Russian oil is displacing Kazakhstani oil from the Uzbekistan market, Russian newspaper Vedomosti informed.
"In January-June 2023, Kazakhstan supplied Uzbekistan with 23,900 tons of oil and around 10,000 tons of gas condensate by rail, marking the lowest figures in the history of observations, according to the Argus market research company. Data from the State Customs Committee of Uzbekistan confirms the negative trend in shipments from Kazakhstan, but the numbers differ. In the first half of 2023, Kazakhstan reduced oil supplies to Uzbekistan by three times year-on-year to 36,400 tons," the newspaper reports.
An anonymous trader noted an increase in shipments of inexpensive Russian oil to Uzbekistan. Russian oil exports increased this year due to supplies from Gazprom Neft, which began combined shipments of raw materials through Russia's Transneft system, which owns all major oil pipelines in Russia, and KazTransOil.
As a result, in the second quarter, the transit of Russian oil through pipelines across Kazakhstan to Uzbekistan towards the Fergana Oil Refinery, which has a designed capacity of 5.5 million tons of oil per year, nearly quadrupled compared to the first quarter, reaching 37,900 tons.
Part of Russian exports went by rail. In the first half of the year, Russia increased railway deliveries of oil and oil products to Uzbekistan by 5.2 times to 1.2 million tons compared to the same period in 2022. However, only 0.6% of the total volume was crude oil, 28% was gasoline, and 20.8% was fuel oil, according to Alexander Slobodyanik, the head of the cargo transportation research department at the Institute of Natural Monopolies Problems.
Russian oil to Uzbekistan is transported via pipelines from Omsk to Pavlodar and Shymkent, and then it is transferred to tanks at the Shagyr oil loading rack before being sent to Uzbekistan by rail.
At the beginning of the year, Uzbekistan reached agreements with Russia for the supply of 300,000 tons of Russian oil. KazTransOil in March announced plans to transport 250,000 tons of Russian oil to Uzbekistan, but in August, the forecast was reduced to 180,000 tons. In the first half of the year, 48,500 tons of Russian oil were delivered to Uzbekistan in transit through Kazakhstan, and in the second half, 131,500 tons are planned to be pumped.
The increase in Russian oil shipments occurred after Kazakhstani oil began trading at a premium to Urals (both Russian and Kazakhstani oil were marketed under the Urals brand in the global market). Following Russia's full-scale invasion of Ukraine in 2022 and the strengthening of sanctions on oil exported from Kazakhstan through Russian infrastructure, a discount of $30-35 per barrel was formed compared to the benchmark Brent. As a result, Kazakhstani oil was renamed Kebco (Kazakh Export Blend Crude Oil), making it more expensive than Urals.
On October 6, Russia and Uzbekistan signed agreements to expand cooperation in the field of oil supplies, as well as the transportation of petroleum products by rail. The agreements were signed following negotiations in Moscow between Russian President Vladimir Putin and Uzbekistan's President Shavkat Mirziyoyev. The volumes of the expected supplies were not disclosed.
KazTransOil had planned to transport 250,000 tons of Russian oil to Uzbekistan in 2023, including 25,000 tons in March. However, in March, only 10,700 tons were shipped in this direction, and by the end of the second quarter, it was 38,000 tons.
The transit of Russian oil to Uzbekistan began in 2017 when the transit volume reached 67,900 tons. In 2018, transit amounted to 36,000 tons. In 2019-2022, transit was not carried out.
KazTransOil approved a new tariff for the storage of Russian oil transported in transit through Kazakhstan to Uzbekistan starting from July 10. The tariff for this service was set at $0.52 per ton per month. The previous tariff for this service was 233.76 tenge per ton per month (without VAT). At the time of the announcement of the change in the tenge, the new tariff was 232.26 tenge, slightly lower than the existing tenge tariff. However, if Kazakhstan's national currency continues to devalue against the US dollar in the medium term, the new tariff will increase income in tenge terms. For example, as of October 9, the tariff is 248.78 tenge, which is higher than the existing tenge tariff. Thus, this measure can be seen as a response to the potential impact of the tenge devaluation on KazTransOil's income.
CentralasianLIGHT.org,
October 9, 2023