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Modernization of Kazakh oil refineries may be delayed 12 марта 2015, 11:42

The process of modernizing Kazakh oil refineries may have to be delayed, putting additional pressure on the domestic fuel market of Kazakhstan.
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Photo courtesy of tng.rusoil.net Photo courtesy of tng.rusoil.net

Kazakhstan introduced a 45-day ban on import of fuel from Russia on March 5. This move has prompted several experts to predict a shortage of gasoline and diesel in Kazakhstan, because the domestic refineries in the Central Asian oil country do not produce enough fuel to satisfy the domestic demand.

It has been declared that Kazakhstan would be able to fully provide for its domestic gasoline demand in 2016, when the modernization of its three refineries is accomplished. Until that time, the domestic market is expected to experience a shortage of high-octane gasoline and diesel fuel from time to time, and these shortages are supposed to be compensated by import of fuel from the neighbouring Russia.

Now, there may be a second problem. It appears that deadlines for the completion of modernization of Kazakhstani refineries might be postponed, Tengrinews reports citing deputy general director for marketing of KazMunaiGas - Processing and Marketing Yerlan Koibagarov.

"We expect that modernization will end by 2016. But, as you know, there are many factors that affect it. For example, a very big factor is the availability of funds that we receive from those who refine that oil. We were planning to refine 15 million tons (in two months in 2015), but we revised our plan to 14.3 million. I.e. we are short 700 thousand tons in these two months,” Koibagarov said during the round table discussion in Astana on March 5.

“Roughly speaking, we did not receive the money that we could have spent on the modernization. So if it continues like this, then I do not know whether there will be enough money to fund the modernization. We might have to move the dates," he said.

At the same time he asked not to confuse modernization of refineries with the ongoing maintenance, which is conducted constantly given that Kazakhstan's plants are not new, and some were built more that 50 years ago.

He added that there had been a lot of cheap Russian fuel in Kazakhstan since the Russian Ruble tumbled and neighbouring giant had started experiencing political pressure and economic problems, so all the Kazakhstani refineries were finding it had to make any sales and some even had to suspend production.

In the meanwhile, CEO of KAZENERGY Association Asset Magauov said that the modernization of the refineries was going well. "Modernization at all the plants gradually continues, and we can already see some improvement in terms of the yield of light oil products," Magauov said.

Reporting by Renat Tashkinbayev, writing by Dinara Urazova, editing by Tatyana Kuzmina

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