Introduce regulation of oil prices for
they want the domestic market in the RK
The Agency for the Protection and Development of Competition proposes to introduce state regulation of oil prices and the volume of its supplies to the domestic market. This was announced by the head of the AZRK Serik Zhumangarin at a round table in the Majilis "On measures to demonopolize key commodity markets of the Republic of Kazakhstan," the correspondent of the Kapital Business information Center reports.kz with reference to the press service of the department. Kapital.kz .
He explained that the basis of the oil and petroleum products markets are vertically integrated companies operating on the principle of "from the well to the gas station."
"The CNPC and KazMunayGas groups of companies, carrying out 80% of oil production, ensure its processing at their refineries and through the givers (Petrosun, KMG, Petroleum Operating) sell fuel to affiliated and large companies – these are Sinooil, Petro Retail, Avtogaz Trade (GazEnergy). In general, pricing in the domestic oil market is non-market in nature. There is an unspoken regulation of prices for oil supplied to the domestic market", – рассказал он.
The price is determined based on the mechanism of reverse calculation of the cost of a basket of petroleum products.
"In other words, when setting the optimal price for petroleum products, the purchase price for oil is formed. There are direct contracts without the use of centralized trading and stock market indicators. At the same time, CNPC and KazMunayGas account for the main share of refining, which limits the possibilities of developing competition in the wholesale and retail markets of petroleum products", – считает глава АЗРК.
In addition, the practice of crushing a single technological cycle of oil refining has been formed at domestic refineries. Thus, in connection with the sale to third parties of the factory storage park and bulk overpasses, previously owned by the Atyrau Refinery, all liquefied petroleum gas is directly pumped into the capacity of the "Liquefied Petroleum Gas Storage Park". As a result of the emergence of a new dominant company, the final cost of the product increases.
In the wholesale market, the main oil suppliers – Petrosun LLP, Petroleum Operating LLP and KazMunayGas JSC – purchase raw materials from subsoil users belonging to the CNPC group and KazMunayGas, taking 80% of the total volume of oil supplies to the domestic market.
"Of the 11 million tons of petroleum products, two–thirds are sold directly to retail chains, a third to secondary wholesale suppliers, as a rule, who do not have any infrastructure. According to the Kazakhstan Fuel Association, independent gas station networks get the missing volumes of petroleum products from intermediaries: Helios – 65%, Gazprom Neft-Kazakhstan – 80%, small networks – up to 90%. Pricing in the wholesale market of petroleum products is also non-market in nature. There are direct contracts, exchange trading applies only to 10% of the total volume of the domestic market. In such conditions, the marginality of large oil suppliers reaches 30%, and affiliated intermediaries – 10-15%", – сообщил он.
Serik Zhumangarin recalled that in 2021, stock trading in petroleum products started. However, due to rising prices, technical problems and planned major repairs at the refinery, as well as an increase in the price of gasoline in the border regions of Russia, the auction was suspended.
"The retail segment is represented by large networks of gas stations: Petro Retail, Sinooil, Helios, Gazpromneft-Kazakhstan, Avtogaz Trade – GazEnergy, Royal Petrol. They account for more than 50% of the market with a concentration in the capital and regional centers of the republic. At the same time, if Sinooil acquires volumes directly from its affiliated company Petrosun, then Petro Retail – from the former owner of this network – KazMunayGas… We have jointly worked out a new market scheme", he explained.
Thus, the filling station proposes to introduce state regulation of oil prices and the volume of its supplies to the domestic market, which will ensure price stability at the first stages of deconcentration. At the same time, it is proposed to consider the inclusion in the oil supply plan of large fields (Tengiz, Kashagan, Karachaganak) and increasing the share of CNPC in the supply of oil to the country's market.
"It is necessary to consider the possibility of selling oil on the stock exchange (5-10% in pilot mode) produced by independent companies, and an increase in fuel trading (30%), which will allow small WINCS and independent companies to develop. It is also proposed to consider the possibility of participation of subsoil users in the supply of oil to refineries directly or through affiliated oil suppliers", he explained.
To reduce the risk of price imbalances, it is proposed to consider the issue of consolidation of oil suppliers through the establishment of a minimum supply volume for processing – from 100 thousand tons. AZRK proposes to exclude from the current market structure an excessive intermediary link in the person of a secondary wholesale supplier, except for oil depots within their capacity.
"An important issue is the restoration of a single technological cycle at refineries in a judicial or contractual manner and the establishment of a ban on their crushing. It is also proposed to consider the introduction in the pilot mode of phased purchase of refinery oil from subsurface users and the sale of fuel at gas stations and large consumers," Serik Zhumangarin concluded.
Source: kapital.kz