Berlin tries to persuade Astana to increase oil supplies to 2 million tons

In 2024, Germany hopes to persuade Kazakhstan to increase pipeline oil supplies through Russia to German refineries to 2 million tons this year, which is 1.7 times more than the current contract. However, the price of the supplies will be a determining factor, as Astana will need to reduce volumes going to other export destinations.
Germany has initiated discussions with Kazakhstan to increase oil supplies to the country's refineries via the Druzhba oil pipeline, transiting through Russia, to 2 million tons in 2024. Almasadam Satkaliev, the Minister of Energy of Kazakhstan, announced this development. He stated, 'We have received a request from the relevant German companies to increase the volume.' As per the existing agreement between Kaztransoil and Transneft, the supply volume from Kazakhstan to Germany for 2024 is 1.2 million tons. Transneft confirmed that Astana has not requested an increase in transit. In 2023, Kaztransoil supplied 993 thousand tons to German refineries.

Additionally, Kazakhstan is in talks to increase shipments to Azerbaijan. The previous day, representatives of the countries negotiated an increase in the transit of Kazakh oil, including an agreement to transport 1.5 million tons of oil annually from Kazakhstan via the Baku-Tbilisi-Ceyhan pipeline.

According to sources of the newspaper Kommersant any increase in supplies through Druzhba would come from volumes redirected from other export destinations through Russia.
Currently, Kazakh oil is transported through the facilities of the Caspian Pipeline Consortium in Novorossiysk (56.6 million tons in 2023), the port of Ust-Luga (approximately 10 million tons), and via Druzhba. According to Kommersant's sources, Kazakhstan is unable to increase its supplies to Germany due to production restrictions. Therefore, in 2023, Kazakh companies supplied the volumes removed from shipments through Ust-Luga to Germany via Druzhba, maintaining the same level of supply. Simultaneously, there is a technical opportunity to augment the supply of Kazakh oil through Druzhba. Previously, approximately 20 million tons of Russian oil were transported annually to Germany via this pipeline.

According to authorities, Kazakhstan's oil production increased by 6.9% to 90 million tons last year. Of this, 70.5 million tons were exported, representing a 9.6% increase. However, the country has committed to reducing oil production by 82 thousand barrels per day in the first two quarters of 2024, bringing it down to 1.47 million barrels per day. Almasadam Satkaliev stated that Astana does not intend to adjust the production forecast for 2024, which stands at 90.3 million tons.

Igor Yushkov, an expert at the Russian Financial University , agrees that increasing supplies from Kazakhstan to Germany via the pipeline, while adhering to voluntary obligations to OPEC+, is only feasible by redirecting volumes from Ust-Luga. However, he doubts the likelihood of this scenario, as Astana already has an established sales channel in the Baltic and contracts with traders, which the country is not eager to terminate. According to the expert, it would be more profitable for Germany to receive oil through a pipeline. This is because there would be no need to pay for transshipment in Gdansk or transportation to the refinery. Additionally, there would be no need to compound the oil received through Druzhba, as it is already of suitable quality. However, Mr. Yushkov believes that only a price increase can convince Kazakhstan to increase supplies to Germany via the pipeline.