Business Week cited Mr Shukhrat Danbay Pavlodar CEO Pavlodar refinery as saying that Russia will supply Kazakh refineries with 7 million metric tonnes of crude this year and the same amount in 2013.

Mr Danbay said that Kazakhstan's Shymkent refinery has already received 2 million tonnes this year. The two countries will continue talks for an agreement on 2014 supply. Russia will also provide Kazakhstan with as much as 2 million tonnes of oil products a year without being specific on time frame. Kazakhstan which is in a customs union with Russia and Belarus will compensate its northern neighbour for export duties it would have received from shipments outside the bloc.

He said that the lost tax revenue will be about USD 500 million a year and will be reimbursed using Kazakh oil priced at the same level as the refineries paid for Russian crude .The Pavlodar refinery which uses crude from Siberia plans to finish a USD 8 billion upgrade by 2016 so that it will be able to process any grade of oil.

Source - Business Week.com

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