Kazakhstan and Russia agreement on cooperation in the field of oil and oil products ratified by the Senate

ASTANA. March 7. KAZINFORM - The plenary session of the Senate adopted the law "On ratification of the Agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on trade and economic cooperation in the field of oil and petroleum products supply to the Republic of Kazakhstan."

"The main point of the Agreement is implementation of duty-free oil supplies from the Russian Federation to the Republic of Kazakhstan until January 1, 2014," said the Minister of Oil and Gas Sauat Mynbayev while presenting the bill.

According to him after January 1, 2014 the mutual supply of oil when carried out is supposed to be done in the mode of swap. Then Kazakhstan and Russia will be self-sufficient in oil, and swap transactions will decide only the logistics supply chain.According to him after January 1, 2014 the mutual supply of oil when carried out is supposed to be done in the mode of swap. Then Kazakhstan and Russia will be self-sufficient in oil, and swap transactions will decide only the logistics supply chain.

S. Mynbayev said that during the period of duty-free oil supplies from Russia to Kazakhstan, that is before January 1, 2014, the Agreement provides for compensation for loss of the Russian budget on oil and oil products to Kazakhstan. Prior to January 1, 2014 Kazakhstan receives from Russia duty-free 6-7 million tons of oil regardless of the swap transactions. In this case, the state budget of the Russian Federation is losing about $ 2.4 billion a year, and on this basis the Russian side is seeking budget losses in the period of 2012-2013. In addition, light oil and heavy fuel oil free of duty are also imported from Russia to Kazakhstan, and the loss of Russia's budget is still about $ 500 million. The document provides for the delivery of Kazakhstan oil to Russia in the amount of about 1.5 million tonnes to compensate for the loss of the Russian budget.

And the loss of tax-free supply of oil budget of Kazakhstan will amount to about $ 600 million. That loss will be compensated by shifting certain amount of gas from Russian market to the Chinese market and that will allow to receive a higher price than for export to Russia.

The Agreement between the two governments was committed in Moscow on December 9, 2010.