• KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
  • KGS/USD = 0.01144 0%
  • KZT/USD = 0.00200 0%
  • TJS/USD = 0.09156 -0.11%
  • UZS/USD = 0.00008 0%
  • TMT/USD = 0.28530 -0.14%
19 February 2025

Viewing results 1 - 6 of 43

Kazakhstan to Offset Oil Overproduction in 2024

Kazakhstan has pledged to compensate for excess oil production in 2024, reaffirming its commitment to the OPEC+ agreements. At the 58th meeting of the Joint Ministerial Monitoring Committee, Kazakh representatives confirmed the country's readiness to take necessary measures in 2025 and 2026 to meet its obligations under the OPEC+ framework. "Despite increased production this year due to the expansion of the Tengiz field, Kazakhstan remains committed to the OPEC+ agreement and will engage in negotiations with partners in accordance with international law," the Ministry of Energy stated. OPEC+ Efforts to Stabilize the Market The February 3 meeting marked the first OPEC+ gathering of 2025. Participating ministers emphasized that voluntary production cuts, implemented by several member states in December 2024, have contributed to oil market stability. Previously, on December 5, 2024, OPEC+ agreed to extend voluntary oil production limits of 2.2 million barrels per day (bpd) for the first quarter of 2025. The decision was made in response to a seasonal slowdown in demand during the winter months. A gradual easing of restrictions is expected to continue until September 2026. The next OPEC+ monitoring committee meeting is scheduled for April 5.

Kazakhstan Ships First Batch of Kashagan Oil to Baku

Kazakhstan has shipped its first batch of oil from the Kashagan field to the Azerbaijani port of Baku, marking a significant step in the country’s efforts to diversify its export routes. The shipment was confirmed by the national oil company KazMunayGas (KMG). The tanker Taraz, carrying Kashagan oil, departed from the port of Aktau and is en route to Azerbaijan. Upon arrival in Baku, the oil will be transported via the Baku-Tbilisi-Ceyhan (BTC) pipeline system to the Mediterranean Sea. The export operation is being carried out by KMG Kashagan B.V., a subsidiary of JSC NC KazMunayGas, which manages Kazakhstan’s share in the North Caspian Production Sharing Agreement (PSA). This initiative aligns with Kazakh President Kassym-Jomart Tokayev’s directive for KazMunayGas to develop alternative hydrocarbon export routes. The shipment also advances the development of the Trans-Caspian International Transportation Route, a vital corridor for Kazakhstan’s oil exports. In 2022, KazMunayGas and Azerbaijan’s state oil company SOCAR signed a general agreement to enable the transit of Kazakh oil. In March 2024, the two parties finalized plans for a phased increase in deliveries through Azerbaijan. Under the agreement, annual transit volumes are expected to reach 2.2 million tons. KMG Kashagan B.V., which holds a 16.88% stake in the North Caspian PSA, represents Kazakhstan’s interests in the North Caspian Project (NCP). The company is responsible for the exploration and production of hydrocarbons in the Caspian Sea, as well as the independent transportation and sale of its production share under the PSA’s terms. Energy analysts highlight that diversifying export routes will help Kazakhstan reduce its reliance on traditional oil supply corridors, thereby increasing flexibility and resilience in the face of global market volatility.

