Iran to Help Build Refinery in Kazakhstan

Iran to Help Build Refinery in Kazakhstan Iran to Help Build Refinery in Kazakhstan

Kazakhstan plans to build its fourth oil refinery in Mangistau, with the help of Iranian firms, Deputy Governor of Mangistau Province said.

"Construction of the refinery will be done together with Iran," Rakimbek Amirzhanov said, adding that the Iranian side, and in particular the Oil Ministry, had confirmed its readiness to participate in the project, Tengrinews reported.

"Both countries have companies interested in investing in the project," he said.

"In the past, Iran exported five million tons of crude through Aktau Port."

“The swap operation at the time was beneficial for both Kazakhstan and Iran. Now we have offered to build a refinery together. It will be located in Mangistau Oblast (in western Kazakhstan). Oil from Mangistau will be sent to the northern ports of Iran, while the southern part will provide crude oil to the oil companies of Mangistau as well as our entire country. It is in the best interests of both sides," Amirzhanov said.

Given the timely allocation of money, a feasibility study would be completed in the near future and an agreement for the construction would be signed by the end of the year, according to Amirzhanov. The minimum amount of investment in the construction of the project is estimated at $6 billion.

Currently, Kazakhstan has oil refineries in Pavlodar, Atyrau and South Kazakhstan Oblasts. However, as Amirzhanov noted, they do not cover the market demand for petroleum products in Kazakhstan. The deficit in the country is about one and a half million tons or 30% of the total market. Most of the deficit is covered through imports from Russia.

Iranian officials said earlier in July that Iran is preparing a proposal to Kazakhstan on resumption of oil swap operations and transit utilizing the potentials in Aktau and Neka terminals, off the Caspian Sea.

"The potentials of Neka Oil Terminal, as Iran's biggest terminal off the Caspian Sea, in Mazandaran Province, will be presented in the near future in an exhibition in Aktau," Seyyed Pirouz Mousavi, managing director of Iran Oil Terminals Company, said July 13.

Aktau Terminal, located on the Mangishlak Peninsula and in the Mangistau Region, enjoys robust infrastructure and operational capacities that can be utilized to export and swap Iranian oil and other petroleum products.

As one of the five Caspian littoral states, Iran borders Sea of Oman and Persian Gulf in the south, and could be a transit route for moving energy from the Caspian Sea, which has no direct access to the international waters and the world markets.

Oil swap can be an important source of revenue, as the northern neighbors with abundant hydrocarbon resources need access to sea lanes.

However, obstacles like the economic sanctions imposed by the US-led western states  over Tehran’s nuclear program, Russia’s rivalry with Iran over controlling energy export routes and political and economic instability in some regional countries prevented the deals.

Iran started crude oil and gas swaps with its neighboring countries in 2000, but the former administration of president Mahmoud Ahmadinejad decided to halt swap operations in 2010.

Currently, three development projects are being implemented in Neka Terminal to boost oil swap operations with the Caspian littoral states.