Kazakhstan Business & Economy - The Times Of Central Asia

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Oil Prices

Opinion: Kazakhstan, Oil, the Iran War and Dutch Disease

In 1977, The Economist coined a new term for the (potential) negative consequences of a short-term boom in natural resources: “Dutch disease.” The phenomenon got its name from an analysis of the decline of the manufacturing sector in the Netherlands following the 1960s natural gas discoveries at Groningen, in the northeastern Netherlands. The theory was that a surge in the price of a natural resource like oil or gas would likely cause currency appreciation, making imports cheaper and other sectors, like manufacturing, less competitive. Whether the recent spike in oil prices will contribute to Dutch disease in oil-rich Kazakhstan will likely depend on the length of the Iran war’s effect on oil prices (which could last well beyond the end of the conflict itself) and the government’s stewardship of Kazakhstan’s economy. President Kassym-Jomart Tokayev deserves credit for the government’s efforts to diversify the national economy. Investing in the nation’s manufacturing base, especially SMEs, educating the Kazakh workforce, and improving healthcare are all helping broaden the Kazakh economy and reduce the country’s dependence on oil. But oil is the main driver of Kazakhstan’s wealth, and while other sectors are increasing their share of Kazakhstan’s economy, oil and the wider extractive sector remain central to public finances, accounting for over 40% of government revenues. So, let’s do a deep dive on Kazakhstan’s oil. Most of Kazakhstan’s oil comes from the west of the country, including the Tengiz field near the Caspian Sea and the offshore Kashagan field in the northern Caspian. The Tengiz oil field is one of the deepest and largest oil fields in the world, while Kashagan, an offshore deposit, ranks as one of the largest global oil discoveries since the 1960s. Kazakhstan’s main export blend, CPC Blend, is a light, sweet crude, a desirable oil type that’s easy to refine into gasoline and diesel. Because the Iran war and restrictions around the Strait of Hormuz have disrupted tanker traffic and raised fears of supply shortages, global oil prices have climbed. And while high oil prices are generally a net positive for Kazakhstan, the current price - Brent crude was trading above $100 per barrel in mid-May 2026 - could present problems. In the short term, high oil prices tend to boost government revenues and budget surpluses. They can increase inflows to Kazakhstan’s National Fund, depending on production, tax receipts, transfers, and government withdrawal policy, and provide resources for government spending on infrastructure and social programs. They can also stimulate demand in related sectors, boosting Kazakhstan’s oil-related industries. And since oil exports typically make up more than half of the nation’s export revenues, high oil prices generally lead to a rise in Kazakhstan’s GDP. So far, so good. But high oil prices also carry risks. For one thing, they can strengthen the tenge and add to domestic demand, especially if higher revenues feed into faster government spending. Which is where Dutch disease comes in. As the stronger currency makes non-oil exports less competitive, capital and labor shift toward the energy...

