Kazakhstan’s law doesn’t allow to buy gasoline directly from SOCAR

Astana, Kazakhstan, Nov.5
By Daniyar Mukhtarov - Trend:

Kazakhstan's KazMunaiGas - Processing and Marketing JSC had no legislative base to purchase fuels and lubricants directly from the State Oil Company of Azerbaijan (SOCAR), a source at the company told Trend on Nov.5.

"Unfortunately, we (KazMunaiGas - Processing and Marketing) didn't have a legislative base to directly appeal to SOCAR. We have authorization within law 'On Public Procurement'. That's to say, we have the right to buy fuels and lubricants by announcing a tender, in which any company can take part," the source said.

"But as a rule and as practice shows, large national companies do not participate in tenders. SOCAR haven't submitted an application to participate in our tender."

The source added that after announcing a tender to purchase fuels and lubricants, a contractor which pledged to supply fuels and lubricants from Azerbaijan, submitted an application to supply namely the Azerbaijani gas and won the tender.

"KazMunaiGas - Processing and Marketing carried out a preliminary payment. Under the terms of the contract, fuels and lubricants from Azerbaijan should be supplied before Nov.10, so, five days left. Otherwise, we will make a refund," the source said.

The source added that if the company had a legislative base, or at least a government decree, it would appeal directly to SOCAR.

At the same time, the source reminded that Kazakhstan can buy fuels and lubricants directly from Russian companies, since it has a corresponding government decree for that.

"Therefore, we can buy fuels and lubricants directly from such large Russian companies as Rosneft, Lukoil ...We intend to propose amendments to the current legislation to ensure that the decree of the Oil and Gas Ministry on covering the demand of the domestic fuels and lubricants market will be a basis for appealing directly to large companies, such as SOCAR in the case of shortage," the source said.

The source added that currently, Kazakhstan is not ready to purchase fuels and lubricants from Azerbaijan at market prices.

"We are not ready to purchase fuels and lubricants at market prices, as these products are currently supplied from Russia and Belarus, with which we do not have customs duties," the source said. "It is beneficial for Kazakhstan to buy fuels and lubricants within the Eurasian Economic Union, that's to say from Russia and Belarus, as there are no customs duties."

The source said Kazakhstan could purchase fuels and lubricants from China, but the prices will be higher than the market prices in the case of purchasing these products from Azerbaijan.

Earlier on Nov.5, SOCAR President Rovnag Abdullayev told reporters that KazMunaiGas national company of Kazakhstan has not appealed to Azerbaijan regarding the purchase of gasoline.

He said that currently, the country does not export gasoline and this fuel is used for meeting domestic demands only.

"But as for Kazakhstan, we are talking about small volumes," Abdullayev added.
"If they offer a good price, corresponding to the market price, we can ensure the supply," he said. "We are talking about small volumes, only 5,000-10,000 metric tons, which we can supply at market prices."

A contract to supply up to 6,000 metric tons of the AI-92 gasoline from Azerbaijan to Kazakhstan was signed with KazMunaiGas Onimderi LLP (100 percent subsidiary of KazMunaiGas - Processing and Marketing JSC) on Oct.10.

"As part of this contract, preliminary payment for 3,000 metric tons of AI-92 gasoline was carried out on Oct.14. The contract stipulates the supply of the paid volume before Nov. 10, 2014.

Currently, the contractor (the company, which should secure supplies) doesn't confirm the readiness for delivery of specified volumes of Azerbaijani oil products to Kazakhstan, allegedly due to temporary restrictions on exports of high-octane oil products from Azerbaijan.

In case of non-fulfillment of obligations by the contractor, KazMunaiGas Onimderi LLP will conduct the needed procedures to terminate the contract and to make a refund. It should be noted that the mentioned restrictions in Azerbaijan will not have negative consequences for Kazakhstan's fuel market.

In order to meet the demands of the domestic oil products market, the KazMunaiGas Processing and Marketing supplied 42,300 metric tons of AI-92 gasoline in October.
Aside from that, currently the oil refineries in Russia and Belarus shipped 37,000 metric tons of AI-92 gasoline, which will arrive in November, 2014.

Additionally, it is planned to sign contracts to deliver in November over 50,000 metric tons of AI-92/93 gasoline produced by the Belarusian Mozyr and Novopolotsk oil refineries and a number of Russian oil refineries.

This product meets the К3-К5 standard of the Technical Regulations of the Customs Union.

Currently, there are no restrictions on the sale of AI-92, AI-95 gasoline and diesel fuel at the KazMunaiGas filling station.

KazMunaiGas - Processing and Marketing JSC is a 100 percent subsidiary of KazMunaiGas JSC National Company. Its assets include Atyrau Refinery LLP (99.53 percent), PetroKazakhstan Oil Products LLP (49.7 percent), Pavlodar Petrochemical Plant LLP (100 percent), KazMunaiGas Onіmderі LLP (100 percent), JV Caspi Bitum LLP (50 percent). The main areas of activity: management of refining assets, exports of oil and petroleum products, the development of retail sales of petroleum products.

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