November 11, 2013 / 4:42 PM / in 6 years

Rosneft agrees to ship oil to China via Kazakhstan

YEKATERINBURG, Russia (Reuters) - Rosneft (ROSN.MM) said on Monday it had agreed on the basic principles for shipping oil to China via neighboring Kazakhstan in a deal essential for the Russian company to honor its supply commitments to Beijing.

The company logo at a Rosneft petrol station in St.Petersburg October 23, 2012. REUTERS/Alexander Demianchuk

The preliminary agreement was signed by executives of Rosneft, Kazakh state oil firm KazMunaiGas and oil pipeline monopoly KazTransOil KZTO.KZ.

No details were disclosed, but sources familiar with the agreement told Reuters that Rosneft would supply 7 million metric tons a year (140,000 barrels of oil per day) to China via Kazakhstan.

Rosneft would pay export duty to the Russian state, the sources said.

Russia and Kazakhstan are part of a Moscow-led duty-free customs union, and the issue of how export duty would be levied was one key obstacle to the agreement.

The fee stands at $395.90 per metric ton in November.

In return, KazTransOil would cut transportation tariffs for Rosneft, which aims to start shipping oil next year, a source in Kazakhstan said.

The sources said Rosneft and Kazakhstan plan to clinch a final deal by the year-end.

Rosneft, the world’s largest listed oil company by output, is preparing to triple oil exports to China to some 1 million barrels per day (bpd), seeking to secure market share and billions of dollars in pre-payments.

But it lacks infrastructure to ship increased volumes to Beijing and has been considering shipments via Kazakhstan of up to 10 million metric tons a year (200,000 bpd) starting from January 1, 2014, sources told Reuters earlier this year.

Reporting by Alexei Anishchuk, Katya Golubkova and Alla Afanasyeva; Editing by Douglas Busvine, Mark Potter and Dale Hudson

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