Business & Economy - The Times Of Central Asia

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Oil and Gas

China’s Power Play in Central Asia’s Energy Sector

China is steadily expanding its influence in Central Asia’s oil and gas sector through multi-billion-dollar investments, long-term supply agreements, and a growing network of strategic partnerships. From Kazakhstan to Turkmenistan, Beijing’s state-backed companies are securing key upstream and midstream assets, financing new petrochemical and pipeline projects, and positioning themselves as indispensable players in the region’s resource development. This expansion is driven not only by China’s rising energy demand, but also by Beijing’s ambition to establish durable overland energy corridors that reduce reliance on maritime routes vulnerable to disruption. Central Asia’s existing and planned pipelines provide China with rare direct access to oil and gas fields across its western frontier, making the region a focal point of its broader energy-security strategy and a cornerstone of Beijing’s efforts to diversify supply while deepening political and economic footholds across Eurasia. Kazakhstan Eyes Chinese Investment Amid Lukoil Sanctions Kazakhstan may seek to transfer Russian company Lukoil’s stake in the offshore Kalamkas-Khazar oil and gas project to a new partner, with some industry channels, including the Telegram channel Energy Monitor, speculating about possible Chinese interest. Lukoil, which has been targeted by Western sanctions, is reportedly planning to exit Kalamkas-Khazar Operating LLP, a joint venture with KazMunayGas (KMG). Each company currently holds a 50% stake. Some commentators have suggested that a Chinese investor could step in, but no replacement has been officially confirmed. Seconded engineers from KMG Engineering are expected to be withdrawn from the project as of January 1, 2026, with several Kalamkas-Khazar staff members temporarily reassigned to other KMG subsidiaries until a new partner is confirmed. The project is considered highly promising, with earlier estimates citing reserves of 81 million tons of oil and 22 billion cubic meters of gas. New exploration has identified additional oil-bearing structures. A final investment decision (FID) worth more than $6.5 billion was originally expected by the end of 2025. However, U.S. sanctions against Lukoil have delayed progress. Located 120 km from the Kashagan field in the North Caspian Basin, the Kalamkas-Khazar block comprises the Kalamkas-More and Khazar fields. The site is situated in Kazakhstan’s Mangistau Region, 60 km from the Buzachi Peninsula. KazMunayGas Chairman Askhat Khasenov previously confirmed that production was expected to begin in 2028-2029, with peak output reaching four million tons annually. Lukoil was sanctioned by the UK on October 15, followed by the U.S., complicating ongoing negotiations. Despite this, major projects where Lukoil holds minority stakes, such as Tengiz, Karachaganak, and the Caspian Pipeline Consortium, have not been impacted. A Lukoil withdrawal would create a rare opening for China to secure its first significant offshore position in the North Caspian, a zone historically dominated by Western majors and Russian firms. Such an entry would represent a notable shift in Kazakhstan’s offshore partnership landscape. Beijing's Billion-Dollar Energy Deals in Kazakhstan In September 2025, President Kassym-Jomart Tokayev announced a series of energy deals with China valued at $1.5 billion. During his official visit to China, more than 70 commercial agreements totaling approximately $15 billion were signed, several...

Chemical Industry

Uzbekistan Plans Chemical Sector Expansion as Cotton Output Target Set at 4.5 Million Tons

On December 3, President Shavkat Mirziyoyev reviewed proposals to expand production, increase exports, and reduce costs in Uzbekistan’s chemical industry, according to a statement from the presidential press service. The government aims to double the size of the chemical sector by 2030, increase mineral fertilizer production by 1.5 times, and boost annual exports to $1 billion. Currently, 21 major projects worth $1 billion are underway, with an additional $4.5 billion in investments planned over the next three years. Officials noted that many of Uzbekistan’s large chemical plants still rely on outdated equipment, resulting in high energy consumption and limited competitiveness. For instance, energy costs account for up to 55% of the production price of nitrogen fertilizers. The introduction of energy-efficient technologies and expanded digital management systems was emphasized as a key strategy to reduce production costs across the sector. Despite strong global demand for chemical products and favorable logistics in neighboring markets, where potential demand is estimated at $1 billion, Uzbekistan has yet to fully tap into these opportunities. Officials proposed increasing domestic raw material processing to develop new products and at least double current export volumes. In 2025, new production lines for “green” mineral fertilizers, cyanide salts, potassium xanthate, and potassium sulfate began operating in the Tashkent, Navoi, and Jizzakh regions. In parallel, the government has set a target to produce 4.5 million tons of cotton next year. To support this goal, authorities have instructed officials to build strategic reserves of phosphorus fertilizers, maintain steady supplies of sulfuric acid to manufacturers, and begin issuing preferential loans to farmers for fertilizer purchases as soon as possible. Mirziyoyev underscored the chemical industry’s strategic role in the national economy, directing officials to ensure reliable domestic supply, enhance export capacity, and create new jobs in the sector. Uzbekistan’s textile industry has also experienced rapid growth. Since 2017, cotton yarn production has more than doubled, knitted fabric output has increased significantly, and garment manufacturing has expanded from under 1 billion units to over 3 billion. As a result, textile exports have risen from approximately $1.1 billion in 2016 to an estimated $2.8 billion in 2024.

