In April, prices for gasoline, diesel fuel and liquefied gas increased in Kazakhstan. At the same time, it was decided not to raise autogas prices in the western regions of the country, where a year ago this very issue became the trigger for mass protests that ended in bloodshed.
BETWEEN THE DEVIL AND THE DEEP SEA
“Gaz Yelu” is the motto of the mass protests in January 2022 that began in the city of Zhanaozen in western Kazakhstan. “Elu” – “fifty” in translation from the Kazakh language. So men and women opposed the increase in prices for liquefied gas, which is used by most motorists in the region. Then, due to the transition to the exchange trade in oil products, autogas immediately increased from 50 tenge to the market 120 tenge.
Protests against the increase in prices for autogas in the Mangistau region, where Zhanaozen belongs, eventually spread to almost all regions of the republic and ended in bloodshed – at least 238 dead, hundreds injured, thousands of detainees.
To reassure the population, a year ago the government made concessions – it returned manual price control and, with it, autogas prices.
A year later, the authorities nevertheless decided to raise prices. However, it does not affect the “problematic” western regions of Kazakhstan. They are increasing prices for autogas by 5–10 tenge in five regions, as well as for gasoline and diesel fuel throughout Kazakhstan.
The order to increase the price of liquefied petroleum gas affected Almaty, Almaty, East Kazakhstan, North Kazakhstan and Abay regions.
Experts note that the state is stuck between the impoverished population, which, due to low incomes, cannot buy fuel at market prices, and businesses operating at a loss.
— The increase in prices is primarily necessary for oil companies, they currently sell three times less than they could. They play the role of the state by subsidizing the market for cheaper fuels and lubricants,” says Nurlan Zhumagulov, director of the Energy Monitor public fund.
Prices for liquefied petroleum gas in Almaty and the East Kazakhstan region increased by 10 tenge, in the other three regions – by five tenge. The highest marginal gas price in Almaty, Almaty and North Kazakhstan regions is 75 tenge per liter.
According to the expert, Tengiz, Kashagan, and Karachaganak, which account for 65 percent of oil production, are directly interested in selling gas at market prices: due to state-regulated prices, they cannot develop production and raise wages for “imported” workers, “who Every year they ask for an increase in wages.
Increasingly striking local workers are also talking about wage increases and social guarantees . The authorities directly link the increase in gas prices with the improvement in the living standards of oil and gas workers. But in any case, they run the risk of increasing social tension, which does not subside after Bloody January.
“GASOLINE AND SO EXPENSIVE”
Sergey Smirnov, an expert in the oil and gas sector, notes that “the authorities do not have a normal solution to the problem.”
– They say that we have the cheapest gasoline, but if we compare the cost of a liter of gasoline with the income of the population, it turns out that gasoline is quite expensive. Along with gasoline and everything else will rise in price. This will all affect prices. The government does not want to systematically solve this problem – an export ban, price increases – these are all temporary solutions. The authorities do not have a normal solution to this problem,” says Sergei Smirnov.
The “gradual” increase in prices for fuel and lubricants does not suit both manufacturers and sellers. Under the draft order to raise the marginal price for liquefied gas, they expressed disagreement with the new prices. They are, in their opinion, too low. For example, an organization in the Akmola region, where gas prices have remained at 70 tenge per liter, noted that they should also be allowed to raise the price of gas “because of increased rail fares.”
“Until January 2023, the delivery of LPG from the plant of SNPS-Aktobemunaigas JSC cost 24,455.86 tenge per ton, already in March the cost of delivery was 30,086.37 tenge per ton, thus, the cost of enterprises of the Akmola region only for the delivery of LPG increased by 6,300 tenge per ton,” writes Oblgaz LLP about its losses and possible job cuts.
As a result, the authorities have a big social dilemma – it is necessary to raise prices, but the population is against it, and if they do not increase, the business will “go bankrupt”.
According to the authorities, over the past three years, the consumption of liquefied petroleum gas in the country has more than doubled.
“In the Mangistau region, more than 90 percent of vehicles use liquefied gas. The main supplier in the region is the Kazakh Gas Processing Plant (KazGPZ). Its main equipment is worn out by 90 percent. Plant emergency shutdowns can leave the population without motor fuel. Against this background, delaying the issue of building a new gas processing plant on the basis of KazGPP carries not only economic, but also social risks,” President Kassym-Jomart Tokayev said back in 2021.
The new plant is expected to be put into operation in autumn 2025.
However, in Kazakhstan the problem has developed not only with the production of gas, but also with its distribution. According to Talgat Arystanbaev, Chairman of the Board of the Gas Engine Association of Kazakhstan, the plan for 2019-2022, which implies the installation of 100 filling stations and the conversion of 12,000 buses to natural gas, has not moved forward.
– In Almaty and Shymkent, queues are observed at gas stations due to the fact that there are a lot of buses and very few CNG filling stations (automotive gas filling compressor stations. – Ed. ). In other cities, the situation is exactly the opposite. Back in 2017, a gas station for 200 public transport units was built in Aktobe, and only 78 buses were bought. Of these, even fewer are on the line today – 38, the rest are in need of repair. The situation is similar in Taldykorgan – only 50 buses have been purchased. In Kostanay, investors cannot put CNG filling stations into operation. It is paradoxical that there is a large plant for the production of gas buses there, – emphasizes Talgat Arystanbaev.
“DIESEL FUEL INCREASES BY 40 KZT, PRODUCTS BY 10-20 PERCENT”
Even when discussing the draft order on raising the marginal prices for gasoline and diesel fuel on the e-government portal , Kazakhstanis expressed their disagreement with raising prices, however, in response to all the comments that “following fuel, prices will rise for everything, and no one will raise salaries for us won’t be,” the Ministry of Energy responded almost according to a template, arguing the need to raise prices by fighting smuggling: fuel prices in Kazakhstan are lower than those of its neighbors, and the current export ban does little to help.
