Kazakhstan expands its arrangement with Russia related to oil transit to China

The Senate, the upper house of the Kazakhstani parliament, has extended a contract between Russia and Kazakhstan on the transit of Russian oil to China through the territory of Kazakhstan. Over the period from 2024 to 2033, the country is expected to earn $1.7 billion.

In December 2013, the governments of Kazakhstan and Russia signed an agreement regulating oil transit to China. From 2014 to 2023, Russia exported 7 million tons of oil to China via this route.

In February 2023, Russian Rosneft and Chinese CNPC signed an agreement on the export of 100 million tons of Russian oil to China until 2034. As a result, Kazakhstan and Russia also amended their agreement in June 2023. 

According to the signed annex:

• The volume of oil transported through Kazakhstan will increase from 7 to 10 million tons per year;

• The cost of transit through the Kazakhstani part of the Tuymazy-Omsk-Novosibirsk pipeline will be set at $2.10 per ton;

• The cost of transit through Kazakhstan’s territory will be set at $15 per ton;

• Kazakhstan will impose zero VAT for services related to oil export via this route;

• The validity of the agreement will be extended to January 1, 2034.

«According to the tax legislation of the Republic of Kazakhstan and for VAT refund, the Kazakhstani side considers services related to oil export as international shipment. The two sides agreed to use the USD exchange rate set by the National Bank of Kazakhstan as of the payment day,» said Senator Suindik Aldashev.

The extended agreement also ensures that the Pavlodar refinery will obtain enough oil from the Omsk-Pavlodar pipeline to work at full capacity.

From 2014 to 2023, Kazakhstan facilitated the transit of 90 million tons of Russian oil to China with gross revenue reaching $1.3 billion.

This annex was also reviewed and ratified by the Senate.