Inflation

Kazakhstan’s Central Bank Raises Inflation Forecast for 2025-2026

The National Bank of Kazakhstan has raised its inflation forecast for 2025 and 2026 in its baseline scenario, according to the regulator’s November Monetary Policy Report. The updated forecast projects inflation in the range of 12-13% in 2025 and 9.5-12.5% in 2026. The outlook for 2027 remains unchanged, with inflation expected to slow to 5.5-7.5%. In comparison, the Bank’s August report had forecast inflation at 11-12.5% for 2025 and 9.5-11.5% for 2026. The revision reflects persistent inflationary pressures, as both actual inflation and inflation expectations among households and businesses continue to exceed earlier projections. Additionally, administered prices are contributing to the increase. While their growth is expected to decelerate under the “inflation +5%” framework in 2026-2027, the cost of goods and services remains under significant pressure. The broader forecast range for 2026 highlights rising uncertainty related to the planned tax reform, its impact on aggregate demand, and expanded financing by the quasi-budgetary sector. Key risks identified by the regulator include: - rising domestic consumer demand - accelerating external inflation - sustained high inflation expectations - secondary effects from increased regulated prices, including fuel and VAT A new Tax Code is scheduled to take effect in 2026, raising the VAT rate from 12% to 16%. Additionally, utility tariff and fuel price freezes will be lifted by early Q2 2025, further contributing to inflationary pressure. The report also flags the scale of state involvement in the economy as a potential inflation driver. “A significant amount of quasi-fiscal injections could increase inflationary pressure and partially offset the effect of the upcoming fiscal consolidation of the republican budget,” the Bank stated. Despite these risks, the National Bank expects inflationary pressures to ease gradually, supported by a moderately tight monetary policy and anti-inflation measures implemented under a joint program with the government and the Agency for Regulation and Development of the Financial Market. A further stabilizing factor could be a decline in inflation among Kazakhstan’s key trading partners. The Times of Central Asia previously reported that the International Monetary Fund links Kazakhstan’s high inflation to signs of economic overheating.

Trans-Caspian International Transport Route

Amid Global Unrest, the Trans-Caspian Corridor Faces a Crucial Test

The COVID-19 pandemic, geopolitical conflicts, and the ongoing shipping crisis in the Red Sea caused by Houthi attacks have severely disrupted global trade and logistics. These events have exposed the vulnerabilities of traditional supply chains and underscored the urgent need for diversification. For countries along the Trans-Caspian International Transport Route (TITR), this presents a unique opportunity to solidify the corridor’s position as a key global logistics artery. But are they prepared to capitalize on this moment, and can the existing infrastructure sustain the rising flow of cargo? Integration and Infrastructure in Focus For landlocked nations, the value of an efficient overland route cannot be overstated. The development of the Trans-Caspian route depends on synchronized multimodal logistics, the elimination of infrastructure bottlenecks, the implementation of digital solutions, expedited customs procedures, and a transparent tariff policy. Experts note that the TITR has evolved from a transport project into a strategic initiative. Its future growth hinges on the quality of intergovernmental coordination. In the past five years, transit volumes along the route have increased sixfold. The upward trend continues in 2025, with 2.6 million tons transported by rail in the first ten months alone. More than 400 types of goods now move along the corridor, including high-value items such as vehicles, electronics, clothing, and textiles. These products, which require timely delivery, signal the route’s growing integration into global supply chains. Demand from Chinese shippers is also rising, with shipments expanding beyond China’s interior to include Southeast Asian countries. At the VII International Transport and Logistics Business Forum “New Silk Way,” Wang Lixin, Deputy Director General of China Railway, announced a new route under development: Southeast Asia-China-Central Asia-Europe. Bottlenecks That Threaten Growth A comprehensive audit conducted in mid-2025 revealed key barriers to expansion. In Kazakhstan, the primary constraint is railway capacity, currently limited to 12 container trains per day. National rail operator KTZ plans to raise this to 20 by 2027 through upgrades and new construction. The maritime segment, particularly the Caspian Sea, remains a persistent risk. Aktau port can currently handle five trains, but the completion of the second phase of its container hub is expected to raise this to eight. The first phase alone will boost capacity by 140,000 TEU this year, bringing the port’s total capacity to 240,000 TEU. However, falling water levels in the Caspian pose a serious challenge. In September 2025, Kazhydromet reported a drop to -29.31 meters off Kazakhstan’s coast, limiting shiploads and raising the threat of “shallow water restrictions.” In response, Kazakhstan has expedited dredging to restore design depths by the end of Q1 2026. Fleet shortages compound the issue. Kazmortransflot operates just three 350 TEU container ships and two dry cargo vessels. In January 2025, the company signed an agreement with Abu Dhabi Ports Group to build shallow-draft container ships with over 500 TEU capacity and larger ferries. KTZ also plans to acquire six vessels (up to 9,000 tons deadweight) by 2027. Challenges in Azerbaijan and Georgia The western segment of the route faces similar constraints....