“With such a difference in prices, the “flow” to neighboring countries has been and will continue. At the same time, the volume of “overflow” will only increase. No restrictive measures will give the desired effect. Preservation of the disparity in prices for fuel and lubricants creates incentives for the operation of the shadow market and damages the national interests of Kazakhstan. Low prices for fuels and lubricants do not make it possible to attract investments and develop the oil and gas industry, carry out geological exploration and replenish the resource base,” the ministry reported on the portal.
According to the agency, since January 31, 2023 (then the ban on the export of fuel and lubricants from Kazakhstan was extended), 288 facts of illegal export of fuel and lubricants from Kazakhstan have been suppressed. Basically, “export” concerned the export of diesel fuel.
“Diesel costs 45 percent more in Russia, 64 percent more in Kyrgyzstan, twice as much in Uzbekistan. As a result, cheap fuel flows to neighboring countries in various ways,” said the Prime Minister.
Meanwhile, experts note that this already increased price does not close the price gap between Kazakhstan and its neighbors.
“I don’t think it will help reduce smuggling. A 20 percent increase in prices for diesel fuel will not affect illegal export in any way, since in Uzbekistan, Kyrgyzstan, prices for diesel fuel are at least 50 percent higher. You can now see the picture that kilometer-long queues are being formed from Uzbekistan to Kazakhstan,” says Nurlan Zhumagulov.
Former adviser to the Minister of Energy of Kazakhstan, Olzhas Baidildinov, noted on his Facebook page that “the break-even level for AI-92 under current conditions and at the current exchange rate is over 250 tenge, and for summer diesel fuel – over 350 tenge.”
The automotive market has already reacted to the increase in prices.
Nadezhda Semidiyankina, head of the Eco-Expert KZ service center for converting vehicles to gas, told RFE/RL that almost immediately after the publication of the order to raise prices for gasoline and diesel fuel, the number of orders doubled.
“Usually there were two or three cars a day, now there are five or six,” says Semidiyankina. “They are starting to move, to install equipment in order to save money. Now the price [for gas] is 30 percent of the cost of gasoline, this is normal.
At the gas stations contacted by Azattyk, they did not want to share their opinions and observations, at one they noted that the situation is stable.
According to the estimates of the analytical company DataMetrics, with an increase in the price of diesel fuel by 40 tenge, the cost of food products will increase by 10-20 percent. Thus, according to these data, the price for butter will increase by 15.4 percent – by 556 tenge, and for vegetable oil – by 20.2 percent, by 180 tenge.
According to the GlobalPetrolPrices portal, as of April 24, Kazakhstan is in the top 10 countries with the cheapest gasoline along with Venezuela, Libya, Iran, Angola, Algeria, Kuwait, Egypt, Turkmenistan and Malaysia.
“As a general rule, richer countries have higher prices, while poorer countries and oil-producing and exporting countries have significantly lower prices. One notable exception is the US, which is an economically advanced country but has low gas prices.
WHY WITH ALL THE WEALTH OF RESOURCES KAZAKHSTAN DOES NOT COVER OWN FUEL REQUIREMENTS?
With all the wealth of resources, Kazakhstan cannot cover its own fuel needs. To resolve the situation, according to experts, first of all, it is necessary to build another oil refinery (refinery).
— When the authorities carried out the modernization program of 2008–2015, the question was whether to modernize existing plants or build new refineries. The authorities calculated that the construction of a new refinery would cost $6 billion, and the modernization of the existing one would cost half as much – $3 billion. In fact, the modernization cost more than $6 billion.
And most importantly, the capacities of the modernized plants should have been enough until 2030, and then they miscalculated. Now they have announced that they will expand the capacity of the Shymkent refinery, and the construction of the fourth refinery is again being refused,
Work for food. How to stop the rise in prices in Kazakhstan?
The expert notes that during the modernization at the Pavlodar refinery it was planned to install equipment for processing Kazakh oil, however, this idea was also abandoned in order to save money. Now the plant is working on Russian West Siberian oil.
Gas from the same Kashagan is processed not in Kazakhstan, but in Russia, at the Orenburg gas processing plant, and then, already processed, is returned to the domestic market of Kazakhstan.
According to the Ministry of Energy, negotiations are currently underway with the Kashagan operator, the North Caspian Operating Company consortium, to build a gas processing plant with a capacity of 4 billion cubic meters per year as part of one of the stages of the development of Kashagan, however, it is not known at what stage the negotiations are now. At the same time, Kazakhstan filed a $5.1 billion lawsuit against the consortium for violating environmental regulations.
Previously, judging by the actions of the government, they did not even think about the deficit. The export customs duty on gasoline and diesel fuel – three times at once – was increased only in 2023, to the level of oil.
“We have reduced the export customs duty to 0.3 of the export customs duty on oil. We thought we would be engaged in the export of gasoline, diesel, but in fact we see that our consumption has grown. We don’t have a surplus. This reduced rate is used for the export of semi-finished products, that is, gas oil, naphtha,” said Vice Minister of Energy Asset Magauov.
Sergey Smirnov notes that the oil produced in Kazakhstan is exported, as it is more profitable than giving it to our refineries, because there it would be processed at domestic prices.
“And if they did it at world prices, then the price of fuel would be prohibitive for our citizens,” the expert explains.
In the meantime, Kazakhstan is directly dependent on Russia. Akorda is holding regular negotiations with Moscow on gas supplies for gasification of the country, including Astana.
Source: azattyq
