Gasoline Prices Up 12%: Kyrgyzstan Imports Fuel from China's Sinopec
Central Asia Column “Steppe Ahead,” by Thomas Baier
AI-92 gasoline costs 87.9 som per liter in Bishkek—about one U.S. dollar—which is 12% more than in May. Russia had most recently accounted for over 90% of Kyrgyzstan’s fuel imports, but deliveries have stalled. Deputy Chief of Staff Erlis Akunbekov therefore negotiated with the Chinese oil company Sinopec in Urumqi on August 17 regarding additional supplies. Both sides agreed to simplify and expedite the procedures for fuel imports from China.
Russian shipments are stalling; prices have been rising since May
From January through May, Russia supplied 251,000 metric tons of gasoline, 235,150 metric tons of diesel, and 48,150 metric tons of kerosene to Kyrgyzstan, according to the English-language regional media outlet The Times of Central Asia. Since the summer, supplies have been stalling. The Orsk refinery in southern Russia was shut down following a drone attack on August 11; according to The Times of Central Asia, repairs will take about six months. The facility processes 6 million metric tons of crude oil per year. At least ten Russian regions restricted fuel sales in mid-August. In St. Petersburg, sales have fallen by about 20% since early August.
The shortage is driving up prices at Kyrgyz gas stations. The country’s antimonopoly agency reported a price of 87.9 som per liter for AI-92 on August 17, compared to 78.4 som in May. AI-95 costs 109.9 som, equivalent to 1.25 U.S. dollars, and diesel costs 99.9 som. The government had only introduced price caps at the end of May and decided to extend subsidies through the end of September. As early as the beginning of July, it removed AI-95 from state price regulation. Prior to that, the fuel had sold out at several gas stations in Bishkek. According to the National Statistics Committee, consumer prices rose by 6.7% from January to July.
The first tanker trucks from China are already on their way
Akunbekov traveled to Urumqi with representatives from more than ten Kyrgyz oil trading companies. Sinopec is one of the world’s largest oil and gas companies. “Kyrgyzstan is interested in increasing shipments of petroleum products from China. This sector has great potential and represents a long-term direction for trade and economic cooperation,” the deputy prime minister said, according to The Times of Central Asia. The first contracts for jet fuel and diesel have been signed. An initial shipment reached Kyrgyzstan by road as early as July.
Akunbekov also agreed with the leadership of China’s Xinjiang region on simplified border and delivery procedures, according to the Kyrgyz news portal Open.kg. Agreements on joint oil production, the construction of a refinery, and fuel storage facilities at the border are expected to follow by the time of the Shanghai Cooperation Organization summit in Kyrgyzstan. Both sides also discussed the planned China-Kyrgyzstan-Uzbekistan railway line, the Barskoon-Bedel-Aksu highway, and the opening of the Bedel border crossing. Back in June, Akunbekov had already discussed joint ventures with Sinopec Chairman Hou Qijun. At the same time, Bishkek is sourcing supplies from elsewhere: Kazakhstan supplies 15,000 to 20,000 metric tons of heating oil per month, and Belarus has pledged to supply diesel and kerosene.
Domestic refineries cover only a fraction of the demand
Kyrgyzstan consumes 1.6 to 2 million metric tons of petroleum products annually, about 1.2 million metric tons of which are imported. The country’s two refineries—the Kyrgyz Petroleum Company and the Chinese-financed Junda plant in Kara-Balta—have a combined nominal capacity of 1.3 million metric tons. In fact, according to The Times of Central Asia, they cover only about 5% of demand, primarily due to a lack of crude oil. Only after modernization could both plants supply about half of the country’s consumption.
August 14 demonstrated just how vulnerable the energy supply is overall. A power outage temporarily paralyzed the power grids in Kyrgyzstan, Kazakhstan, Uzbekistan, and Tajikistan, affecting Bishkek, Almaty, and Dushanbe, among other cities. The Kazakh grid operator KEGOC points to the failure of two 600-megawatt generators at the Toktogul hydroelectric power plant in Kyrgyzstan. The Kyrgyz grid operator, however, attributes the cause to a Kazakh high-voltage transmission line; a commission is investigating the incident. The outage struck the region in the midst of record-high demand: Kyrgyzstan’s electricity consumption is 18% higher than last year. The country is paying a price for restructuring its supply chains: Truck transport across the Tian Shan is more expensive than Russian rail deliveries, and China’s export volumes have so far been small. With winter approaching, it remains to be seen whether the new sources will fill the gap left by Russia. If the expansion with Sinopec succeeds, the country’s energy dependence will shift from Moscow to Beijing.
Source: The Times of Central Asia, The Times of Central Asia (price regulation), The Times of Central Asia (blackout), Open.kg, Open.kg (prices) (all EN)