Results of the Year
Petroleum Products Market: Between Regulation and the Transition to Transparency
The fuel market has traditionally been one of the key elements of Kazakhstan’s national economy and a condition for social stability in the country. Amid rising domestic demand, mounting pressure from global trends, and the need to modernize refining capacity, the state has been forced to balance regulation and market instruments.
At times, this balancing act follows the formula described by the Marxist classic Vladimir Lenin: “One step forward, two steps back.” As of February 1, 2025, Kazakhstan officially abolished state price controls on gasoline and diesel fuel, as such controls led to price distortions within the Customs Union, encouraged illegal cross-border fuel flows, and prevented the sector from attracting investment for further modernization and development. As a result, from January through September 2025, gasoline prices in the country rose by 11.2 percent, while diesel rose by 9.2 percent (see “Free Pricing in Kazakhstan: The Start of a New Era for the Central Asian Oil Products Market,” Petroleum, No. 4-2025).
On October 16, Prime Minister Olzhas Bektenov announced “a moratorium on any further increases in the price of 92 RON gasoline and diesel fuel until inflation stabilizes.” The industry was instructed to fix retail prices for 92 RON gasoline and diesel at the level in effect in each specific filling-station network as of that date. “The introduction of a single nationwide cap price is not envisaged. This flexible approach makes it possible to preserve elements of healthy competition,” the Ministry of Energy explained, and it pledged strict penalties for violations.
Thus, the sector—tightly regulated for many years—is being slowly and with difficulty reformed. There is no alternative: the country must move to a new stage by introducing exchange mechanisms, liberalizing prices, and preparing for the formation of the common market of the Eurasian Economic Union (EAEU).
The Caspian Commodity Exchange, which has ranked among the top three by transaction volume since 2011 and trades, among other things, petroleum products and liquefied gas, has prepared an “Analytical Report: The Oil Products Markets of Kazakhstan and Russia in the Context of Global Trends and Forecasts.” The document provides a current analysis of the sector and a forecast of its development.
Sustained Growth Amid Persistent Risks
According to the report, oil refining in the country is concentrated at three major plants—the Atyrau, Pavlodar, and Shymkent refineries—which together account for over 94% of output. In 2024, crude throughput totalled 17.9 mln tons, and oil products output reached 14.5 mln tons. Kazakhstan’s oil products market shows steady growth in production and consumption, yet remains dependent on imports for certain fuel types.
At the same time, the increase in refining is accompanied by structural challenges. First, refining depth remains below the global average, which limits the production of higher-margin products. Second, reliance on refinery turnaround cycles makes the market vulnerable to seasonal fuel shortages, especially during planting and harvest periods in the agricultural sector.
Government plans call for expanding the Shymkent refinery’s capacity from 6 mln to 12 mln tons per year, which should strengthen the domestic market and reduce the need for imports. The prime minister also recently announced the start of construction of a fourth refinery in the country. In response to a parliamentary inquiry, he stated that the Ministry of Energy has drafted terms of reference for a pre-FEED technical and economic study for the project “Construction of an Integrated Oil Refining and Petrochemical Complex in the Republic of Kazakhstan.” The new plant’s capacity is set at 10 mln tons per year.
The terms of reference include identifying project participants and evaluating at least four potential sites, including an option in the Mangystau Region. The work is divided into stages: 2028 to 2030—pre-FEED; 2030 to 2032—development of design-and-estimate documentation; 2032 to 2040—plant construction.
Domestic consumption: demand growth and specifics
The report notes steady growth in domestic consumption. In 2023, final energy consumption reached 43.4 mln tons of oil equivalent, with oil and oil products accounting for 33.5% of that volume.
A distinctive feature of the Kazakhstani market is the high share of diesel fuel (44% of total oil-product consumption), reflecting the agricultural profile of the economy and significant freight traffic, including transit. The share of gasoline is about 42%.
Accordingly, any fluctuations in diesel prices and volumes have a multiplier effect across planting campaigns and the logistics of grain and industrial exports.
“Cheap gasoline supports the economy but weakens the flagships that, in fact, fund the country. Roads and schools are built with state funds. The largest contribution to that budget comes from the oil and gas sector.
Here is the example of KazMunayGas. It clearly shows what artificially cheap gasoline leads to. Take its producing subsidiaries Ozenmunaigas and Embamunaigas. They supply 60% of crude to refineries at $12 to $30 per barrel, while the global price is $60 to $100 per barrel. KMG has two groups of assets: its own producing companies and equity stakes in the three giants Tengizchevroil (TCO), NCOC, and KPO. It is the dividends from these three projects that make the company profitable today. Its own production is barely in the black, far less than it was 10 to 20 years ago.
This problem should have been addressed 10 years ago, step by step. Decisions were postponed, and now everything has come due at once.”
Alisher Kozhasbayev, Adviser to the Prime Minister of the Republic of Kazakhstan
Imports and exports: strategic dependence on Russia
Although Kazakhstan is actively expanding refining capacity, import dependence persists. In 2025, under an intergovernmental agreement, the Republic may purchase duty-free from Russia 285,000 tons of gasoline, 300,000 tons of jet fuel (aviation kerosene), 450,000 tons of diesel fuel, and 500,000 tons of bitumen. Such purchases help smooth seasonal demand peaks. The volumes are agreed “with a margin”. In past years, they were not fully drawn.
While importing finished products, Kazakhstan also maintains a raw-material export orientation. In 2024, crude oil exports totalled 68.6 mln tons, and 70.5 mln tons are planned for 2025. The primary route is the Tengiz–Novorossiysk pipeline of the Caspian Pipeline Consortium, which carried 54.9 mln tons in 2024. Additional routes to Russia, Germany, China, and Uzbekistan are also used.
Thus, Kazakhstan serves as both a major crude exporter and an importer of finished oil products. This paradox underscores the relevance of developing deep processing domestically.
State regulation: from administered prices to deregulation
Until February 2025, prices for key fuels (RON 92 and diesel fuel) were directly regulated by the Ministry of Energy. In February 2025, a decision was made to phase out fixed prices and adopt market mechanisms.
The rationale is clear: artificially low fixed prices encouraged “gray exports” of fuel to higher-price neighbouring markets. Annual losses from such exports were estimated at $1.2 bln.
Ending price controls is intended to create conditions for a sustainable pricing model and improve the sector’s investment appeal. The transition period, however, requires particular care, since rapid price increases can create social tensions. As noted above, in October the government paused the process by freezing further price increases; officials say the freeze will last at least until the end of spring, when the agricultural planting campaign concludes.