Kazakhstan seeks ways to boost its oil export to Germany

Kazakhstan is going to export 100,000 tons of oil to Germany per month, although it is exploring the possibility to boost this export, Energy Minister Almasadam Satkaliyev said.

«We’ve started our export to Germany from a small amount of oil, about 20,000 per month. Now, after a new agreement has been signed, we are going to increase the oil export to 100,000 tons per month via the Druzhba oil pipeline,» he told journalists in the corridors outside the meeting between President Kassym-Jomart Tokayev of Kazakhstan and German President Frank-Walter Steinmeier.

According to Satkaliyev, Kazakhstan is exploring the possibility of boosting oil export to Germany as some of its oil refineries need new oil instead of crude oil Urals Russia used to export to Germany via the Druzhba pipeline. Given that Kazakhstani oil has similar characteristics it is a good option for such a replacement.

«We are exploring the possibility to boost oil exports in this direction. Once these exports are finished, we will be able to talk about its increasing,» the minister noted.

President Steinmeir is on a three-day official visit to Kazakhstan starting on June 19. He is going to visit the Mangistau region of the country to take part in the opening ceremony of the Kazakh-German Institute of Engineering and the official start of testing drilling at the green hydrogen production site of Svevind, a German-Swedish company.

On June 19, Deputy Head of KazTransOil (a subsidiary of KazTransGas) Eric Sagiyev said that oil exporters want the pipeline company to explore the possibility to boost oil exports toward Germany via the Druzhba pipeline.

«Concerning the oil export to Schwedt refinery in Eastern Germany, we have a 1.2 million tons quota from Russian Transneft for 2023. Therefore, we can export 100,000 tons of oil per month. By now, we have a request from Karachaganak Petroleum Operating for the export of 100,000 tons of oil toward Adamova Zastava, an oil transfer station, and then farther to Schwedt,» he said.

The official also mentioned that the amount of future oil export to Germany will be discussed in Q3 or Q4 this year.

«Currently we have several applications from oil exporters, who have repeatedly asked to boost the export, but this issue will depend on a size of a transit quota our Russian partners will give us,» Sagiev noted.

Given that KTO didn’t export oil to Germany in January and exported just 20,000 tons in February and March each, the company won’t be able to reach a target figure of 1.2 million tons of oil if it exports just 100,000 per month. Therefore, KTO is going to negotiate with Transneft the possibility to export more than 100,000 per month in the second half of the year.

«We have effectively removed all the obstacles and now the oil export toward Adamova Zastava is going smoothly. We have to talk to exporters and our partner Transneft to negotiate the possible increase in oil export can catch up with our schedule. We will most likely have to do this in the second half of the year,» Sagiyev said. He also noted that applications from Kazakhstani oil exporters will be needed for such a negotiation.

On the other hand, Kazakhstan received a 1.5-million-ton quota from the Baku-Tbilisi-Ceyhan oil pipeline. This export is occurring at the expense of Tengizchevroil’s resources.

«There is a bottleneck there regarding the quality of the oil. The Baku-Tbilisi-Ceyhan pipeline specializes in light oil from Azerbaijan, which is different from Kazakh oil in terms of quality. Therefore, there are some issues concerning the oil quality bank. If Kazakhstan succeeds in negotiating regarding the quality bank, then the role of the Baku-Tbilisi-Ceyhan pipeline will significantly increase or Kazakhstan,» he underlined.

In 2022, KazTransOil exported 13.1 million tons of oil abroad and transported 17.94 million tons within the country.

In April, Kazakhstan exported 50,000 tons of oil to Germany, while the export in March was just 20,000 tons. Over the period from February to April, Germany received 90,000 tons of oil from Kazakhstan.

In December 2022, KTO requested a quota for the export of 1.2 million tons of oil to Germany within this year, including 300,000 tons in the first quarter. The first bunch of oil was supposed to be exported to Germany in January. However, in reality, it happened only in February.

Kazakhstani oil goes to the PCK Raffinerie refinery in the city of Schwedt with a capacity of 11.6 million tons of oil products per year. The refinery used to be under the control of Russian Rosneft, but in September 2022 the Federal Network Agency of Germany took it under its own control.

The refinery in Schwedt was the only refinery in Germany that reported serious problems after the EU banned purchases of Russian oil. The reason was its history, as the refinery was specially designed for Soviet and then Russian oil and was directly connected with the Druzhba pipeline. The refinery is strategically important for Germany as it provides the capital city of Berlin with gasoline, diesel and jet fuel.

In November 2022, a few weeks before the EU oil embargo, the Schwedt refinery for the first time in its history imported raw materials through the Polish port of Gdansk and then received it through the Druzhba oil pipeline. The refinery also announced a plan to build an oil pipeline to the German port of Rostock.