Uzbekistan boosts its import of Russian oil sevenfold. This is why

According to the Argus pricing agency, Uzbekistan has been purchasing Russian oil with a much more significant discount per barrel than Kazakhstani oil.

«Our data shows that Kazakhstan has been supplying its oil to Uzbekistan with a discount of $8 to $9 per barrel out of the North Sea Dated price. At the same time, Russian oil goes to Uzbekistan with a discount of $11 to $12 per barrel,» the agency reported.

In the first quarter of 2024, Russian Gazprom Neft shipped 75,000 tons of oil through the pipeline system of KazTransOil (a subsidiary of KazMunayGas), which is slightly more than seven times higher than in the same period last year. This oil was transported toward Uzbekistan via the Omsk-Pavlodar-Shymkent pipeline and the Shagyr oil loading rack.

At the same time, in Q1 2024, Uzbekistan also purchased 15,200 tons of Kazakhstani oil delivered by railway, a decrease compared to 25,600 tons in January-March 2023. Almost all this oil was shipped to the Fergana refinery.

This April, KazTransOil plans to transit 50,000 tons of Russian oil to Uzbekistan through the territory of Kazakhstan and about 550,000 tons during the year in general.

In 2023, KazTransOil pumped up only 154,300 tons of Russian oil to Uzbekistan, although the initial amount of oil was supposed to be about 225,000 tons. Given that the pipeline company shipped just 10,700 tons of Russian oil to Uzbekistan in Q1 of 2023, oil transit surged sevenfold year-on-year. However, even if the company transits 50,000 tons each month starting from April, it wouldn’t meet the annual plan with 450,000 tons in April-December and 75,000 tons in January-March.

Russia started its oil exports to Uzbekistan through the pipeline system of KazTransOil in 2017. It exported 67,900 tons of oil that year and then 36,000 tons in 2018. From 2019 to 2022, there were no oil supplies from Russia toward Uzbekistan.

On February 1, 2023, KazTransOil raised the tariff for Russian oil transit to Uzbekistan from $25.12 to $27.90 per ton (VAT excluded). All transit to Uzbekistan is implemented under the oil supply schedule approved by the Ministry of Energy of Kazakhstan.

In February this year, Kazakhstan reported a 13,000-ton decline to 1.96 million barrels per day compared to January, according to April’s report by the Organization of Petroleum Exporting Countries (OPEC). As of March 24, the North Sea Dated (Brent) oil cost $85.44 per barrel compared to $83.90 on February 24 and $81.11 a year earlier. The same for Urals was $68.24, $66.45 and $44, 50, and for WTI – $80.49, $76.89 and $76.03, respectively.