WORLD: Kazakhstan, an oil-rich country, is preparing to liberalize fuel prices, which are among the cheapest in the world

The Ministry of Energy of Kazakhstan has developed a draft order to cancel the 2014 regulatory act that established the list of petroleum products for which the state regulates the selling price, according to Neftegaz ru. Fuel is very cheap, much cheaper than in neighboring countries, which causes shortages on the domestic market, given that illegal exports are the order of the day.

The Ministry of Energy in Astana points out that a gradual liberalization of prices is necessary, but with priority support for vulnerable social groups, because the country is faced with cross-flows and “gray” exports of petroleum products. The economic feasibility of new projects to increase oil production and expand the largest oil refineries in Central Asia from 18 to 28 million tons/year must also be encouraged, which will create new jobs and thus carry out the investment programs desired by the Government.

In this regard, the Ministry of Energy is expected to develop a policy based on a sustainable model for setting fuel prices. “It aims to create a balance in the market between supply and demand, eliminate fuel shortages, stimulate the modernization of the oil refining industry, create new jobs and attract long-term investments,” according to the cited source.

The Ministry of Energy also assured that the Government will not allow a sudden increase in fuel prices and that, “together with interested bodies, it will strengthen control over the market, ensure compliance with legislation and uninterrupted fuel supply to the domestic market.”

Kazakhstan has among the lowest fuel prices in the world, much lower even than those in neighboring countries. 92-octane gasoline thus costs 205 tenge per liter (the equivalent of 37 eurocents), and diesel costs 295 tenge per liter, the equivalent of 54 eurocents.

However, this situation has created several problems, from a deficit in the domestic market, to the impossibility of the industry to make investments, and to massive exports of fuels, through various illegal schemes, to surrounding states, where prices are much higher – for example, in Uzbekistan diesel costs the equivalent of 528 tenge, i.e. 80% more than it costs in Kazakhstan.

Under these conditions, the local market is facing a shortage of fuels, including LPG, which is a fairly widespread fuel, which is increasing from year to year.

Kazakhstan has repeatedly extended a ban on the export of petroleum products outside the country, and last fall a law was prepared to extend the ban on the export of certain types of petroleum products outside the customs territory of the Eurasian Economic Union (EAEU) until December 31, 2026. However, fuels leave the country “in the gray”, even through legal schemes – for example, in transit through the country refueling is carried out mainly on the territory of Kazakhstan.

Officials have estimated that in order to solve the problem of the growing shortage of light petroleum products, it is necessary to begin designing a new oil refinery with a capacity of 10 million tons per year, the construction of which is expected to begin no later than 2032. The new facility will cover the country’s needs from 2040 to 2050 and will allow their export to the rapidly developing markets of Central, South and Southwest Asia.

Also, in order to increase the production of fuels and lubricants in line with the government’s strategy for the development of the industry for the period 2024-2032, the capacities of the current oil refineries, Shymkent, Pavlodar and Atyrau, as well as the Aktau bitumen plant, will be expanded by 50%.

Thus, 28 million tons of petroleum products will be produced in Kazakhstan – the current figure is 18 million tons. In addition, environmental standards for fuel production will also increase, given that the country aims for climate neutrality by 2060.

Kazakhstan is the most important source of oil for Romania, given that the national oil company KazMunayGas owns the Rompetrol group, which controls Petromidia, the largest refinery in Romania.