Kazakhstan holds back on gasoline exports to Russia over sanctions risk

Major oil refineries in Kazakhstan have decided not to use quotas allocated to them for gasoline exports to Russia due to the risk of sanctions, Reuters reports, citing industry sources.

According to the sources, Kazakhstan’s Energy Ministry authorised the Pavlodar Oil Refinery, the country’s second-largest refinery with an annual capacity of 5.5 million tons, to export 17,500 tons of AI-92 gasoline to the Russian market in July.

The Atyrau Refinery, which has the same annual capacity, received a similar quota in August.

Despite the allocations, owners of the fuel supplies do not plan to export the gasoline, Reuters sources said.

They cited difficulties making payments through Russian banks and the risk of coming under Western sanctions as the main reasons. One source said nobody wants to come under sanctions.

The sources also stressed that Kazakhstan itself is currently facing insufficient motor fuel supplies on the domestic market. Demand is seasonally high, while neighbouring countries are also experiencing shortages following supply problems in Russia.

The only Kazakh refinery to agree to supply gasoline to Russia was the smaller Kondensat refinery, which has an annual capacity of 850,000 tons. In August, it received its first shipment of 4,100 tons of Russian crude oil by rail; it had previously purchased naphtha from Tatneft. In July, the refinery sent 9,000 tons of gasoline to Russia.

Gasoline from the Atyrau Refinery is too expensive for Russian importers, sources noted.

AI-92 gasoline costs $1,100–1,200 per ton, or about 101,300 rubles. This is 43% above the current price of 70,828 rubles per ton on the St. Petersburg International Mercantile Exchange.

Domestic gasoline production in Russia currently meets only about two-thirds of demand, according to Dmitry Prokofiev, director of external communications at NEFT Research. Since the beginning of the year, Ukrainian drones have attacked Russian oil refineries more than 70 times. As of early August, at least 18 refineries had either completely halted operations or were operating at reduced capacity, while another five refineries had fully stopped fuel production over the previous four weeks.

According to Rystad Energy estimates, Russia’s refining volumes are about 30% below the seasonal norm, at roughly 4 million barrels per day. Russian oil companies will not be able to eliminate the shortfall through domestic production in September, with industry sources telling Kommersant that even under an optimistic scenario, fuel output will rise by only 10–15%.

By Bakhtiyar Abbasov