Energy Security

Kazakhstan Targets 2027 Exit From Routine Russian Electricity Imports

Kazakhstan wants to stop buying electricity from Russia by 2027. The challenge is whether it can do so while keeping homes warm, mines running, and fast-growing regions supplied when demand peaks. The target is a test of whether the country can close a power deficit caused by years of underinvestment, rising demand, aging thermal plants, and uneven regional supply. The goal was restated this month by Deputy Energy Minister Sungat Yessimkhanov, who said Kazakhstan expects to reduce its electricity shortfall this year and bring it down to zero in 2027. The pledge builds on earlier government comments that Kazakhstan would cut imports as new domestic capacity comes online. In February 2025, Yessimkhanov told Kazinform that Kazakhstan planned to reduce electricity imports from Russia and could stop buying foreign electricity once planned capacity was commissioned in 2027. The gap is small on paper, but it carries political weight. Kazakhstan may be energy-rich, but its electricity system has been running short. The country produces coal, oil, gas, uranium, and growing volumes of renewable power, yet it still relies on imports from Russia to cover gaps between generation and consumption. In 2025, Kazakhstan generated 123.1 billion kilowatt-hours of electricity and consumed 124.6 billion kilowatt-hours, according to a January government meeting on new capacity. Installed capacity rose from 25.3 gigawatts to 26.7 gigawatts, but demand still exceeded domestic generation. Data from KEGOC, Kazakhstan’s national grid operator, shows how narrow the margin has become. In 2025, the gap between production and consumption was 1.4956 billion kilowatt-hours. KEGOC said the shortfall was covered by supplies from the Russian energy system. Kazakhstan received 4.6388 billion kilowatt-hours from Russia and sent 2.1595 billion kilowatt-hours back. That left a net power flow from Russia of 2.4793 billion kilowatt-hours, down from 3.4111 billion kilowatt-hours in 2024. The planned 2027 shift does not mean Kazakhstan will disconnect from Russia’s grid. The objective also fits a wider pattern in Astana’s energy policy: not breaking with Russia, but reducing the number of areas in which Russia is the default route, supplier, or emergency backstop. In oil and trade, Astana has been trying to expand alternatives to the Caspian Pipeline Consortium route through Russia, including through the Middle Corridor. In electricity, the logic is narrower but similar. Ending Russian power imports would not make Kazakhstan energy-independent, but it would turn one more Russian-linked dependency from a structural need into a contingency option. Kazakh energy analyst Zhakyp Khairushev made this distinction in comments to LS, stating that Kazakhstan has a real chance to reach annual self-balance in 2027, but a stable surplus will be harder. The key issue is not only installed capacity, but available capacity during peak hours, winter demand spikes, and repair periods. A megawatt of wind or solar power does not play the same role as a megawatt of coal, gas, or flexible generation during a cold evening. Kazakhstan’s deficit is not only about total output; it is also about where electricity is produced, when it is available, and whether the grid...

Oil Price

Kazakhstan Sees No Major Risks From UAE Exit From OPEC+

Kazakhstan does not expect major economic turbulence following the United Arab Emirates’ withdrawal from OPEC and the OPEC+ agreement, despite the country’s continued dependence on global oil prices, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said. The UAE announced that it would leave OPEC on May 1, citing disagreements over existing production quotas. Abu Dhabi plans to increase oil output amid concerns over possible supply disruptions through the Strait of Hormuz and the risk of shortages on the global market. The departure of one of the world’s largest oil producers has fueled concerns about a potential drop in crude prices and the possibility of a price war among exporters. However, Zhumangarin said international analysts remain cautious in assessing the broader implications of the move. “Some are saying this marks the end of the OPEC era. In reality, international expert assessments and forecasts remain very cautious regarding whether this could lead to a price war and whether such a scenario is even possible,” he told reporters. According to the minister, even if the UAE raises production from the current 3.5 million barrels per day to 5 million barrels per day, the global market would continue to balance itself through other major producers and alternative suppliers. Commenting on the possible impact of lower oil prices on Kazakhstan’s economy, Zhumangarin noted that the government traditionally prepares several macroeconomic development scenarios. “This year, the pessimistic forecast was based on an oil price of $50 per barrel,” he said. The minister also pointed out that oil prices had exceeded $100 per barrel several times this year amid tensions in the Middle East. According to Zhumangarin, Astana retains the ability to adjust budget spending if conditions on the oil market deteriorate. On the eve of the US-Israeli war on Iran in late February, the industry benchmark Brent crude was trading at approximately $70 to $73 per barrel; as of May 11, it had risen to slightly below $104 per barrel. In April, OPEC+ countries increased oil production by 206,000 barrels per day, including a rise in Kazakhstan’s quota from 1.569 million to 1.599 million barrels per day by June. Kazakhstan’s authorities would like to see further growth in national oil production, however, a lack of viable export routes aside from Russia, as well as the fallout from Ukrainian attacks on the Russian port of Novorossiysk in November last year, have limited Kazakhstan's ability to fully exploit the recent rise in prices.

