Kazakh Senate ratifies agreement on Russian oil supplies to Kazakhstan

Kazakhstan Senate has adopted the draft law On ratification of the agreement between the governments of Kazakhstan and Russia on trade and economic cooperation in supplies of oil and oil products to Kazakhstan, Tengrinews.kz reports. “The agreement between the governments of the two countries was signed in Moscow on December 9, 2010. It outlines the trade and economic cooperation in common markets of oil and oil products and terms of oil products supplies to Kazakhstan to meet its domestic needs in the amounts specified in the indicative oil and oil products balances approved by the parties. The essence of the agreement lays in duty-free oil supplies from Russia to Kazakhstan. The protocol will expire on January 1, 2014,” Kazakhstan Oil and Gas Minister Sauat Mynbayev said. According to the Minister, starting from January 1, 2013, if Kazakhstan supplies oil, these operations will be performed on a parity basis through swap operations, but there should be a transition period before that. “Back in 2010 Russia agreed to supply 6-7 million tons of oil per year duty-free and without counter-supplies of oil until January 1, 2014. These supplies from Russia are allowing us to export our 6 million tons of oil and add these profits to our national fund and budget. The profits here are made of the export duty and the income tax. When we counter-supply 1.5 million tons of oil to Russia our budget looses the total of around $600 million. All these amounts are considered in the Finance Ministry’s budget,” Sauat Mynbayev said. He also added that Kazakhstan was switching to swap operations with Russia starting from January 1, 2014. According to the Minister, the negotiations are still in process and the terms are unknown yet. “Starting from January 1, 2014, the countries will be creating conditions for swapping of oil supplies between companies in equivalent volumes based on the agreements between the companies,” the Minister added. By Baubek Konyrov