Mechanisms to limit sharp rise in prices for liquefied petroleum gas under development in Kazakhstan — Bulat Aqchulaqov

Measures to implement the instructions of the President Kassym-Jomart Tokayev given on Jan. 11, 2022, during his speech in the Majilis of the Parliament were considered at the government session chaired by the Prime Minister Alikhan Smailov. Minister of Energy of the Republic of Kazakhstan Bolat Aqchulaqov reported on issues in the energy sector.

The Ministry of Energy divided the forthcoming work on the execution of the instructions of the President of the Republic of Kazakhstan into short-term and medium-term tasks.

A short-term measure, according to the minister, is the establishment of state regulation of prices for gasoline and diesel fuel. In this direction, the ministry has adopted relevant orders to set marginal prices for the retail sale of petroleum products. In particular, the prices for oil products are as follows:

  1. AI-80 gasoline — 89 tenge per liter;
  2. AI-92 gasoline — 182 tenge per liter;
  3. AI-93 gasoline — 182 tenge per liter;
  4. AI-95 gasoline — 215 tenge per liter;
  5. diesel fuel — 230-260 tenge per liter.

Medium-term measures, according to the minister, are:

First. Transition to an extended overhaul period of oil refineries. Reducing repair time.

Second. Creation of reserve stocks of oil products in the amount of 200 thousand tons.

Third. Harmonization of the terms of repair work of oil refineries and shipments of diesel fuel for agricultural producers, according to which the shipment of diesel fuel for agricultural producers will begin in February, a month earlier than before.

Fourth. Equipping oil depots with control metering devices.

Further, according to the minister, in order to ensure full control over the situation on the liquefied gas market, temporary state price regulation for liquefied petroleum gas was introduced and retail prices were approved with a decrease to the range of 50-75 tenge per litre.

Two orders were approved:

  • an order to suspend the Trading Rules until Jan. 1, 2023, according to which the Ministry of Energy will sell liquefied gas outside of electronic trading;
  • an order to reduce the wholesale price limit for liquefied petroleum gas. In order to comply with the limit prices established by the AZRK for the retail sale of the CIS.

Also, to date, an order has been developed to amend the Rules for the formation of a plan for the supply of liquefied gas to the domestic market outside the ETP.

“As short-term measures, until the end of January 2022, comprehensive measures will be introduced to the Government to further improve liquefied gas trading through the ETP/commodity exchanges, taking into account the introduction of transparency principles and mechanisms that limit the sharp rise in prices for liquefied petroleum gas,” Aqchulaqov reported.

Also, according to him, in order to increase the share of the manufacturing industry in the structure of the economy and ensure import substitution in the petrochemical industry, a number of large projects will be implemented.

In particular, this year it is planned to commission a plant for the production of polypropylene with a capacity of 500 thousand tons / year.

In addition, the focus will be on the implementation of large projects for the production of terephthalic acid and polyethylene terephthalate with a capacity of about 1 million tons / year, polyethylene with a capacity of 1.25 million tons / year and butadiene with a capacity of 189 thousand tons / year.

The implementation of these projects will attract about $10 billion in investments to the economy of Kazakhstan.

“This year, the consortiums of Tengizchevroil, Karachaganak Petroleum Operating and North Caspian Operating Company established the International Center for the Development of Oil and Gas Engineering. The main goal of the Center is to localize the production of goods of these three enterprises for the oil and gas industry of the Republic of Kazakhstan by opening new production facilities, as well as expanding the capabilities of existing domestic producers,” Aqchulaqov reported.

According to the minister, the annual volume of purchases of these enterprises is about 5 trillion tenge.

In addition, a Direct Investment Fund for Local Content Development has been established. Chevron, as part of its reinvestment obligations to the republic, allocates funds in the amount of $248.5 million for the development of local content.

To date, the Fund has already been registered at the site of the Astana International Financial Center. Investments will be prioritized in three areas: technology and IT, the production of basic goods and the assembly of certain types of equipment for the oil and gas sector, and environmental protection. But they will not be limited to them.

“Thanks to such initiatives, we must build our system for the production of goods for the oil and gas industry,” Aqchulaqov said.

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