Foreign Workers

Kazakhstan Plans New Measures to Attract Highly Skilled Foreign Workers

Kazakhstan is preparing to introduce new mechanisms to attract highly qualified foreign specialists as part of a broader effort to increase the country’s openness to talent, investors, and entrepreneurs. The Ministry of Labor and Social Protection has drafted amendments to the country’s migration legislation following a presidential decree aimed at modernizing migration policy and addressing labor shortages. The proposed legislation introduces a targeted recruitment system for in-demand foreign specialists based on the current needs of the domestic labor market. A key element of the reform is the creation of a government-approved list of priority professions. The list is expected to include specialists in information technology, healthcare, education, and culture, sectors currently experiencing some of the most acute labor shortages. The draft law also establishes clearer and more transparent procedures for hiring foreign professionals at the request of employers. Authorities are placing particular emphasis on improving conditions for foreign specialists working and living in Kazakhstan, including through an expansion of the Altyn (Golden) Visa program. Under the proposed changes, foreign specialists would be eligible to apply for resident status after a specified period of employment in Kazakhstan. The status would provide access to tax incentives, financial services, healthcare and education opportunities, as well as the right to work outside the country’s foreign labor quota system. Officials say the reforms are intended not only to address labor shortages, but also to facilitate the transfer of skills and expertise to local workers and accelerate technological modernization. In the longer term, the government hopes the measures will help position Kazakhstan as a regional hub for skilled professionals and advanced technologies. The Labor Ministry is also working to significantly expand the list of in-demand professions from 51 to 174 specialisms. The expanded list would include occupations in the nuclear industry, energy, biotechnology, genomic medicine, water management, irrigation, and healthcare. Authorities say the initiative is designed to strengthen Kazakhstan’s competitiveness in the global race for talent and support the development of strategically important sectors of the economy. The Times of Central Asia previously reported that Kazakhstan had approved its 2026 quota for foreign labor at 0.25% of the country’s total workforce. The quota includes permits for 726 senior executives and deputies, 3,402 heads of structural divisions, 5,893 specialists, and 3,131 skilled workers. An additional 4,994 permits were allocated for seasonal labor.

Investment

Kazakhstan to Improve Investor Protections and Accelerate Digital Reforms

Kazakhstan Prime Minister Olzhas Bektenov has instructed government agencies to accelerate the removal of administrative barriers for investors and expand the digitalization of investment procedures amid intensifying global competition for capital. Speaking at a meeting on investor rights protection attended by government officials, prosecutors, business representatives, and the Atameken National Chamber of Entrepreneurs, Bektenov said improving the investment climate remains a government priority. “Just last week, a presidential decree was signed on improving migration policy, aimed at creating a better environment for attracting investors, entrepreneurs, and highly qualified specialists,” Bektenov said. According to the government, Kazakhstan’s Investment Headquarters reviewed 44 projects worth approximately $25.5 billion during the first quarter of 2026. Prosecutor General Berik Asylov said the number of criminal cases against businesses has fallen fourfold over the past three years. “We are overseeing more than 3,000 investment projects. We maintain direct communication and continuous monitoring with investors and the business community,” he said. According to the Foreign Ministry, investors submitted 273 appeals during the first quarter of the year, with around half resolved positively. The main concerns related to tax administration, customs procedures, and land issues. Baurzhan Yeraly, chairman of the Committee for the Protection of Investors’ Rights under the General Prosecutor’s Office, said the rights of around 600 investors had already been protected this year, with complaints handled directly rather than transferred between agencies. Officials cited several successful cases, including the connection of a major energy project in the Atyrau region to engineering infrastructure and the inclusion of a paper products manufacturer in the national registry of domestic producers. Bektenov criticized what he described as a formalistic approach by some state bodies in dealing with businesses. “Every request from an investor is a signal behind which stand decisions on capital allocation, the launch of new production facilities, and the creation of jobs,” he said. The prime minister warned that officials and managers in the quasi-state sector responsible for bureaucratic delays would face “the strictest measures.” He also pointed to systemic problems, including weak coordination between agencies, delays in public service delivery, and insufficient oversight at the regional level. Particular attention was given to the role of local administrations, which were instructed to supervise key investment projects directly and accelerate the allocation of land, infrastructure, and permits. The government also plans to speed up development of the National Digital Investment Platform. More than 3,000 projects worth around $200 billion have already been integrated into the system, though more than 400 projects have yet to be uploaded. “In the context of global competition for investment, we must ensure a stable and favorable investment climate,” Bektenov said. Asset Irgaliyev, chairman of the Agency for Strategic Planning and Reforms, said the agency is developing a “regulatory intelligence” platform using artificial intelligence to identify excessive requirements and administrative barriers. Authorities also plan to expand the overseas network of Kazakh Invest. According to company head Sultangali Kinzhakulov, representative offices in the United States, Germany, China, Russia, Turkey, Malaysia, and Qatar will operate as “one-stop...

