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. Last Updated: 07/27/2016

Russia, Kazakhstan Ink Oil-Gas Transit Pact

ST. PETERSBURG -- Russia and Kazakhstan signed long-term agreements Friday on transit of Kazakh oil and natural gas via Russian territory to West European importers, greeted by both nations' presidents as a critical step of increased cooperation.

The countries' natural gas monopolies Gazprom and KazMunaiGaz have created a joint venture, KazRosGaz, which will start by transporting 3.5 billion cubic meters of gas through Russian pipelines in the first few years and increase it to up to 50 bcm in the future, President Vladimir Putin said.

"The agreements fully serve the interests of Kazakhstan and Russia," Putin said on the sidelines of an Asian security summit in St. Petersburg. "They insure a guaranteed route for Kazakh oil exports and also help Russia strengthen its status as a transit country."

He also said Russia will now take Kazakhstan's oil production plans into consideration when developing its pipelines.

"Kazakhstan is becoming our priority partner while we develop our own Russian structure," Putin said.

Kazakhstan plans to boost its gas production more than fivefold to 50 bcm a year by 2005 when it starts developing the giant Kashagan offshore Caspian gas field.

The oil transit agreement will be valid for 15 years and can be extended.

"Kazakhstan will benefit by getting access to global markets and Russia will reap the transit dividends," Kazakhstan President Nursultan Nazarbayev said. "These agreements bring relations between Kazakhstan and Russia to a new level."

The agreements follow the division of three disputed Caspian oil fields in May and tighten the cooperation of the two countries in the energy sector.

The United States has tried to develop alternative routes that would bypass Russia to bring Central Asia and the Caspian region's energy resources to world markets. Throughout the 1990s, Russia tried to gain control of transport routes in the former Soviet republics.