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Kazakhstan to step up crude shipments to Germany in April: pipeline operator

Highlights

100,000 mt of crude to be shipped via Russian pipelines

Kazakhstan diversifying crude export routes, also using BTC

Kazakh crude via Transneft pipelines meets strong demand

  • Author
  • Nick Coleman
  • Editor
  • Nick Coleman
  • Commodity
  • Oil Shipping

Kazakhstan is to increase crude deliveries to Germany to 100,000 mt in April, state pipeline operator KazTransOil said March 31, as the nascent trade via Russia's pipeline system gains pace.

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In a statement, KazTransOil said the Kazakh energy ministry had given its approval for the delivery, equivalent to around 24,000 b/d, and the crude would be transported via Russia's Transneft pipeline system to the Adamova Zastava delivery point on the Belarus-Poland border for onward transport to Germany.

Shipments to Germany had totaled 40,000 mt in February-March, it added.

The trade has been prompted by German and European Union efforts to limit imports of Russian oil following the invasion of Ukraine, even as certain countries have secured exemptions from sanctions, reflecting infrastructure ties to Russia.

While Germany has renounced Russian oil shipments, EU sanctions do not prohibit use of Russian pipelines for oil from other countries, and Kazakhstan is not party to the invasion of Ukraine.

The Kazakh crude, produced onshore and akin to Russia's Urals, is particularly intended for refineries such as the 232,000 b/d Schwedt facility in Brandenburg, northeast of Berlin, that long relied on Russian crude imported via the Druzhba pipeline system. Leuna, in Saxony-Anhalt and with 230,000 b/d of capacity, has also long relied on Russian crude.

Export drive

Kazakhstan, a growing oil producer in the OPEC+ group that relies on other countries to reach world markets, has rebranded the crude it exports across Russia as Kazakh Export Blend Crude Oil (KEBCO) to differentiate it from Russia's heavily discounted Urals. Platts, part of S&P Global Commodity Insights, assessed KEBCO at a $2.85/b discount to Dated Brent on March 30.

The country has also been making more shipments of light crude from its "supergiant" fields across the Caspian to Azerbaijan, from where it is transported through the Baku-Tbilisi-Ceyhan pipeline to Turkey's Mediterranean coast.

However, with Kazakh production broadly on the rise, shipments have remained firm also through the main export artery across southern Russia, CPC, which loads in the Black Sea port of Novorossiisk, according to Commodities at Sea data.

April loadings of Kazakh CPC Blend have been provisionally set at around 1.33 million b/d, down slightly on March's 1.39 million b/d, according to loading information compiled by traders.

CPC Blend was assessed at a $4.07/b discount to Dated Brent on March 30 on a Cost Insurance and Freight (CIF) basis.