Cash-strapped Tajikistan launches construction of first refinery

Tajikistan’s President Emomali Rahmon launched construction of the country’s first refinery, a 2,000-b/d facility in the town of Tursunzoda about 40 km west of the capital, Dushanbe.

Construction of the facility was prompted by supply shortages and price increases after Russia imposed prohibitive tariffs on gasoline exports in May to address its own supply shortages.

Analyst Andrew Neff of IHS Global Insight said the export tariffs on Russian gasoline helped alleviate shortages in the Russian market. But Neff also noted, “There is a growing fear that Russia could see more oil product shortages in certain regions, with consequent negative effects for countries such as Tajikistan that rely on Russian oil product imports.”

Rahmon suggested if funding could be found to increase the refinery’s capacity to 10,000 b/d, then 90% of Tajikistan’s fuel and lubricants would be met by the new installation.

Energy analysts claim the kind of refinery envisaged for Tajikistan can be built in 4-5 months at a cost of $100-150 million and could pay for itself within 8 months under local conditions.

Export duties
News of the refinery coincided with reports that Tajikistan and Russia have yet to reach consensus on lowering or eliminating completely export duties on light oil products imported by the republic.

Since the beginning of 2010, Tajikistan has been trying to get Russia to cancel the duties, which are now $400.50/tonne of Russian gasoline and $298.20/tonne of the remaining oil products.

Neighboring Kyrgyzstan succeeded in getting Russia to cancel export duties on products, but Tajik Economic Development and Trade Minister Farruk Khamraliyev is uncertain how the agreement was reached.

“We don't have specific information as to how Kyrgyzstan was able to convince Russia to lift the export duties. Several reports have it that this became possible after the parties agreed to jointly carry out several different energy projects,” Khamraliyev said.

Meanwhile, Zhumakydar Akeneyev, president of the Association of Oil Traders of Kyrgyzstan, said up to 1,000 tonnes/day of fuels are smuggled from his country to Tajikistan.

“We set gasoline purchase limits in southern regions because a large consignment of fuels is being smuggled into Tajikistan via the Batken region,” said Akeneyev “We are just forced to set these limits.”

In May, however, Kyrgyz customs service chief Kubanychbek Kulmatov predicted fuel smuggling from Kyrgyzstan into Tajikistan will increase due to price variations between the two countries.

“Current price for a liter of diesel fuel in Kyrgyzstan is 52-53 som and variation of diesel prices in Kyrgyzstan and Tajikistan is now very high,” said Kulmatov, who also observed, “Our common border with Tajikistan is practically open.”

Since the beginning of this year, prices for gasoline and diesel fuel in Tajikistan have risen 25%, with officials saying the Central Asian country spends $343 million/year on imported oil products, out of a state budget of $2 billion.

Contact Eric Watkins at hippalus@yahoo.com.

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