
With Poti’s waters too shallow for the large vessels, containers are usually shipped to bigger Black Sea ports such as Istanbul or Romania’s Constanța, where they are moved onto smaller ships for the trip to Poti. That adds three to five days to the transit.
Might the planned Anaklia deep-sea port, to be located just north of Poti, be a better bet for Kazakhstan in maritime trade shipping? (Credit: Giorgi Balakhadze).
The new Anaklia port infrastructure would work with water at least 16 metres deep, so the large ships could dock directly. Georgia’s government has been searching for a private investor for the project.
Vestnik Kavkaza said the World Bank sees congestion that troubles Black Sea and Caspian ports as a key constraint on the Middle Corridor. It referred to a World Bank forecast that Middle Corridor volumes could rise from 3mn to 11-15mn tonnes by 2030.
For Kazakhstan, according to the Oxford Analytica analysis, ocean access via Pakistan is possibly a safer bet. That is despite the potential security risks transit routes to Pakistan through Afghanistan could pose. Reaching Pakistan via China is a taller task.
Islamabad is competing with Tehran for influence in regional connectivity and is keen to tap Central Asian efforts to escape geographic isolation. On July 29, Pakistan said it was ready to give Kazakhstan access to port facilities in Karachi, Port Qasim and Gwadar on the Arabian Sea, which provides direct access to the wider Indian Ocean.
Momynkulov told CASPIA Lab that Astana is weighing both routes through Afghanistan to Pakistani ports and the viability of the use of Chabahar.
James Durso, a US national security analyst, told Azattyq that if using Iran becomes effectively impossible for Kazakhstan, the main remaining option would be the route through Afghanistan to Pakistan, and from there to the ports of Gwadar or Karachi – but that would mean dealing with the Taliban. As things stand, only Russia recognises Afghanistan’s Taliban administration, but the Central Asian countries have been developing constructive diplomatic, trade and investment ties with the group.
Durso added that Trump had given Central Asia considerable attention, meeting its leaders in Washington and trying to make deals, but that a US sanctions campaign that disrupts Central Asia’s regional trade could push the region’s republics further toward China.
For Central Asia, Durso said, the key question will be whether the US is willing to grant exceptions to its sanctions for the sake of its trade transit development.