LUKOIL will supply to Uzbekistan duty-free oil

LUKOIL will supply to Uzbekistan duty-free oil

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We are talking about the supply of 200 thousand tons per year transit through Kazakhstan


Photo: REUTERS/Sergei Karpukhin

Russia has held negotiations with Uzbekistan on duty free oil supplies. It was about the supply of 200 thousand tons of Russian oil per year, mainly it will be the raw material of the company “LUKOIL”, told “Izvestia” two sources familiar with the negotiations. Experts believe that the oil agreement may have a geopolitical extension — including Uzbekistan’s accession to the Customs Union and the EEU.

Earlier, Uzbekistan asked about the supply of oil through the pipeline Omsk–Pavlodar–Shymkent–Zafarabad without levying export customs duties in the end of last year, but the Russian authorities refused for lack of technical ability. The talks continued after Kazakhstan has offered his help with the transit.

— In the supply of oil to Uzbekistan is interested first of all “LUKOIL”, basically it will be his raw material, — explained the “Izvestia” a source in the market.

Another source added that “Gazprom Neft”, “RussNeft” and “Rosneft” can also participate in the export of oil, given the obligations of Rosneft supplies to China.

The press service of “LUKOIL” refused to comment on the subject, gave the company a request for the supply of oil to Uzbekistan and at what volume. In January, the energy Ministry said that the specific volumes of oil supplies to the appeal of the Uzbek side was presented.

— We are talking about a small volume of supply — about 200 thousand tons per year, — explained the “Izvestia” a source familiar with the negotiations.

Another source confirmed the discussed figure. The Ministry of energy the volume of deliveries has not commented.

— Negotiations on duty-free oil supplies from Russia to Uzbekistan continue. In accordance with the instructions of the Russian government is discussing possible solutions, — told “Izvestia” in the Ministry.

This decision will be the supply of oil through Kazakhstan. National oil and gas company “KazMunaiGaz” is ready to consider possibility of transit of Russian oil to Uzbekistan, said during the visit of the President of Uzbekistan Shavkat Mirzaev in Kazakhstan, the energy Minister of the host country Kanat Bozumbaev. Following the visit, the countries agreed on the use of the pipeline for oil imports, said the Chairman of the Board of the national holding company “Uzbekneftegaz” Alisher Sultanov.

Uzbekistan produces about 3 million tons of oil at fields in South-Western Uzbekistan, the capacity of the three refineries of the country for raw materials is about 11 million tons and consumption of petroleum products and 3.5 million tons, cites energy expert at the center of the business school “SKOLKOVO” Catherine Grushovenko.

— Total demand in the import of raw materials Uzbekistan, thus, is no more than 3-4 million tonnes annually, of which about 2-3 million tons can supply Kazakhstan. In the event supplies from Russia are unlikely to talking about “the deal of the century”, she said.

However, Catherine Grushovenko’m sure Russia will get the losses from free trade with Uzbekistan.

— Each sold ton of oil is a loss for the budget, and the loss is palpable. If we imagine that supplies will amount to 200 thousand tons per year, at least it lost $20-30 million — calculated the expert.

Despite these losses, the political victory of Russia may be more important — to expand Russia’s influence in the oil market of Central Asia and improve relations with potential member of the Customs Union and the Eurasian economic Union, says Catherine Grushovenko.

Because the agreement on the supply can yield much more significant dividends than paying export duties, agrees the analyst of “Alpari” Maxim Romanchuk.

— It is very likely that the subject of the auction will be Uzbekistan’s accession to the EAEU and the Customs Union. It is no secret that China is currently in connection with the implementation of its strategy of “one belt and one road” more and more strengthens its position in the region, warns the analyst.

To bring Uzbekistan’s accession to the Customs Union and the Eurasian economic Union was impossible under the previous President of the Republic Islam Karimov, who strongly opposed the accession of Uzbekistan to the above-mentioned organizations, reminiscent of Maxim Romanchuk.

In addition, Uzbekistan is a major market, “LUKOIL” considers this a very promising market from the point of view of fuel sales.

— At the same time to supply fuel from Russian refineries or buying local is very unprofitable. Thus, the project of “LUKOIL” for the creation of a network of filling stations depends in deliveries of Russian oil, — said Maxim Romanchuk.

Kazakhstan in the supply chain will guarantee that the rules of the world trade organization (WTO), which includes Russia, violated by the absence of duties on oil will not, said the analyst of “ALOR Broker” Kirill Yakovenko.

According to the WTO, Russia has a number of obligations to its members in matters of oil supply condition is the exception to the abolition of import duties on oil. In case if Russia will make an exception Uzbekistan, other WTO members have the right to demand from Russia of the same concessions, — explains the analyst.

If Kazakhstan is a transit country, WTO rules are not violated. And since Russia and Kazakhstan, the agreement on the free movement of goods and services, the fee will not be applied, recalls Kirill Yakovenko.

Russian needs oil to Uzbekistan for processing at the refinery. There are three such plants: Bukhara, Fergana and Altyaryk. Private Russian company LUKOIL with a total investment of $5 billion is the largest foreign investor in Uzbekistan.

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