Azerbaijan, Baku, May 31 / Trend /
Elena Kosolapova, Trend commentator
In the near future Kazakhstan may once again face increasing shortages of fuels and lubricants and as a consequence - a jump in prices for petroleum products. This situation may be provoked by closure for scheduled maintenance from June 25 to July 25 of one of the three refineries of Kazakhstan - Pavlodar petrochemical plant.
In general, a number of regions of Kazakhstan experience shortages of fuels and lubricants on a regular basis. There are several reasons for this. First, Pavlodar, Shymkent and Atyrau refineries existing in the country today can not simply cope with the growing needs of industry and population. For example, sowing this year will require 360,000 tons of diesel fuel (according to the Ministry of Agriculture). Not to mention the needs in fuels and lubricants in such energy-intensive industries as metallurgy, and oil and gas production, making the main percentage of Kazakh GDP.
To meet the needs of the domestic market in fuels and lubricants various options were offered. In particular, since late 2011, Kazakh Minister of Oil and Gas Sauat Mynbayev has repeatedly expressed interest in tolling operations in Russia as well as in China, Azerbaijan, Turkmenistan and Europe. In early May, such operations have been even temporarily exempt from rent tax. However, no arrangements in this area have been reached to this day.
Another factor exacerbating the situation in the fuels and lubricants market in Kazakhstan is that the main producer of high-octane and aviation fuel in the country, namely the Pavlodar Petrochemical Plant, focuses on refining West Siberian oil from Russia. That is, its work is directly dependent on Russian oil supplies. However, because of differences in laws, bureaucratic delays and other reasons disruptions in the supply of Russian oil occur regularly. In particular, in May, Russia cut supplies to the Pavlodar Petrochemical Plant by almost half - it delivered 270,000 tons of oil instead of the usual 500,000. As a result, fuel prices in the country are growing. In particular, according to the Kazakh national airline Air Astana, the sale price of kerosene in 2012 increased by 200 percent compared to 2010. As a result, prices for tickets for the company's domestic flights rose in April. However, they rose only by 16 per cent on average.
Kazakhstan is trying to partially offset its demand for fuels and lubricants due to their import. Thus, about 30 percent of fuels and lubricants consumed in Kazakhstan have traditionally come from Russia. However, the Russian prices for fuels and lubricants are much higher that the Kazakh ones, and to date, the state imports them almost at a loss. And the fuels and lubricants shortage problem in the country by importing them can only be solved by significantly raising their prices in the domestic market. Kazakhstan doesn't agree on that yet.
To address the issue of oil refining in the country, it has been repeatedly proposed to build another large refinery. However, as Minister of Oil and Gas Sauat Mynbayev said, even if such a decision is made, construction will begin only by 2020. However, there were other statements. In early March, Prime Minister of Kazakhstan Karim Massimov urged to accelerate the resolution of this issue in connection with the start of commercial production of oil in the largest Kazakh Kashagan field in late 2012. However, no specific timing was named.
Also, the media have repeatedly reported citing sources that Kazakhstan plans to acquire refineries outside the country. However, no official statements on this issue have been made.
Thus, the problem of fuels and lubricants in the country has not yet been resolved. A decline in oil refining in the country in connection with a stop for a month of the Pavlodar petrochemical plant could trigger an even more critical situation. In accordance with past practice, before closing for repairs Pavlodar plant should provide a monthly supply of fuels and lubricants in its stores. Director-General of the plant Shukhrat Danbai told Trend, the plant will provide an adequate supply of fuels and lubricants for the maintenance period. But last year, scheduled maintenance of the plant ended with higher marginal prices for fuels and lubricants in the country, and gasoline at some gas stations, according to a number of Kazakh media was sold only by coupons. And this year, given the limited supply of Russian oil at the beginning of the year and in May, fuels and lubricants shortages could become even more noticeable.
Today, the most promising step for the solution of problems with oil products in Kazakhstan is the modernization of the all three existing refineries. It involves an increase in production capacities of plants, as well as the reorientation of the Pavlodar petrochemical plant to process Kazakh oil. Under the plan, upgrading plants should be completed by 2015. Prime Minister of Kazakhstan Karim Masimov said earlier the country will gain independence for the fuels and lubricants provision after the implementation of these projects.