Kazakhstan plans flat oil export duty until 2014

ASTANA: Central Asia's largest oil producing country Kazakhstan plans to keep its crude export duty at $40 per tonne until 2014, its economy minister said on Saturday, promising a stable export regime for producers.

"There can come such a delicate moment: if you are charging taxpayers, there comes a moment when you just overload them," Kairat Kelimbetov told Reuters in an interview.

"This will be followed by recession, which means no investments. The government is not discussing a revision (to the oil duty) at the moment," he said.

Kazakhstan, which holds about 3 percent of the world's recoverable oil reserves, reintroduced a duty on crude exports last year at a level of $20 per tonne. The government doubled the duty to $40 from Jan. 1.

Export duties were first introduced in May 2008 as oil prices approached record highs, before being withdrawn again in Janaury 2009 after crude prices plunged.

Foreign oil companies control a significant proportion of oil production in Kazakhstan. The Chevron-led Tengizchevroil venture is the largest oil producer and Chinese companies control nearly a quarter of output.

"Our producers are investors," Kelimbetov said. "Usually, long-term contacts or Production Sharing Agreements were signed, and usually all the new rules do not affect these contracts," the former head of sovereign wealth fund Samruk-Kazyna said.

"We are not like the Middle East here. We don't just open the tap and the oil will flow," he said. "We have difficult production conditions that require a high level of technology. These are very capital-intensive projects."

Kazakhstan's economy, the largest among the former Soviet republics of Central Asia, has grown rapidly in the last 10 years on the back of high commodity prices.

Kelimbetov, appointed minister last month in a cabinet reshuffle following the re-election of President Nursultan Nazarbayev, said he expected the economy to grow by 7 percent in 2011, the same as last year.

In terms of economic growth, Kazakhstan's is outperforming Russia, its former Soviet master and still its largest trading partner. Russia expects gross domestic product (GDP) growth of 4.5 percent annually over the next four years.

"Our (oil price) forecast is $80 per barrel this year and $70 per barrel in 2012-2015," Kelimbetov said. "I think we have a very sustainable forecast. But if prices go down, we could not match a 7 percent growth scenario."

Kelimbetov said he expected Kazakhstan to keep inflation within its forecast range of 6-8 percent this year.

"There is always a dilemma in economic politics: high growth implies high inflation," he said. "To get high growth along with low inflation is hard, but manageable," he said.

Inflation in Kazakhstan ran at 8.4 percent in April on an annualised basis, exceeding the upper end of the government's full-year forecast. Consumer prices have risen 4.2 percent since the beginning of the year.

The central bank raised its refinancing rate by 50 basis points to 7.5 percent from March 9, its first rise in 18 months, and has said it would consider further rises if needed to combat inflation.

Kelimbetov said the central bank would use the "full range of monetary policy tools" to curb inflation, but he did not give details.

Copyright Reuters, 2011