Kazakhstan's petrol prices may double by 201602 october 2012, 13:38
Oil and gas expert of the Institute of Political Solutions (IPS) Sergey Smirnov expressed his opinion on Kazakhstan's necessity to switch to production of Euro-4 and Euro-5 standards fuel. He believes that Kazakhstan’s fuel prices may grow 1.5 or 2-fold by 2016. According to the technical regulations of the Customs Union, Kazakhstan has to switch to production of Euro-4 and Euro-5 standards fuel by January 1, 2016. Production and sales of fuel of other standards – Euro-2 or Euro-3 – will be banned.
Smirnov believes that the process of modernization of oil refineries is quite a complicated one, considering that Kazakhstan has to switch to the new more advanced Euro 4 and 5 standards, omitting the Euro-3 standard. “We are still making the poor Euro-2 fuel, while Europe has cast it away long time ago. During development of the project of refineries modernization it was specifically emphasized that we would not be moving gradually, but would ‘jump’ to Euro-4 and Euro-5,” Smirnov said.
The expert expressed doubts that modernization of the refineries would be a success this time, considering the previous experience. “If I am not mistaken, Atyrau refinery has been modernized twice and the target fuel standards have still not been reached. Meanwhile, I don’t see any real steps made. And this time it has been announced that Atyrau refinery will be modernized, but there is no information on Pavlodar and Shymkent refineries modernization plans.”
Increasing fuel imports to Kazakhstan could be a solution in case Kazakhstan’s refineries are not modernized by 2016. Several fuel stations in Almaty and Astana are already selling imported AI-95 petrol of Euro-5 standard. One liter of this Belarus-made fuel costs 295 tenge ($1.96). The expert believes that Euro-5 standard fuel should cost about the same in 2016. “Perhaps, the price will go down a little, considering lack of the customs duties, but it will not go down dramatically. Transport costs will remain part of the game,” Smirnov said.
Deficiency of Kazakhstan-made raw materials is another problem of Kazakhstan’s oil and gas sector, according to the expert. “They are going to process around 17 million tons a year, whereas now our refineries currently process around 14 million tons. 7 million tons is Kazakhstan’s crude oil, another 7 million tons of crude is supplied from Russia. I don’t know where they expect to get the 3 more million tons from. We are so focused on exporting our crude that we don’t have enough left to load our own refineries.”
The expert doesn’t believe that switching to new fuel standards is very advantageous for Kazakhstan. The fuel’s environmental friendliness is, in his opinion, an unquestionable advantage: use of Euro-4 and Euro-5 fuel significantly decreases polluting emissions. Nevertheless, this fuel may turn out too expensive for Kazakhstan’s car-owners. “I doubt that by that time salaries will be raised enough for people to be able to easily afford petrol at such prices. That’s why I don’t see much immediate benefit for the people. Should the country continue pursuing this course we’ll have to switch to bicycles like in China, or bikes and scooters like in Vietnam,” the expert stated.
Oil and gas expert of the Institute of Political Solutions Sergey Smirnov. Photo courtesy of IPS©
By Dmitriy Khegai from Tengrinews.kz