Rise of petrol prices unjustified in Kazakhstan25 october 2012, 16:23
There are no objective reasons for rising fuel prices at Kazakhstan’s local market, Sergey Smirnov of the Institute of Political Solutions (IPS) said in an exclusive interview to Kapital.kz.
According to Smirnov, oil price has been fluctuating around $110 per barrel in the last 2 months, that’s why it is not appropriate to refer to some spike in oil prices at the world’s market to justify the rise in petrol prices at the local market of oil producing Kazakhstan.
The expert noted that calculation of fuel costs based on global oil prices is a very complicated tasks. This calculation includes many factors that could have been avoided (being irrelevant for Kazakhstan) and the local petrol prices could have been lowered.
Kazakhstan does not have a fuel market in its traditional form; there are only several elements of it and the general appearance. And the inadequacy of the recent oil and fuel prices growth certifies to the lack of market regulation mechanisms in Kazakhstan. 8.5 percent growth of oil per barrel cost from June to October caused a rise in prices for AI-92 petrol by almost 4% that was effected in one step on October 3.
Oil and gas expert of the Institute of Political Solutions Sergey Smirnov. Photo courtesy of IPS©
Sergey Smirnov also believes that one should not expect petrol prices to lower in Kazakhstan in future. Around 7 million tons of oil out of the 80 million tons produced in Kazakhstan is currently processed at the country's refineries, while the remaining 73 million tons of crude is exported. However, loading the refineries with the country’s own oil is impossible not only for technical reasons, but also because of the government’s mercantile interests. According to Kazakhstan Oil and Gas Minister Sauat Mynbayev, if “we decrease our export by 7 million tons and send them to the local market, our budget will get $1.8 billion a year less”.
The government is going to invest around $6 billion into modernization of Kazakhstan’s oil refineries. Sergey Smirnov noted that the modernization expenses will be covered by the revenues generated from the rise of petrol prices.
Petrol prices were raised in Kazakhstan on October 3. The Agency for Natural Monopolies Regulation stated that the rise was related to increasing prices for Brent oil from $104.09 to $114.8 per barrel.