Unlawful Oil Trade of Approximately 54 Million Tenge Discovered in Two Kazakh Regions
In a recent blow to the illegal oil trade, authorities in Almaty and Abai region have put a stop to over 247,000 liters of smuggled oil, valued at a staggering 54 million tenge!
According to the Committee of State Revenues, during an inspection on an oil base in Almaty on April 30, 2025, they stumbled upon 177,100 liters of petroleum products, worth over 35 million tenge. The oil had been stored shoddily in tanks, fuel trucks, and plastic containers without any proper documentation.
Meanwhile, on April 25, 2025, an unregistered gas station, operating without tax registration and plying its trade in Semey, was uncovered during a surprise tax inspection. Over 70 tons of petroleum products, valued at approximately 19 million tenge, were confiscated.
Both sets of materials were sent to the respective Departments of Economics and Financial Monitoring for further action.
This clampdown is a clear message that such illicit activities are harmful to the economy, creating unequal conditions for honest entrepreneurs and posing potential threats to the environment and public safety.
It's interesting to note that the oil and gas industry in Kazakhstan operates under three types of contracts: concession, production sharing agreement (PSA), and joint venture (JV). With the largest fields being developed under PSA and JV, the lower tax burdens place create an imbalance in the industry.
As we dive deeper, it's essential to understand that large-scale oil smuggling can distort market prices, undermine legal operators, and divert revenue from state budgets. In fact, illicit financial flows, as estimated by the IMF, can account for 28-35% of GDP in developing economies. Given Kazakhstan's dependence on oil exports, similar concerns may arise.
To put this in perspective, the worldwide loss from fuel smuggling and tax evasion amounts to an estimated $10bn annually, and governments lose $87bn annually from lost tariffs due to illicit trade. While specific Kazakhstan data isn't currently available, these global patterns raise red flags for countries like Kazakhstan, where oil exports constitute 60% of total exports.
In conclusion, the authorities' swift action against oil smuggling is a step in the right direction towards ensuring fairness and protecting the nation's economy. Keep a close eye on this issue as it unfolds!
- The value of the confiscated petroleum products in Almaty was approximately 35 million tenge, with a further 19 million tenge seized from an unregistered gas station in Semey.
- The oil smuggling in Almaty and Abai region, totaling over 247,000 liters, was discovered to have occurred without any proper documentation.
- Despite the lower tax burdens in the oil and gas industry under production sharing agreement (PSA) and joint venture (JV) contracts, large-scale oil smuggling can still distort market prices, undermine legal operators, and divert revenue from state budgets.
- The worldwide loss from fuel smuggling and tax evasion is estimated at $10bn annually, with governments losing $87bn annually from lost tariffs due to illicit trade, making it a significant concern for countries, such as Kazakhstan, where oil exports constitute 60% of total exports.
