Kazakh firm, SOCAR in talks over fuels, lubricants deal
By Aynur Jafarova
Kazakhstan's KazMunaiGas National Oil and Gas Company is negotiating with Azerbaijan's state energy company SOCAR to purchase fuels and lubricants.
Kazakhstan's First Deputy Energy Minister Uzakbai Karabalin announced the news at a press conference in Astana on September 16.
"Kazakhstan intends to cover the shortage of petroleum products in its domestic market by sealing the deal," Karabalin said.
He added Kazakhstan is also in talks with Russia and Turkmenistan to purchase fuels and lubricants.
One third of the fuels and lubricants consumed in Kazakhstan is imported from Russia.
"However, currently, there is a difficult situation in Russia, as its Achinsk refinery has just started full production after halting output due to an accident. Additionally, scheduled repair work has started in several Russian refineries," Karabalin noted.
The official believes the significant difference in fuels and lubricants prices in Kazakhstan and Russia has also prompted his country to turn to neighboring countries, such as Azerbaijan and Turkmenistan.
"The price for one liter of AI-92 gasoline is 128 tenge in Kazakhstan, while it is equal to 160 tenge ($1=182 tenge) in Russia. The price for one liter of diesel fuel is 115 tenge in Kazakhstan, versus 170 tenge in Russia," Karabalin said, adding that only few companies and individuals will be able to purchase Russian oil products at such high prices.
Kazakhstan decided to postpone the scheduled repair at the Shymkent refinery to February or March or April of 2015, in order to provide the domestic market with enough fuels and lubricants.
The refinery is projected to produce around 250,000 metric tons of gasoline of all brands, including, AI-92 gasoline (186,000 metric tons) in September 2014. The domestic demand for this gasoline brand is 280,000 metric tons.
"September has always been a tense month, but the harvest season is coming to an end and the volume of diesel fuel being used during the harvest season will soon be delivered to the market," the deputy minister said.
He further expressed hope that the country will manage to eliminate the shortage of oil products.
Azerbaijanis and Kazakhs are both Turkic-speaking nations and share close historical, religious, and cultural ties. Both sides are the littoral states of the Caspian Sea and possess a common maritime border.
About 130,000 ethnic Azerbaijanis live in Kazakhstan.
The trade turnover between the two countries amounted to $371 million in 2013. Some 52 Kazakh companies operate in Azerbaijan, while 723 companies with the Azerbaijani investment are registered in Kazakhstan.
Kazakhstan invested $5.2 million in Azerbaijan in fixed assets in 2002-2013. This comes as only in the last two years, Azerbaijan invested $132.8 million of direct investment in Kazakh economy.