Kazakhstan emerges as alternative to Russia in Central Asia's oil products market

Kazakhstan took protective measures to secure its own energy sector. The republic's ban on gasoline imports from Russia will come into force on August 25. Astana argues that this is a temporary measure. The restrictions will be in place for only three months and will affect petroleum products transported by rail. The ban is associated with a surplus of own gasoline, which Astana is ready to sell in the markets of Tajikistan, Kyrgyzstan and Uzbekistan. But it requires Moscow's consent.

Russia is the main fuel supplier to Kazakhstan. It accounts for about a third of the total gasoline market in the country - about 900 thousand tons. After three oil refineries were modernized, which cost Astana more than $6 billion, the republic has begun to fully meet its needs for high-octane fuel - Euro-4 and Euro-5 brands and even produced surpluses. Therefore, it was decided to reduce the supply of Russian A-92 gasoline, to stop its competition with Kazakh one. According to Kazakh Energy Minister Kanat Bozumbayev, "the volume of own fuel was predicted, therefore, we see no point in importing large quantities of Russian gasoline." According to him, this issue was discussed with Russian colleagues in advance. Bozumbayevnoted that Kazakhstan and Russia work within the framework of joint balances, which are approved by both parties. He specified that the ban only applies to railway transport. It may be more profitable to import gas to the border areas of Kazakhstan from Russia than reliver it from Kazakhstan's Petropavlovsk across the country.

Kazakhstan intends to sell surplus gasoline into the markets of Central Asian countries. According to minister Bozumbayev, before doing this, it is necessary to obtain Moscow's consent. "Kazakhstan's Ministry of Energy has been waiting for documents from the Russian side for already two months to agree on the beginning of gasoline exports to Central Asia. Kazakhstan is working actively to start fuel exports to Central Asia," the minister said. Given the current utilization rate of oil refineries "gasoline reserves in the country will amount to 600 thousand tons by October" and Kazakhstan will be forced to "stop the production of gasoline or reduce factories utilization rate," the minister stressed.

The deputy chairman of the board for the transportation, processing and marketing of oil at the Kazakh national company KazMunayGas, Daniyar Tiesov, said that this year they plan to export up to 400 thousand tons of fuel to Kyrgyzstan, Uzbekistan and Tajikistan. In 2019, the volume of supplies is expected to increase to 1.2 million tons.

"There is no conflict of interest between Russia and Kazakhstan in the supply of oil products to Kyrgyzstan, Uzbekistan and Tajikistan. Kazakhstan does not need to import Russian gas now. It produces a sufficient amount of high grade Euro-4 and Euro-5 gasoline, as well as jet fuel and diesel fuel. The republic need to return the investments in modernization of three oil refineries. After launching the Atyrautsky and Petropavlovsky plants, volume of oil products increased by 25%. The renovation of another oil refinery -Shimkent - will be completed in September. The oil refinery will enter its operating capacity. Accordingly, the amount of high-octane gasoline in the republic will even increase. Kazakhstan covers its gasoline needs itself, and this trend will increase. Accordingly, Astana does not need any competition in the form of Russian gasoline. Therefore, Kazakhstan's desire to sell its products is logical, to avoid over-storage. It's in the interests of the Kazakh economy, but not in Russia's interests. Nothing personal, just business," the researcher at the the Center for the Study of Central Asia, the Caucasus and Urals-Volga Region of the Institute for Oriental Studies of the Russian Academy of Sciences, Alexander Vorobyov, told Vestnik Kavkaza.

The situation, according to the expert, is not very favorable for Russian producers and suppliers of petroleum products, as competition is increasing and the market is shrinking. "But on the other hand, Kazakhstan, as a sovereign state, cannot be banned from trade. All we can do is negotiating. Especially since Kazakhstan is an important political ally.

The second point stressed by the expert is that Kazakhstan refuses Russian imports for three months, after which the ban can be extended if necessary, or, on the contrary, lifted. The situation may change. If now Kazakhstan is 75-80% self-sufficient in gasoline, then in case of emergency at an oil refinery a gasoline deficit can be formed. Therefore, possibilities for importing should always be open. In addition, Kazakhstan is growing, both in terms of population and economic parameters. In the long term, the republic's existing oil refineries will not solve the fuel shortage problem. That is why the Kazakh authorities intend to build a fourth oil refinery.

As for the Central Asian markets, then, for example, Kyrgyzstan and Uzbekistan are convenient in terms of logistics, but Tajikistan and Afghanistan - are not.

By Victoria Panfilova, columnist of Nezavisimaya Gazeta, specially for Vestnik Kavkaza


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