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Economic sanctions on Russia can influence Kazakh oil market - ministry

April 07, 2014, 17:23 UTC+3 ASTANA

"Export to Russia will be somehow restricted. We believe that export rates may fall," Kazakhstan Minister of Oil and Gas says

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Oil extraction site in Kazakhstan

Oil extraction site in Kazakhstan

© ITAR-TASS/Anatoly Ustinenko

ASTANA, April 07./ITAR-TASS/. Economic sanctions against Russia can complicate oil export, Kazakhstan's senior government official has said.

“We do not know yet what sanctions can be imposed on Russia ,” Kazakhstan Minister of Oil and Gas Uzabkai Karabalin told parliament on Monday.

“I want to draw attention to two factors. Firstly, export to Russia will be somehow restricted. We believe that export rates may fall,” he said.

Secondly, there is the risk of an oversupply of Russian oil products, he added

"Large amounts of oil products will start pouring in. On the one hand, they will be in abundance. We’ll exceed the target balance that we’ve signed. On the other hand, our market will be flooded with cheap oil products. This will hamper the work of Kazakhstan's refineries,” Karabalin said.

“Under these circumstances, other variants should be borne in mind: Kazakhstan may export oil to the Black Sea region via Azerbaijan and Georgia. Moreover, Kazakhstan has its own terminal in the port of Batumi,” he said.

“Also, we are keeping an eye on Iran. If sanctions are lifted, we shall enjoy the benefits of a well-established export route to the port of Neka, in Iran, from Aktau, on Kazakhstan's Caspian Sea coast. It was a very good route once until Iran set forth harsher conditions,” Karabalin said.

Kazakhstan praises oil cooperation with China. “As of today Kazakhstan has a China-bound pipeline Atasu-Alashankou with a maximum throughput of 20 million tonnes a year. Under an effective cooperation programme oil supplies to China may be increased to capacity over a period of two years,” he said.

In 2013 Kazakhstan transported 1.85 million tonnes of oil to China via the pipeline Atasu-Alashankou.

Every year Kazakhstan produces 82 million tonnes of oil and exports 68 million tonnes. The government is working on a strategic programme extending till 2020, as the country's domestic consumption may go up by another 4-5 million tonnes.

Under the optimistic scenario, says Kazakhstan's oil and gas ministry, oil production may soar to 150 million tonnes a year, and under the pessimistic one, slump to 75 million tonnes.

“On the average we shall be producing 100 million tonnes of crude. This amount will help increase budget revenues and facilitate stable economic development,” Karabalin said.

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