Kazakhstan Business & Economy - The Times Of Central Asia

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Kazakhstan and CNPC to Expand Cooperation

The partnership between Kazakhstan and the China National Petroleum Corporation (CNPC) is set to broaden, with plans to implement joint projects in the oil and gas industry. This information was shared during a meeting held via videoconference on December 28th between Kazakhstan's First Deputy Prime Minister, Roman Sklyar, and CNPC President, Hou Qijun. Sklyar highlighted the CNPC as a long-standing strategic and investment partner of Kazakhstan. In response, Qijun expressed the corporation's commitment to expanding its cooperation with Kazakhstan, driven by the agreements made by the leaders of both countries. As part of this renewed alliance, the Kazakh Government is actively working on specific projects within the Framework Agreement on expanding strategic cooperation in the energy sector. This agreement was signed during the state visit of the President of Kazakhstan, Kassym-Jomart Tokayev, to China earlier this year. Current projects under discussion include expanding the production capacity of the Shymkent Refinery in south Kazakhstan, constructing the second line of the Beineu-Bozoy-Shymkent gas pipeline, and conducting joint geological exploration in Kazakhstan.

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EBRD to Tackle Bottlenecks on Major Logistical Hub

To tackle the identified bottlenecks within the Trans-Caspian corridor, the European Bank for Reconstruction and Development (EBRD) announced on December 27th its commitment to providing financial support for the enhancement of modern logistical infrastructure. The bank's loan, amounting to up to U$ 40 million, is intended for Kazakhstan’s principal private rolling stock operator, Eastcomtrans. This support aims to bolster the operator's container handling capacity, specifically targeting one of the busiest junctions near Almaty city, thereby ensuring the continuous operation of its railway fleet. Eastcomtrans, an EBRD client since 2014 and the possessor of 8% of the nation’s total rolling stock, will utilize the allocated funds, available in both US dollars and Kazakh tenge, to further advance its Zhetygen logistical center. The investment will also facilitate the acquisition of approximately 250 new railcars and the maintenance of its existing stock. Located in close proximity to the Chinese border and adjacent to Kazakhstan's largest urban area, this upgraded logistical hub will function as a pivotal point along the Trans-Caspian Corridor. It is poised to enhance the smooth flow of cargo traffic across Kazakhstan. Anticipating a surge in trade volumes, especially in container traffic between Asia and Europe, the hub's development aims to accommodate the escalating demand for freight transit.

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EU’s €20M Project to Diversify Internet Resources in Kazakhstan with Satellite Communications

The European Union (EU) is set to contribute to the diversification of internet resources in Kazakhstan, as announced by Johannes Baur, the Head of the Cooperation Department of the EU Representative Office in Kazakhstan. This initiative is part of the EU's broader commitment to bolstering digital infrastructure and connectivity in Central Asia. "In Kazakhstan, internet traffic now comes from Russia and China," Baur said during a meeting organized by the Eurasian Foundation for Central Asia. He further explained the EU's proposition: "Our project wants to offer Kazakhstan the opportunity to use European satellite communications, a product of the European company, SES. For example, while Starlink satellites orbit the Earth in a low orbit, SES satellites orbit in a medium orbit. Satellites in medium orbit can cover the whole of Kazakhstan, which is an advantage. We can even cover the whole of Central Asia." This ambitious project has received approval from the European Commission and is set to be showcased at the Central Asia - European Union summit scheduled for 2024. Baur disclosed the initial funding earmarked for the project, stating, "First of all, the European Union will allocate 20 million euros, but this is the amount allocated to the whole of Central Asia. I think most of these funds will be directed to Kazakhstan, Kyrgyzstan and Uzbekistan. The specific details are still unknown, but it will be a large loan from the European Investment Bank." This initiative aligns with the EU's ongoing efforts to diversify its supply chains and strengthen its relations with strategic partners like Kazakhstan. Moreover, it is expected to contribute significantly to the development of a secure and sustainable supply of digital resources across Central Asia.

