Kazakhstan seeking way-out to stabilize situation in fuel market
By Aynur Jafarova
Kazakhstan is seeking to stabilize its domestic oil products market by introducing a monthly recalculation of prices for petroleum, oil and lubricants, which will vary depending on the prices for fuel in Russia.
The announcement was made by Uzakbai Karabalin, deputy energy
minister, on December 9.
The correlation of the country's oil prices will depend on the
price changes in Russia, which supplies one-third of Kazakhstan's
gasoline consumption.
These steps are aimed at protecting fuel supplies to the domestic market from sharp surges and shocks associated with changes in prices of oil in world markets and in Russia.
Recently, oil-rich Kazakhstan has faced shortage of petroleum
products in the domestic market due to the reduction of supplies
from the traditional supplier, Russia.
Experts believe that one of the causes of this shortage in the
domestic market was the difference in prices. Kazakhstan had the
lowest prices for petroleum products, which led to the unauthorized
export of them and increase of the deficit.
To prevent this situation continuing, the Kazakh Energy Ministry
will set monthly marginal prices starting from January 1, 2015 in
coordination with the National Economy Ministry of the country.
This is not the first step of the Kazakh government to solve the
fuel shortage problem. Earlier it was decided to establish a
stabilization reserve of AI-92 gasoline in the amount of 50,000
metric tons.
Kazakhstan has some oil refineries, which are located in Shymkent (country's southern part), Atyrau (western part) and Pavlodar (northern part). The total processing capacity of them is 13 million tons per year.
According to the forecasts, the gasoline production in Kazakhstan in 2014 will amount to 2,885 million metric tons, while the consumption is expected to reach 4,168 million metric tons.
Kazakhstan is currently upgrading all of its oil refineries. The process is scheduled to be completed in 2016. After the upgrade, Kazakhstan's need in light petroleum products will be fully met.
In order to prevent discontent among the population for high prices for fuels, the country has approved new price limits for retail sale of the state-regulated petroleum products.
From December 10, Kazakhstan will use the following maximum prices for retail sales of oil products (with state’s price regulation) taking into account VAT: diesel fuel – 107 tenges per liter; AI-80 gasoline – 89 tenges per liter, AI-92/93 – 115 tenges per liter. ($1=181.7 tenges).
It is believed that these steps taken by the government will normalize the situation in the country for some time. But how long these measures will be effective is unknown.