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. Last Updated: 07/27/2016

Transportation Ministry Halves Railway Tariffs for Caspian Oil

The Transportation Ministry said Friday that it had halved tariffs on railway transit of Kazakh and Turkmen crude and refined oil products to the Black Sea in a bid to attract customers from alternative routes bypassing Russia.

Oil firms ship crude from Kazakhstan and Turkmenistan across the Caspian in tankers to the Azeri port of Baku, where it is reloaded into rail tanks to travel to Georgia's Batumi and Poti ports for re-export to the Mediterranean.

Baku also plans to start loading crude into the newly built BP-led Baku-Ceyhan pipeline to the Mediterranean soon.

Russia's new 50-percent discount is aimed at encouraging oil firms to send oil to the Russian port of Makhachkala on the Caspian, reload it onto rail for transit to ports on the Black and Azov Seas in Russia and Ukraine.

An official at the Transportation Ministry said the new tariff was equal to the cost of shipping oil from the Kazakh port of Aktau to Georgia's Batumi, making the offer competitive with existing routes.

An industry source said Russia hoped to divert 250,000 tons per month from the Azeri-Georgian route.

The move comes as Russia and Georgia are going through a rocky period of political relations due to the pro-Western stance of the Georgian leadership. Moscow has already banned all imports of Georgian wines and mineral water, important export products for the country.

The new tariff will come into force next week and will be effective until the end of this year.

Russia has also offered a 48 percent discount on Kazakh fuel oil shipments toward Russia's Kavkaz port and Ukraine's outlets on the Black Sea, effective until Nov. 30.