Kazakhstan ready to send more oil to Uzbekistan for the right price

Kazakhstan ready to send more oil to Uzbekistan for the right price
/ bne IntelliNews
By bne IntelliNews October 17, 2023

Kazakhstan is prepared to consider increasing oil supplies to Uzbekistan if the price offered by Tashkent is right, Kazakh Deputy Energy Minister Yerlan Akkenzhenov said on October 11, while dismissing news reports that Russian oil deliveries were displacing its own supplies in the Uzbek market.

Uzbekistan has traditionally struggled to import enough oil because of long transport distances, resulting in lower utilisation rates at its refineries. The oil that the country does import primarily comes from Russia rather than neighbouring Kazakhstan.

Russia’s Gazprom Neft has committed to delivering 300,000 tonnes per year (6,000 barrels per day) to Uzbekistan via Kazakhstan – so far this year 79,000 tonnes have been sent. Kazakhstan, meanwhile, exported only 87,000 tonnes to Uzbekistan in 2022 and 46,000 tonnes in the first nine months of this year. 

Kazakh oil shipments to Uzbekistan are declining. The amount sent in the first half of this year was 36,400 tonnes, representing a threefold decrease year on year, according to Uzbek state statistics. Meanwhile, Gazprom Neft increased deliveries through Kazakhstan to Uzbekistan fourfold in the first quarter of 2023, to 37,900 tonnes.

Kazakhstan could expand its supplies if the Uzbek side offers a better price and conditions than those offered by China and other recipients of its oil, however, according to the Kazakh energy ministry. The matter has already been discussed by both sides. Uzbekistan is currently only a marginal market for Kazakhstan, accounting for a mere 0.13% of its total oil exports last year. Uzbek authorities are yet to comment on the issue.

At the same time, Russia has indicated it wants to expand its market share in Uzbekistan. On October 6, the two countries entered agreements to expand co-operation on oil and petroleum product supplies via rail. The documents were signed in Moscow, when Uzbek President Shavkat Mirziyoyev and Russian President Vladimir Putin attended a ceremony to inaugurate the launch of Russian natural gas deliveries to Uzbekistan via Kazakhstan. 

Pricing details for either Russian or Kazakh oil have been discussed.