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EEU Leaders Seek to Strengthen Position of Economic Bloc

A meeting of the Supreme Eurasian Economic Council was held in St Petersburg on December 25th. The meeting was attended by leaders of the Eurasian Economic Union (EEU) member countries - the Prime Minister of Armenia, Nikol Pashinyan, President of Belarus, Alexander Lukashenko, President of Kazakhstan, Kassym-Jomart Tokayev, President of Kyrgyzstan, Sadyr Japarov, and President of Russia, Vladimir Putin. Opening the meeting, Russian President Putin said that the Eurasian Economic Union will soon be ten years old, and over this period, the mutual trade between its member countries has almost doubled and the aggregate GDP of the EEU countries has grown from US$1.6 trillion to US$2.5 trillion. “We have created deep common markets for goods, services, capital, and workforce, which are operating in line with agreed-upon rules. The main point is that the Eurasian Union has become an authoritative international integration association with an efficient structure and a good foundation,” he said. Putin added that the work on aligning integration processes within the EEU and China's Belt and Road Initiative is also yielding results. The Council’s meeting adopted the declaration “Eurasian Economic Path,” which is aligned with China’s Belt and Road Initiative.

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Inaugural Meeting of Kazakhstan-Saudi Business Council Held in Riyadh

The first meeting of the Kazakhstan-Saudi Business Council took place on December 21st, 2023, demonstrating the deepening diplomatic and economic relations between the two countries. This event was organized by the Embassy of Kazakhstan to Saudi Arabia and the Federation of Saudi Chambers, as part of the 6th session of the Intergovernmental Committee between the two nations. In attendance were the Ambassador of Kazakhstan to Saudi Arabia, Berik Aryn, and Co-Chairman of the Business Council and General Director of GreyWolf Management LLP, Kanat Kudaibergen. Representatives from 46 Kazakh companies also participated in the meeting. Saudi Arabia was represented by the Ambassador of Saudi Arabia to Kazakhstan, Faisal Al-Qahtani, Co-Chairman of the Business Council and CEO of Alrajhi International Investments, Ahmed Al-Dakhil, as well as representatives from the Federation of Saudi Chambers and over 40 Saudi company managers and representatives. The establishment of the Kazakhstan-Saudi Business Council was formalized through an agreement signed between the National Chamber of Entrepreneurs of Kazakhstan, Atameken, and the Federation of Saudi Chambers during the Astana International Forum in June 2023.

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How Will Free Trade Zone Between EAEU and Iran Affect Kazakhstan?

The free trade Agreement between the Eurasian Economic Union (EAEU) and Iran will ensure an increase in annual mutual trade to U$18-20 billion in the near future, Andrey Slepnev, a member of the Board for Trade of the Eurasian Economic Commission said during a briefing. The free trade agreement between the EAEU and Iran is scheduled to be adopted on December 25th 2023. “Iran is a large market, our neighbor, and a key country in the international North-South transport corridor,” said Slepnev. “We consider this new agreement as one of the elements of this corridor." Slepnev stated that currently trade between EAEU countries with Iran is carried out, among other things, within the framework of the interim agreement adopted in 2019, which covers about 360 commodity items. But even this has made it possible to double mutual trade in three years, from $2.5 billion to more than $5 billion, and in 2022 to bring it to $6.2 billion. “The conclusion of a full-scale agreement will allow us to double trade in a short time. The first target we are focusing on is $18-20 billion, which is quite realistic to achieve in the foreseeable future," said Slepnev, adding that implementation of the agreement will be carried out on the basis of the WTO. For this purpose, work will be carried out on the harmonization of regulations, since Iran is not a WTO member. In addition, the parties will strive to increase the volume and channels for making payments in their national currencies. “In Kazakhstan, we see prospects for the supply of traditional Kazakh products to Iran; first of all, wheat, barley, agri-food products, metals, and chemical products. This agreement will allow Kazakhstan to increase its presence in the Iranian market," he added. Slepnev stressed that the expansion of the EAEU trade partnership with third countries will make it possible to use and actively develop the transit and transport potential of EAEU countries. Trade with Iran naturally involves the use of the North-South corridor, and will also contribute to the communications in the East-West corridor, which runs through the countries of Central Asia and Russia. “The demand for these intercontinental transport corridors is constantly increasing in the context of international tension. Economically, we live in a time when the one who is faster wins, so our advantage is speed and convenience," Slepnev concluded.