Kazakhstan to supply oil products to Armenia

ArmInfo.The MPs of the Kazakh Senate adopted the law "On the ratification of the Agreement between the Government of the Republic of Kazakhstan and the Government of the Republic of Armenia on trade and economic cooperation in the  field of supplies of petroleum products to the Republic of Armenia".

As Acting Minister of Energy of the Republic of Kazakhstan Aset  Magauov noted, presenting the draft law at the plenary session of the  Chamber, the supply of oil and oil products between members of the  Eurasian Economic Union is regulated by separate bilateral  agreements, in accordance with the Treaty on the Eurasian Economic  Union dated May 29, 2014. On July 16, 2020, an Agreement on trade and  economic cooperation in the field of supply of petroleum products to  Armenia was signed in Nur-Sultan.

"The parties create the necessary conditions for the economic  entities of the states of the parties to deliver supplies from  Kazakhstan to Armenia with the involvement of authorized  organizations," Aset Magauov said, Kazinform reports.

It was noted that, in accordance with the agreement, the parties  approve the list of goods that are allowed to be delivered to  Armenia. Further, the departments of the parties conclude an  appropriate protocol.  "Therefore, if any oil products are not  included in the permitted list, then the export of goods will not be  carried out," Aset Magauov explained.

In addition, in accordance with the Agreement, until December 1 of  the current calendar year, the competent authorities of the parties  annually draw up a balance of production, domestic consumption,  supply, import and export of goods from the Republic of Kazakhstan  and the Russian Federation to the Republic of Armenia, that is,  indicative balances. "Considering that Russia is the main supplier of  oil products to Armenia, possible supplies of Kazakh products will be  determined on a residual basis. The Agreement also provides for a ban  on supplies in excess of the volumes provided for by the indicative  balances of the parties," Aset Magauov added.

According to Acting Minister, trade between the countries of the  Eurasian Economic Union is carried out without payment of export  customs duties, without customs control. This Agreement establishes a  practically special regime for trade in petroleum products and  contains control mechanisms for the export of petroleum products from  Kazakhstan to Armenia. Such mechanisms will make it possible to sell  surplus oil products on the more premium market of Armenia, which  will positively affect the internal balance of oil products and  increase the revenue of economic entities in Kazakhstan, as well as  streamline the export of oil products from the Republic of Kazakhstan  and protect the domestic market from uncontrolled flows of oil  products to the EAEU countries.   "It should be noted that the conditions of supplies will be  determined by entrepreneurs independently by mutual agreement. These  agreements will proceed only from the economy of these supplies,"  Aset Magauov said.  The head of the Ministry of Energy noted that in  practice, export transactions are concluded in foreign currency,  usually in US dollars. Therefore, no risks are expected. The  agreement also provides for a number of control mechanisms.  Kazakhstan can unilaterally stop or limit duty-free supplies of oil  products to Armenia in case of exceeding the volumes approved by  indicative balances, force majeure, in order to ensure national  security and protect the domestic market, as well as in case of  violation by Armenia of its obligations to ban the export of  Kazakhstani oil products to third countries and EAEU countries from  their territory. "Therefore, there are no risks for the domestic  market," Aset Magauov summed up.  From 2020 to the present, the  supply of Kazakh oil products to Armenia has not been carried out.  Re-export from Armenia has not been recorded. The agreement  stipulates that KTZh-GP monthly submits a report on the volumes of  shipment of goods according to the nomenclatures of goods of the  Unified Tariff and Statistical Nomenclature of Cargoes. In  particular, the enterprises of the railways of Kazakhstan and Armenia  interact through the information system in the field of railways.  Also, the fiscal authorities of the states of the parties interact  through the information system of the EAEU.