Kazakhstan Ends Era of Cheap Fuel: Price Controls Set for Abolition

On January 17, the Ministry of Energy of the Republic of Kazakhstan published a number of draft orders on the Open NLA (normative legal acts) portal, which were to be discussed within five days. In total, the Ministry proposed the abolition of eleven orders regulating wholesale and retail prices for petroleum products, which have been under price control since 2014. In addition, it intends to change the calculation formulas and price ceilings for wholesale and retail sales of liquefied and natural gas. I have been writing about the need for price liberalization since 2018, as seen in articles such as “#Kazneft, part 2: The Bermuda Gasoline Triangle - Why Prices Will Rise” and “#Kazneft, part 4: We Rank Seventh in the World for the Cheapest Gasoline. Is It Sold at a Loss?” This is a landmark event for the Government of Kazakhstan, which has long maintained not only the lowest fuel prices in the region but some of the lowest globally. The country consistently ranks among the top ten nations with the cheapest energy resources, including fuel, natural gas, coal, and electricity.   Cheap and Even Cheaper According to Global Petrol Prices, as of January 20, 2025, fuel prices per liter in dollar terms across the EAEU, CIS, and neighboring countries are as follows: (Table 1) Country RON-95 Diesel Turkmenistan 0,43 0,29 Kazakhstan 0,47 0,55 Russia 0,61 0,71 Azerbaijan 0,65 0,59 Belorussia 0,75 0,75 Kyrgyzstan 0,81 0,81 Afghanistan 0,83 0,83 Uzbekistan 0,99 0,95 Georgia 1,09 1,06 China 1,15 1,02 Ukraine 1,39 1,37 Mongolia 1,49 1,19 Kazakhstan ranks seventh globally for the affordability of RON-95 gasoline, trailing behind Angola, Egypt, Algeria, Kuwait, Turkmenistan, and Malaysia. At the same time, there are “throwaway” prices in Iran, Libya, and Venezuela, but these price indicators do not reflect the actual availability of fuel in these countries. Turkmenistan also shows relatively low fuel prices, primarily due to the use of alternative fuels, such as methane, in transportation. Kazakhstan has historically had nearly double the price gap compared to its neighboring countries, which has facilitated the shadow export of fuel despite an official ban on exporting petroleum products.   A Leaky Bucket I have described Kazakhstan's domestic fuel market as a "leaky bucket"— no matter how much fuel is produced, it is constantly in short supply. In 2024, the country processed about 18 million tons of oil, with its three major refineries — Atyrau: 99% owned by the national company KazMunayGas (KMG), Shymkent: 51% owned by China National Petroleum Corporation (CNPC), and 49% by KMG, and Pavlodar: 100% KMG — accounting for approximately 17 million tons. Mini-refineries produced an additional one million tons. The production of petroleum products (excluding fuel oil) amounted to around 14.5 million tons.   The balance of petroleum products for 2025 is as follows, million tons: (Table 2) Product Production in the Republic of Kazakhstan Import from Russia Import to production, % RON-92, RON-95, RON-98 5,0 0,29 6 % Diesel fuel 5,1 0,45 9 % Jet fuel 0,75 0,3 40 % Bitumen/tar 1,1 0,50 45 % For 2025,...

New U.S. Anti-Russian Sanctions Could Spell Trouble for Central Asian Economies

On January 10, 2025, the U.S. Treasury Department announced a new package of sanctions targeting Russia’s energy sector. The measures, which affect a wide range of organizations and individuals, are set to take effect on February 27. While ostensibly aimed at undermining Russia’s economic interests amid the ongoing conflict in Ukraine, the sanctions are likely to have significant repercussions for Central Asian countries given their close economic ties with Russian energy giants. The sanctions package, viewed by some analysts as a final move by the outgoing Biden administration, could become a potent tool for the incoming administration to exert influence over Russian interests in Central Asia. Sanctions on Gazpromneft Subsidiaries The new sanctions include restrictions on Gazpromneft's subsidiaries operating in Central Asia. Affected entities include Gazpromneft Tajikistan, Gazpromneft Kazakhstan, Gazpromneft Asia (Kyrgyzstan), and Munai Myrza (Kyrgyzstan). According to the U.S. Treasury Department, Gazpromneft and its regional subsidiaries are considered critical sources of revenue that support Russia’s military efforts in Ukraine. In response, Gazpromneft characterized the sanctions as "unfounded, illegitimate and contrary to the principles of free competition." The impact of these sanctions, however, could prove severe for the economies of Central Asia, where Gazpromneft plays a key role in the energy sector. Gazpromneft Asia, for example, is a major supplier of petroleum products in Kyrgyzstan, making it a critical player in the domestic market. Sanctions on the company could disrupt fuel supplies and drive up energy prices in the country. Gazpromneft Kazakhstan LLP, based in Almaty, operates a network of Gazpromneft-branded gas stations in Kazakhstan. While disruptions to fuel supplies in this network might not critically affect Kazakhstan’s economy - the largest in Central Asia - the sanctions carry broader implications. Threats to Joint Projects Beyond direct sanctions on companies, several executives of Russian oil firms actively operating in Kazakhstan have been added to the U.S. sanctions list. Key figures include Vadim Vorobyev, President of Lukoil PJSC and a member of Kazakhstan’s Foreign Investors Council. Lukoil is a strategic partner of KazMunaiGas (KMG) in production and exploration projects; Nail Maganov, CEO of Tatneft, which collaborates with KMG on projects such as Karaton Podsolovaya, Butadiene, and the Saran Tire Plant; Alexander Dyukov, the Chairman of Gazpromneft, and Sergei Kudryashov, CEO of Zarubezhneft, which has signed letters of intent for joint projects with KMG. These sanctions could complicate existing partnerships and delay key projects, undermining Kazakhstan’s energy sector and its broader economic growth. Sanctions on Rosatom and Nuclear Energy Another significant element of the sanctions package is the inclusion of Rosatom executives on the U.S. sanctions list. This development poses challenges to Kazakhstan’s plans to establish an international consortium - including representatives from France, South Korea, China, and Russia - to build a nuclear power plant. With Rosatom facing restrictions, the consortium is now likely to exclude Russia, potentially straining relations between Astana and Moscow. A global leader in nuclear energy, Rosatom was expected to play a central role in the project. Kazakhstan may now explore alternative arrangements, balancing its energy ambitions with the...