Agriculture

Turkish Cengiz Holding Plans $500 Million Investment in Kazakhstan’s Sugar Industry

Turkish industrial conglomerate Cengiz Holding has announced plans to invest $500 million in the construction of two sugar processing plants in Kazakhstan, according to the Ministry of Agriculture. The announcement followed a meeting between Agriculture Minister Aidarbek Saparov and Cengiz Holding board member Jengiz Shaban. The proposed facilities would have a combined annual capacity of up to 300,000 tons of sugar. North Kazakhstan and Pavlodar regions are under consideration as potential locations for the new factories. The project has a 10-year investment horizon. Construction is expected to begin in 2026, with production to commence within two years. According to Shaban, the initiative aims to boost domestic sugar supply while also supporting the development of by-products such as animal feed, food ingredients, and industrial alcohol. Saparov described the proposal as “strategically important” for Kazakhstan’s food security. “The creation of new processing capacities and the formation of a sustainable raw material base are key priorities for the state,” he said. The Ministry of Agriculture reports that Kazakhstan currently operates four sugar factories, three of which process domestically grown sugar beets. Despite this, annual consumption stands at approximately 500,000 tons, with local production meeting only 14% of national demand. Earlier, another Turkish conglomerate, Safi Holding, also expressed interest in establishing a sugar processing facility in Kazakhstan. The existing sugar factories include Aksu-Kant (Taldykorgan district), Koksu Sugar Factory (Almaty region), and the Merken and Taraz plants in Zhambyl region. Three of these process local sugar beets, while the Taraz facility relies on imported cane sugar. In 2024, Kazakhstan recorded a bumper sugar beet harvest of 1.2 million tons, yet only about 700,000 tons were processed, once again exposing deep-rooted inefficiencies in the sector.

Crypto-mining

Turkmenistan Legalizes Crypto Mining and Exchanges for the First Time

Turkmenistan has officially legalized cryptocurrency mining and the operation of crypto exchanges. A newly adopted law sets strict conditions for market participants while introducing safeguards to protect citizens from the risks associated with virtual assets. Key Provisions of the New Law Coming into force on January 1, 2026, the Law on Virtual Assets, signed by President Serdar Berdymuhamedov and published in the state newspaper Neutral Turkmenistan, legalizes cryptocurrency mining, exchanges, and trading platforms for the first time in Turkmenistan. The law defines the legal framework for the creation, storage, issuance, and circulation of virtual assets. While cryptocurrencies will not be recognized as a means of payment, currency, or security, they are treated as objects of civil law. Virtual assets may be either secured or unsecured. Crucially, the legislation makes clear that the state bears no responsibility for obligations incurred by crypto platforms or for losses in asset value. Mining Regulated by the Central Bank The right to mine cryptocurrencies will be granted to individual entrepreneurs and legal entities, all of whom must register electronically with the Central Bank of Turkmenistan. Hidden mining, the unauthorized use of another party’s computing power, is explicitly banned, targeting illicit mining networks. Crypto exchanges and related service providers must obtain licenses from the Central Bank. Permitted services include the exchange, transfer, storage, and management of virtual assets, as well as initial offerings. Opening a crypto wallet will require full customer identification in line with anti-money laundering protocols. Both Turkmenistan residents and foreign nationals may establish crypto exchanges, but with strict limitations: Individuals and legal entities from offshore jurisdictions are barred from participation; and Founders holding offshore bank accounts are also disqualified. Tight Restrictions on Crypto Advertising The law introduces some of the region’s strictest rules on crypto-related advertising. All promotional materials must include a warning that virtual assets are not backed by the state and that investments carry the risk of financial loss. The following are prohibited in advertising: Promises of profitability; Use of images of minors; Implications of luxury, bonuses, or effortless wealth; References to state affiliation, including the use of “Turkmenistan,” “national,” or “Turkmen”; and Use of terms like “virtual asset,” “cryptocurrency,” or “digital asset” by companies not directly involved in the sector. These restrictions aim to protect the public from deceptive and aggressive promotion of high-risk financial products. Part of a Regional Regulatory Trend Turkmenistan’s move follows a broader regional trend toward formalizing the crypto sector. In November, Kazakhstan also enacted legislation governing the circulation of unsecured digital assets nationwide. Previously, such activities were only permitted within the Astana International Financial Center source.