Nurlan Kapparov, head of the country's state oil company Kazakhoil said late on Tuesday that several domestic refineries had ground to a standstill after crude supplies dried up.

"For any oil producer, exports are the most lucrative option," Kapparov told Kazakh television news. "A company earns about $65-70 for every tonne of oil exported but it can only get $25-30 per tonne by supplying local refineries."

"Even this it can only hope to receive after a delay of about six months," he added, referring to the non-payments problem that dogs most producers in Kazakhstan.

The shortages have sparked deficits in parts of Kazakhstan. Retail prices for oil products rose by between 14 and 39 percent in May, the anti-monopoly committee said earlier.

Only 18 per cent of the oilproduced in the first quarter of 1999 was sold on domestic markets, it said.

The Pavlodar refinery stopped work five months ago while the Atyrau refinery was working at a third of its capacity, Kapparov said.

Oil is the main driving force in the economy of this vast resource-rich but cash-strapped country and the lion's share of foreign investments have been received by this sector.

Earlier this year, Russia, which controls most pipelines from Central Asia to Western markets, agreed to double Kazakhstan's quota to 7.0 million tonnes in 1999 from 3.5 million tonnes in 1998.

This along with the "30-35 percent rise" in world oil prices has helped drive up exports, Kapparov said.

According to the State Statistics Agency, Kazakhstan exported 7.2 million tonnes of crude, products and condensates in the period between January to April 1999.

Kazakhstan produced just 7.932 million tonnes of crude and condensates in the same period, the agency said.

Exports in April were 35 percent higher than the samemonth in 1998, it added. The situation is soon to be rectified, said anti-monopoly committee head Nikolai Radostovets. He said the government and oil producers had last week reached an agreement to supply refineries with a minimum amount of crude.

But Kapparov said the export increase has not been without benefits because it has enabled producers to pay all tax arrears to the budget. He said Kazakhoil would start supplying the Atyrau refinery in July. Kazakhoil last month acquired a controlling stake in the Atyrau refinery and Kapparov said the next step would be to tap the retail market.

"We plan to open a chain of gas stations starting in October, in Atyrau, Almaty and over the next few years, we hope to have hundreds of such outlets," he said. "This way we can effectively regulate the domestic market."