Wednesday, 11 May 2011

TAJIKISTAN SEEKS TO EASE DEPENDENCE ON RUSSIAN OIL

Published in Field Reports

By Suhrob Majidov (5/11/2011 issue of the CACI Analyst)

From April 1, 2011, Russia has increased export dues for oil products for countries outside the Customs Union of Russia, Belarus and Kazakhstan. The export due has increased by up to US$ 283 for one ton of refined oil and up to US$ 198 for one ton of dark-oil products.

From April 1, 2011, Russia has increased export dues for oil products for countries outside the Customs Union of Russia, Belarus and Kazakhstan. The export due has increased by up to US$ 283 for one ton of refined oil and up to US$ 198 for one ton of dark-oil products. The new export tariffs heavily affect Tajikistan, which imports up to 92 percent of its domestic oil consumption from Russia. The increase of oil export dues has already resulted in a sharp increase of prices for gasoline and essential food products in Tajikistan.

Russia first introduced export dues for oil products in May 2010. The same year, Tajikistan’s government started negotiations with Russia to eliminate the dues and even managed to come to a preliminary agreement. The Ministry of Energy and Industry of Tajikistan later developed and submitted all the necessary documents required for the agreement to its Russian counterpart. However, the issue is still under negotiation.

Kyrgyzstan is another CIS country which depends heavily on importing oil products from Russia. The introduction of export dues was therefore as disturbing to the fragile economy of Kyrgyzstan as it was for Tajikistan. However, the Kyrgyz government managed to negotiate a removal of the dues in exchange for not increasing the rental fees for the Russian military base in Kant.

Many experts claim that the issue of oil export dues is not just an economic issue. They believe that Russia is using its economic power for applying political pressure on vulnerable countries like Kyrgyzstan and Tajikistan. Thus, Russia was very successful in promoting its interests in Kyrgyzstan in exchange for removing the oil export dues. According to both Russian and Tajik independent experts, Russia is now pressuring Tajikistan in order to its get approval for using the military airport “Aini” in Tajikistan.

Bilateral negotiations about the deployment of a Russian military base at the Aini airfield have lasted for several years already. According to local political expert Saimuddin Dustov, Russia now plans to strengthen its position in negotiations on the Aini airfield using oil export dues. The expert claims that Russia is concerned that other interested countries like India, Iran or the U.S. could outstrip Russia and take over the airfield for their needs.

Official sources in the Tajik government deny any political pressure from the Russian side. Tajikistan’s Deputy Minister of Foreign Affairs, Nizomiddin Zohidov, said during a press-conference that the issue of oil export dues is just an economic issue and there are no underlying political reasons behind it. He confirmed that there is no ultimatum from the Russian side in exchange for removing the export dues. At the same time, Zohidov said that “Tajikistan is very anxious about the issue of increased oil export dues, which has a negative impact on the economy of the country”.

Meanwhile, Tajikistan has started looking for alternative sources for oil import, and Tajikistan’s government has decided to diversify its oil import sources in order to ease its dependence on Russia. The head of the government-run Strategic Research Center, Suhrob Sharipov, announced during the press-conference that “the Government realizes the threat of having 90 percent of its oil imports coming from one country”. Official sources reported that negotiations have started with Kazakhstan, Turkmenistan and Iran.

However, experts claim that Tajikistan has no alternative sources for its oil imports, and Russia remains the most optimal supplier. For instance, Turkmenistan sells light oil products at world prices. Thus, one ton of light oil products from Russia together with the new export dues will still cost less than one ton of light oil products from Turkmenistan. As for Kazakhstan and Iran, both countries have problems supplying their own internal markets with light oil products. Consequently, these countries are not interested in exporting light oil products but only crude oil, and Tajikistan has no means for processing crude oil and producing gasoline.

While Tajikistan’s government is seeking ways out of the situation, Russia has increased the dues again. The Russian government recently decided to increase the export rates for oil products to 44 percent starting in May, 2011. Moreover, Russia itself has temporary problems in supplying its internal market with light oil products. Consequently, the Russia’s Ministry of Energy proposed to introduce a temporary ban on oil exports in order to satisfy the local market. Tajik experts claim that if the ban would be introduced, the local market of oil products in Tajikistan will collapse. The uncertain situation and rumors has already led to the rise in staple food prices in Tajikistan.
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