Data Center

U.S.-Linked Consortium to Build $1.5 Billion Data Center in Kazakhstan

Kazakhstan has signed a memorandum of cooperation with an international consortium that includes Dornan Engineering Group and JMOT04 to develop a major high-capacity data center project in the country. Kazakhstan’s Ministry of Artificial Intelligence and Digital Development signed the agreement during GITEX AI Kazakhstan. According to the ministry, the project involves the construction of a Tier III–Tier IV high-reliability data center with planned capacity ranging from 50 MW to 200 MW. Investment in a 200 MW Tier IV facility is estimated at between $1 billion and $1.5 billion. To ensure a stable and independent power supply, the project also includes plans to build a gas-fired power plant with capacity of up to 250 MW. Investment in the energy facility is estimated at between $200 million and $400 million. The project will be implemented by Ample Solution Limited, one of Asia’s largest suppliers of electronic components, founded in 2008. “Kazakhstan has a unique geographic position, a favorable climate, and competitive electricity costs. These factors create a solid foundation for hosting international data centers and developing digital infrastructure,” said Zhaslan Madiyev, deputy prime minister and head of the Ministry of Artificial Intelligence and Digital Development. Authorities are currently selecting the optimal location for the project, prioritizing sites near gas infrastructure to ensure efficient electricity generation and operational reliability. The Times of Central Asia previously reported that Kazakhstan’s planned “data center valley” would be located in the northeastern Pavlodar region. Speaking after a government meeting on May 5, Deputy Energy Minister Sungat Yessimkhanov said the first facilities in the cluster are expected to appear as early as next year. According to Yessimkhanov, work is currently underway to formalize land allocations and ensure a stable electricity supply for the centers. “We are directly involved in the overall process. At the first stage, 300 MW will be required, and there are no issues with that volume,” he said. “The first facilities will appear in 2027, and uninterrupted electricity supply will be guaranteed by then.” During the GITEX AI forum, Kazakhstan’s Energy Ministry and the Ministry of Artificial Intelligence and Digital Development also signed cooperation memorandums with Ample Solution Limited and Dominor Partners Ltd covering the development of hyperscale data centers in Kazakhstan, including the creation of a specialized cluster combining digital and energy infrastructure. Under the agreements, the parties will cooperate on the development of supporting energy infrastructure, including power generation projects using gas, coal, and renewable energy sources to ensure a stable electricity supply for the data centers. Particular attention will also be given to localizing the production of equipment and technologies to strengthen technological independence and create new opportunities for industrial development. The agreements additionally provide for technology transfer, workforce development, and joint work on digital and energy infrastructure projects, including the Industrial & Digital Energy Hub initiative. According to Kazakhstan’s Energy Ministry, the projects are expected to attract investment, support the development of the digital economy, create jobs, and strengthen Kazakhstan’s position as a regional technology and energy hub.