Kazakhstan may boost its oil exports to China fourfold

According to Deputy Energy Minister Yerlan Akkenzhenov, Kazakhstan plans to gradually increase its oil exports to China.

«Currently, we export about one million tons of oil to China annually. We plan to gradually boost this export. Kazakhstan is also interested in this and we will try to meet this demand,» he said on the sidelines of the Kazakh-Chinese Business Council meeting.

Akkenzhenov told Kursiv that Chinese oil companies operating in Kazakhstan would like to increase their oil exports to China. Since Kazakhstani refineries buy oil at a price much lower than the export price, almost all oil companies aim to export as much oil as possible, reserving just a small fraction of their output for the domestic market. The Ministry of Energy of Kazakhstan believes that internal demand for oil products must be supplied first.

«Our Chinese colleagues ask us to foster oil exports. This will depend on future oil output. The more oil the country produces, the more flexible we’ll be in enhancing our exports abroad, though not at the expense of internal needs,» he said, emphasizing that supplying oil products to the domestic market is the top priority for his agency, while exporting oil abroad is of secondary importance.

Currently, the ministry and Chinese companies are discussing possible changes in the oil supply schedule to find more room for their oil exports within Kazakhstan’s overall oil output.

The vice minister also mentioned that Kazakhstan has ratified an agreement to transit ten million tons of oil from Russia to China per year for the next ten years. This deal allows Kazakhstan to supply four million tons of Russian oil to the Pavlodar refinery, offsetting this with Kazakhstani oil transported via the Atyrau-Samara pipeline.

At the end of the business council meeting, the Ministry of Energy and Chinese CNPC are expected to sign a cooperation agreement. The two sides plan to combine efforts to raise the Shymkent refinery’s capacity from 6 to 12 million tons per year and expand the Kazakhstan-China oil pipeline and the Beineu-Bozoy-Shymkent gas pipeline.

«We are discussing boosting oil supplies to the Shymkent oil refinery and enhancing oil exports to the People’s Republic of China. Another important task is the expansion of the Beineu-Bozoy-Shymkent gas pipeline. This pipeline is crucial for supplying gas to our southern regions and for boosting the transit of Turkmenistani gas to China,» Akkenzhenov said.

The official also highlighted that the two countries are closely cooperating in the petrochemical industry as well.