New method of calculation to balance prices of all oil and gas exporters in Kazakhstan

Almaty. July 21. Silkroadnews – New method of pricing for exported oil and gas in Kazakhstan is to balance the prices between all exporting companies, KazTAG reports.

“Yes, the cost price will be one for all. All the global markets have the benchmark oil grades and prices are determined in relation to these grades, regardless of the size of the company. The rules are the same for all. Price shall be determined by calculation according to the supply conditions, transport costs to world markets, insurance, inspection, etc.”, Kanat Dospanov, Deputy Head of Specialized Department of the State Revenue Committee of Kazakhstan’s Ministry of Finance, said at the briefing on Thursday.
He added, there was no such a method of calculating the price before.

“There was no such a technique in oil and gas sector before. The price was determined based on the market relations law, but as there are some companies abusing such state of affairs, the administrative issues have been arisen. There were no clear rules earlier”, said K. Dospanov.

According to him, there are more than 100 exporters and 150 mining companies operating in Kazakhstan now, including 10 large companies providing 80-90% of the oil.

“Indeed, each company sells its oil under different supply conditions. Accordingly, the prices are different for different suppliers ... Large companies can defend their interests when selling to the large traders. Small companies, due to objective reasons, sell at the price imposed by the international traders. Thus, here we define a clear and uniform rules for all”, he added.

K. Dospanov explained, the price will now be determined by calculations according to the conditions of supply, taking into account the cost of transportation to the world markets, as well as international quotations for resources.

This methodology, he adds, allows to develop transparent tax registers, thus, providing their reports on the basis of these registers the companies will not be a subject to tax audits.

“We will be able to control and monitor their actions remotely. Claims will only be raised to the dishonest taxpayers”, K. Dospanov said.

Speaking about the timing of the new pricing methods introduction, he said he does not know the exact date so far, but most likely it will happen this year.

“At the moment the methodology has been submitted to the Department of Energy. According to the law, they must agree it with the state agencies involved and submit to the government. I think it shall happen this year”, K. Dospanov summarized.