Germany is rocking Kazakhstan

Germany has applied for 2023 to be pumped through the Transneft system, but not Russian, but Kazakh oil is going to be imported through the Druzhba oil pipeline. Thus, Berlin will be able to replace no more than 7 million tons of oil, which is almost three times lower than traditional purchases from Russia. So far, however, Germany and Kazakhstan have not agreed on supplies, since Kazakh companies have almost no free volumes.

German refineries do not intend to buy Russian oil in 2023, the German Ministry of Economy said. But, according to Suzanne Ungrad, the representative of the department, the shareholders of the plant in Schwedt submitted an application to Transneft for reserving capacities in the Druzhba pipeline system for pumping oil from Kazakhstan. The statement was a response to an interview with the head of Transneft, Nikolai Tokarev, in which he stated that Germany had applied for the pumping of raw materials from January 1. “They announced that they would not take oil from Russia from January 1, and now we have received applications from Polish consumers: give us 3 million tons next year, and 360 thousand tons for December, and Germany has already submitted an application for the first quarter “Give it too,” said Mr. Tokarev. He did not specify what volumes of pumping Germany asked for.

Kazakhstan pumps oil through Russia in two directions: through the Caspian Pipeline Consortium to the port of Novorossiysk, and through the Atyrau-Samara oil pipeline in the direction of the Baltic ports (design capacity is about 17 million tons). Deliveries via the pipeline are carried out within the framework of an intergovernmental agreement, in which the volume of transportation is limited to 15 million tons.

But the actual annual deliveries from Kazakhstan amounted to about 10 million tons. In the ten months of 2022, according to Argus, transportation has fallen seriously: by 28%, to 6.8 million tons.

Theoretically, Kazakhstan could redirect to Germany the oil that it exports through the port of Ust-Luga, but these volumes are contracted for 2023 by Poland, so if the contract is not fulfilled, penalties will apply. At the same time, Warsaw itself is ready to resell the oil received in this direction to Germany, but such transportation is more expensive than along the Russian route, and besides, you will have to pay for two transshipments: in Ust-Luga and Gdansk.

At the same time, as Kommersant’s sources assure, Germany does not yet have firm agreements on deliveries with Kazakhstan. The countries held talks in early December, but Berlin was unable to offer Astana sufficiently favorable terms, according to Kommersant’s interlocutors. One of Kommersant’s sources says that the Kazakh side referred, among other things, to the lack of free volumes.

Transneft reported that Kazakhstan did not request to pump its oil in the direction of Germany and negotiations on this issue are not currently underway. As Igor Demin, adviser to the president of the pipeline monopoly, clarified to Kommersant, Kazakhstan will technically be able to supply to Germany via the Atyrau-Samara pipe an additional no more than 3-7 million tons, depending on the condition of the oil pipeline, instead of 19-20 million tons, which Germany annually received from Russia. He recalled that in order to coordinate the pumping of Kazakh oil through Druzhba, a political decision is needed and the issue is in the zone of responsibility of the Ministry of Energy.

Kommersant’s sources believe that the simplest option would be swap operations, although their volume is limited due to the existing contractual obligations of Kazakh companies.

In theory, Kazakh companies can resell Russian oil as a trader, because the EU sanctions do not formally apply to supplies via Druzhba.

Mikhail Burmistrov, CEO of Infoline-Analytics, also admits this scenario. In his opinion, a powerful redistribution of raw material flows will inevitably lead to the use of swap operations. “Already now we see, for example, that the countries of the Middle East receive Russian oil, freeing up their own volumes for supplies to the world market,” he says. At the same time, now, the expert notes, it will be very difficult to quickly replace the Russian volumes of Germany.

Olga Mordyushenko, Dmitry Kozlov