KazMunayGaz Looking to Buy Another European Oil Refinery

Kazakhstan’s KazMunayGaz (KMG) is seeking to acquire an oil refinery in Bulgaria from Russia’s LUKoil at a bargain price. The purchase of Lukoil Neftohim Burgas, the largest oil refinery in the Balkans, would, according to some media sources, more than double [KMG’s] European refining capacity.” KMG reported a bid of $1 billion for the refinery, which one outlet stated “seems small.”   Pressured Out The Burgas refinery was built in the early 1960s and “joined the LUKoil Group” in 1999. The European Union decision to impose a ban on Russian oil imports after the Kremlin launched its full-scale war on Ukraine deprived Lukoil Nefthohim Burgas of its major source of crude oil. According to a Financial Times report from November 2024, the Bulgarian government pressured LUKoil to sell the refinery, hitting the Russian company “with a 60% tax on profits in an effort to force out its owners” and prohibiting the “export of Russian crude-based products from Lukoil Neftohim Burgas.” In turn, LUKoil complained about “discriminatory laws and other unfair, biased political decisions toward the refinery.” KMG reportedly lost interest in the refinery in late 2024, but BNN Bloomberg reported on January 7 that the Kazakh company was still among the bidders for the Bulgarian refinery.   Advantage KMG When the EU banned Russian oil imports, Lukoil Nefthohim Burgas compensated by purchasing oil from Kazakhstan and the Middle East. If KMG buys the Bulgarian refinery, presumably most or all of the crude processed there will come from Kazakhstan. Kazakhstan exported some 70.5 million tons of oil in 2023, and expects figures will be slightly less in 2024, some 68.8 million tons, due to maintenance at the Tengiz and Kashagan fields. Some 80% of those oil exports are shipped from Kazakhstan through the Caspian Pipeline Consortium (CPC) pipeline to Russia’s Black Sea port at Novorossiysk. Prior to Russia’s full-scale invasion of Ukraine, the EU purchased about 50% of the Kazakh oil shipped through the CPC pipeline, but that amount has risen to 80% since the ban on Russian oil imports was imposed. Kazakhstan is also increasing the amount of oil it exports through Azerbaijan to Georgia’s Black Sea port at Batumi, where KMG subsidiary KazTransOil owns the oil terminal. Kazakhstan has a deal to ship 1.5 million tons of oil annually through Azerbaijan, but Kazakh Energy Minister Abdusalam Satkaliyev said in November 2024 that his country was looking to boost that to 20 million tons. Kazakhstan currently has two Aframax-class oil tankers (deadweight 80,000 tons each) operating in the Black Sea, but plans to bring this number to 12 during the coming years. The Lukoil Nefthohim Burgas refinery has a capacity to process some seven tons of oil annually. KMG International already owns two oil refineries in Romania. The Petromidia refinery, with an annual capacity of some five million tons, is located 20 kilometers from the Black Sea port city of Constanta, and the much smaller and older Vega refinery, north of Bucharest, with an annual capacity of some 350,000 tons....

Kazakhstan’s Mining Association Proposes Reforming Mineral Extraction Tax

Aibar Dautov, head of Kazakhstan's Mining Industry Association, has called for reforms to the procedure for calculating the mineral extraction tax (MET) to boost budget revenues from oil and solid minerals. Speaking at the Astana Open Dialogue during discussions on the new tax code, Dautov noted that Kazakhstan currently employs ten different MET rates for crude oil taxation. These rates are determined based on two key factors: the price of oil at the time of sale and the annual production volume at a given field. The current tax structure is divided into the following production thresholds: 5% tax for annual production up to 250,000 tons 7% for 500,000 tons 8% for 1 million tons 9% for 2 million tons 10% for 3 million tons 11% for 4 million tons 12% for 5 million tons 13% for 7 million tons 15% for production up to 10 million tons 18% for production exceeding 10 million tons Dautov criticized this system as unfair to other sectors of the economy. “We believe the criterion of annual production volume should not exist at all. This differentiation has been in place for many years, but for some reason, it hasn’t been removed or acknowledged as a tax benefit. The Ministry of National Economy continues to support its inclusion in the new Tax Code. It’s unclear why this grading still exists—it should be eliminated and considered a relic,” Dautov stated. The complexity is even greater for solid minerals, according to Dautov, as their MET calculation currently involves 38 different tax rates for various types of minerals. The Times of Central Asia previously reported that Kazakhstan's Ministry of Industry and Construction has proposed replacing the current MET system with royalties. Under this system, taxes would be calculated based on the volume of sold products rather than the volume extracted. This change is scheduled to take effect on January 1, 2026, under new subsoil use contracts, while existing contracts will remain taxed under the current rates.