Kazakhstan Cuts Oil Export Taxes


Kazakhstan reduced export duties on lubricants, crude oil and other petroleum products, and identified the lowest acceptable crude oil price that still remains profitable for the government.

The country reduced its lubricant export tax by U.S. $113 per metric ton to $60/t, part of a broader action to reset oil sector duties in order to bring costs to export from Kazakhstan in line with international prices. The duty on crude was reduced $80/t to $60/t, while duties on heavy distillates, gas oil, liquid fuel, black oil and other products underwent the same change as lubricants.

Just like in Russia, Kazakhstans crude oil prices are attached to the prices in the international markets, Tamara Kandelaki, head Moscow-based consulting firm InfoTek, told Lube Report. This is not a crisis measure per-se, the government is just adjusting [to create] more favorable conditions for the exporters.

According to the decree, the government developed the export duties based on the average oil price in the world markets projected for 2015, which is $540 per metric ton ($77.16 per barrel) or less. The countrys oil industry could go bust if the crude oil price drops too sharply.

Most of the state revenues come from oil and gas exports, and the countrys oil sector is controlled by the state. The sharp drop in oil prices affected the economies of many oil exporting countries in the region such as Russia, Kazakhstan and Azerbaijan.

Those countries found it particularly painful when oil prices fell below $50 per barrel – in Kazakhstan, for example, the average cost of the oil production amounts to $50 per barrel. On Monday, the Brent crude oil price benchmark stood at almost $57 per barrel.

Kazakhstan has the second-largest oil reserves as well as the second-largest oil production among the former Soviet republics after Russia, according to the U.S. Energy Information Administration. The country has three fuel refineries.

Hill (High IndustrialLubricants and Liquids Co.) operates a 70,000 t/y lubricant blending plant in Shymkent, in southern Kazakhstan. Some of the volume produced in the Hills lubricants plant is exported to China. Semol, a much smaller blender in Semey, eastern Kazakhstan, manufactures lubricants, technical fluids, metal drums and plastic canisters.

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