Oil Chronicles
Oil Chronicles. January 2024
January 2024

Starting January 1, KazTransOil increased the tariff for pumping Russian oil through the Kazakhstani section of the TON-2 pipeline (Tuymazy-Omsk-Novosibirsk-2) by 21%, from $9.3 per ton (excluding VAT) per 1,000 km to $11.28 per ton. Within Kazakhstan, the pipeline spans 186.25 km, serving as a conduit for Russian oil deliveries to the Pavlodar Refinery and facilitating exports to China and Uzbekistan.
As of the new year, Kazakhstan reduced its export customs duty (ECD) on oil to $79 per ton, down from $86 per ton in December 2023. Since September 2023, the monthly ECD rate for oil and petroleum products has adjusted by $1 per barrel in response to fluctuations in the average global price, within the range of $25 to $105 per barrel, according to a decree issued by the Minister of Finance of Kazakhstan. The average market price is determined monthly by the Ministry of Finance based on monitoring of KEBCO and Severomorsk quotes over the preceding two months.
Starting January 1, the Pavlodar Refinery, owned by KazMunayGas, increased its processing fee from 23,240 tenge (excluding VAT) per ton to 26,500 tenge per ton, as reported by Argus. Despite this adjustment, it maintains the lowest tariff among all Kazakhstani refineries.
For the next ten years until 2034, KazTransOil has locked in the transit tariffs established in 2018 for Russian oil transit to China. The agreement with Rosneft for oil transportation services through Kazakhstan to China remains valid until December 31, 2033. Between 2014 and 2016, KazTransOil annually transited 7 million tons of Russian oil. Since 2017, this volume has increased to 10 million tons.
In 2024, the sole shareholder of QazaqGaz, Samruk-Kazyna Fund, plans to take the company public through an IPO. Before this, as stated by the chairman of the fund's board, Nurlan Zhakupov, "we will address the tariffs because we cannot offer retail investors to buy a company where the tariff, i.e., the price of goods or services, is lower than the cost price. Therefore, we must align the business logic in this company, and then we will proceed with the IPO." Corresponding tariff negotiations with the Ministry of Energy and the antimonopoly authority are already underway, according to the head of the sovereign fund.
Following negotiations in Astana, Kazakhstan's Minister of Energy Almasadam Satkaliev and Japan's Minister of Economy, Trade, and Industry Ken Saito signed a memorandum of cooperation in low-carbon development and collaboration within the energy transition framework.
Their first joint project will be the "500 MW Wind Power Project utilizing energy storage battery systems in the Republic of Kazakhstan."
In January, the Burgas refinery in Bulgaria received the first two shipments of Kazakh KEBCO-grade oil, each totaling 70 thous. tons. Additionally, one shipment of Iraqi Basrah Light oil (76 thous. tons) and 33 thous. tons of oil from Tunisia were received. Reuters reported this development.
Since 1998, the Russian company LUKOIL has owned the Lukoil Neftochim Burgas refinery. However, on December 18, 2023, the Bulgarian parliament passed a law prohibiting the refinery from processing Russian-origin oil starting March 1, 2024. Under these circumstances, traders surveyed by Reuters note that KEBCO, a grade similar in quality to the Urals, could emerge as the most suitable replacement for Russian oil in Bulgaria.
Oil throughput via the Tengiz-Novorossiysk pipeline is set to increase by almost seven mln tons in 2024 compared to the previous year, reaching over 70 mln tons, as announced by the Director-General of the Caspian Pipeline Consortium, Nikolay Gorban, during a press conference in Astana.
According to the head of the CPC, 63.5 mln tons of oil were transported through the pipeline in 2023, with 56 mln tons originating from Kazakhstani shippers. Regarding Kazakhstani shipper applications for the current year, he stated that "they are roughly the same as in 2023."
January 16, the Ministry of Energy of Kazakhstan announced the conclusion of negotiations with shareholders of the Kashagan project regarding liquefied natural gas (LNG) supplies to the domestic market.
According to a preliminary agreement, QazaqGaz is nominated to negotiate with Kashagan shareholders regarding potential future LNG supplies produced at the Bolashak plant. "As of today, the parties are cooperating towards reaching the Final Investment Decision on the LNG infrastructure project in 2024. LNG supplies to the Kazakh market are planned to commence by the end of 2025. By 2027, after the completion of infrastructure works at the Kashagan field, LNG production volumes will reach 700 thous. tons per year," the Ministry of Energy's statement reads.
Minister of Energy Almasadam Satkaliev stated that oil production in 2023 amounted to approximately 90 mln tons, falling short of planned targets. Initially, the goal was to achieve 92-93 mln tons production by the year’s end. "In fact, we produced about 90 mln tons," the minister said.
He cited reasons such as repairs at major oil and gas production facilities with equipment replacements, the country's participation in the OPEC+ deal, and several accidents throughout the year at energy supply facilities and transmission networks. He noted that oil production in the country is planned to reach 90.3 mln tons in 2024.
January 18, the private company Chevron Direct Investment Fund (CDIF) announced its first investment of up to $41 mln in the capital of two non-energy sector Kazakhstani companies. Investment agreements totaling up to $41 mln were concluded with the top.kz (a business services marketplace) and Orhun Med Limited (a rapidly growing medical company). The recipients intend to utilize the funds received from CDIF for business expansion, creating additional job opportunities, and implementing new technologies.
CDIF operates according to a Memorandum of Understanding signed on October 11, 2021, between the Ministry of Energy of the Republic of Kazakhstan and Chevron, establishing an investment fund of $248.5 mln.
The Ministry of Energy of Kazakhstan has once again instructed KazMunayGas and Petrosun (a joint venture between KMG and Chinese CNPC) to supply fuel to agricultural producers at 15% below prevailing market prices for the spring planting season.
The Ministry has approved the schedule for allocating regions to refineries for the supply of diesel fuel for the spring field works in 2024. According to the document, 340.2 thous. tons of diesel fuel are planned for shipment from February 1 to June 30, 2024, to agricultural producers in 17 out of 20 regions of Kazakhstan.
January 22, NCOC announced an upcoming change in the company's top management. In March 2024, Giancarlo Ruiu will assume the role of Managing Director of NCOC, replacing Olivier Lazar. With over 20 years of experience in oil and gas field management in Kazakhstan and abroad, Mr. Ruiu currently serves as General Director of Karachaganak Petroleum Operating B.V.
January 22, Canadian company Condor Energies Inc. announced the signing of an agreement with the government of Kazakhstan to build the first modular liquefied gas plant. The plant will have a capacity of up to 350 tons of LNG per day, which will be used as fuel in railway locomotives and large quarry dump trucks.