Russia’s fuel crisis lands in Central Asia
As Ukrainian drones hammer Russian refineries, Kazakhstan, Kyrgyzstan and Tajikistan are scrambling to protect supplies, curb smuggling and brace for the inflationary fallout.
It has long paid to smuggle fuel out of Kazakhstan.
Russia’s rapidly unfolding gasoline crisis is about to make it even more profitable.
As Ukrainian drone strikes continue to disrupt Russian refining capacity, Astana has responded by tightening border controls and highlighting a series of high-profile fuel-smuggling cases in an effort to protect the domestic market.
This week, Kazakhstan’s Financial Monitoring Agency sought to demonstrate just how seriously it is taking the problem. Since January, police and border officials have prevented more than 700 attempts to secretly export fuel and other oil byproducts out of the country, the agency revealed.
Smugglers certainly cannot be faulted for lacking a spirit of enterprise. In the western province of Mangystau, one underground operation built an illegal mini-refinery and processed more than 28,500 tons of “unaccounted-for” crude oil. Another scheme involved the construction of a secret tunnel to Uzbekistan. One gang alone managed to transport around $75 million of AI-92 grade fuel to Kyrgyzstan.
Prices for fuel in Kazakhstan have long been held down through a combination of subsidy and regulation. A litre of AI-92, the most popular grade, currently sells at around $0.50. For comparison’s sake, in Kyrgyzstan, the same amount goes for roughly $0.90.
In Russia, the situation is growing increasingly unpredictable. According to RFE/RL, 55 of the country’s 83 regions have reported fuel shortages or introduced restrictions on gasoline and diesel sales. In some areas, motorists have been limited to 30 or 40 litres per visit and barred from filling jerry cans. Elsewhere filling stations have simply run short of fuel. Prices have climbed sharply and vary considerably from region to region.
Even so, officials have sought to frame the problem as temporary and driven in part by panic buying, while pro-Kremlin media personalities have downplayed the scale of the crisis.
If Reuters is to be believed, Moscow is now looking to Astana to get it out of this hole. This week, the news agency cited four energy industry sources as saying that Russia is in negotiations to import around 50,000 tons of AI-92 gasoline. That might be a modest amount, but given that Kazakhstan itself suffers routinely from shortages, the very idea is a politically delicate one.
Kazakhstan has not ruled out considering such an arrangement, though.
