Kazakhstan's Oil companies reportedly shipping oil at prices three or four times BELOW world average prices.Anyone care to tackle what this suggests?

Kazakh government gets tough on domestic oil market Source: BBC Monitoring Central Asia Publication date: Feb 06, 2000

Excerpts from report by Kazakh Commercial TV on 5th February

[Presenter]

The Kazakh government has decided to put the republic's oil market in order.

Export quotas will be regulated in step with oil prices.

[Correspondent, over video of a plant and facilities][Kazakhstan's Russian-language]

'Delovaya Nedelya' newspaper reported that some oil companies were exporting oil at a price three or four times below average world prices.

TheAktobemunaygaz [Aktobe oil and gas, the oil extracting company in western Kazakhstan], [Canadian] Hurricane Kumkol Munay [ operates Kumkol oil deposit in southern Kzyl-Orda Region] and the Tengizchevroil [Kazakh-US joint venture developing Tengizoil deposit in western Atyrau Region] companies are amongst the violators.

[Two sentences inaudible due to poor reception]

However, the government considers that the budget does not get the funds received from oil exports in full. Perhaps amendments will be introduced to the legislation, which will enable these funds to be demanded from the companies. Oil producers, in their turn, are reminding the Kazakh leadership of the existing agreements. [passage omitted: unidentified person says in English, with an intepreter translating for him, that decisions were previously taken on economic grounds]

Many specialists noted that fuel prices in Kazakhstan were going up irrespective of world prices. If a crisis situation is arising in the domestic market then representatives of some companies say this is due to the need to export the maximum quantity of oil while it is expensive on the world market, as a result of which domestic oil processing plants are standing idle.

[Person unidentified due to poor video report]

From the very beginning the contracts concluded with every investor specify that they will be able to export oil at world prices, which means that supplying oil to internal consumers, in the person of the oil processing plants, at a lower price, undoubtedly means a restriction, that is, a loss of profit.

[Correspondent] As is becoming clear, oil is also exported to the world market at a price below cost but still there is some profit. So far neither representatives of the companies nor the government have explained this hardly comprehensible situation.

Publication date: Feb 06, 2000 ) 2000, NewsReal, Inc.

-- Carl Jenkins (Somewherepress@aol.com), February 06, 2000

Answers

This is getting weirder and weirder by the minute.

What month and year is this? Oh ya. Ok, now it makes sense.

-- paul leblanc (bronyaur@gis.net), February 06, 2000.

What the hell does "three or four times below average world prices" mean? If the price is $28 per barrel, one times below the average world price would mean they are giving it away free. Three times below the average world price would seem to say they are giving you $56 per barrel to take it. How do I get some?

-- nobody (nobody@nowhere.com), February 06, 2000.