Kazakhstan Parliament ratifies agreement on Russian oil transportation to China via Kazakhstan

Kazakhstan’s Senators have ratified the agreement between Kazakhstan and Russia on cooperation in transportation of Russian oil to China via Kazakhstan in late June, Tengrinews reports citing IA Novosti-Kazakhstan.

“The sides are creating a legal framework for long-term transportation of Russian oil by an authorised Russian organization in the amount of 7 million tons per year with an option of increasing the amount to 10 million tons per year and granting Russia the right to access the Omsk (Russia) - Priirtyshsk (Kazakhstan) - Atasu (Kazakhstan) - Alashankou (China) oil pipeline system,” the statement says.

The cost of oil transportation along the route in the amount of 7 million tons per year will be approved for the entire term of the agreement by an authorized state body of Kazakhstan in US Dollars per one ton on the basis of the existing agreements of the organizations authorized by the parties.

In addition, the agreement provides that the value added tax is set to zero on oil transportation services along the whole Kazakh section of the pipeline. “Herewith, to compensate for the value added tax in accordance with the tax legislation of Kazakhstan, oil transportation services are qualified by the Kazakhstani side as international transportation,” the statement explains.

According to the Committee, the authorized organization of the Kazakh side is entitled to substitute the Russian oil with the Kazakh oil in the oil pipeline system in order to supply Kazakhstani oil refineries, provided that the authorized organization of the Russian side will receive the oil in the same amount and quality in the final destination of the transportation route (Alashankou) as specified in the agreement.

The Minister of Oil and Gas Uzakbai Karabalin previously stated that the "transportation will made on a paid basis. The tariff is set in the agreements between the authorised entities, and their will be a payment. As far as I can remember, the tariff is around 9.8 dollars per transported ton."

By Dinara Urazova