Kazakhstan Business & Economy - The Times Of Central Asia

Viewing results 523 - 528 of 2065

Rare Earth Elements

After Securing Ukraine Agreement, U.S. Eyes Central Asia for Rare Earths

After months of negotiations, the United States and Ukraine have finally signed an agreement to co-finance the development of Ukraine’s mineral resources, hydrocarbons, and infrastructure. According to The National Interest, the U.S. will not assume ownership of Ukraine’s assets; instead, profits will be directed into a joint investment fund, with full reinvestment in Ukraine. Ukraine’s First Deputy Prime Minister Yulia Svyrydenko described the deal as a mutually beneficial partnership. U.S. Treasury Secretary Scott Bessent hailed it as a “historic economic partnership,” underscoring America’s enduring commitment to a “free and prosperous Ukraine.” Since his return to office in January, President Donald Trump has prioritized securing access to rare earth minerals. This move is part of a broader U.S. strategy to reduce reliance on China, which currently dominates the sector with control over approximately two-thirds of global production. By contrast, the United States accounts for only about 12%. While Ukraine possesses 22 of the 50 minerals identified as critical by the U.S. government, it holds just around 5% of global reserves. As a result, Washington is looking beyond Ukraine and Central Asia has emerged as a strategic alternative. Reports from the Caspian Policy Center and the International Tax and Investment Center highlight the region’s significant rare earth potential. The countries of Central Asia have already taken steps toward deeper cooperation. In 2024, the United States and Uzbekistan signed a Memorandum of Understanding to enhance collaboration on critical minerals. However, competition for access remains stiff. China maintains robust trade links across the region, and Russia continues to wield considerable economic influence. Nonetheless, regional dynamics are shifting. In recent years, Central Asian states have increasingly sought to diversify their partnerships, reducing dependence on Moscow and Beijing. They have moved to deepen ties with the United States, the United Kingdom, and the European Union. In September 2023, then-President Joe Biden met with Central Asian leaders to discuss regional cooperation, including rare earth supply chains. This was followed by the June 2024 meeting of the U.S.-Central Asia Trade and Investment Framework Council, where both parties emphasized the need for increased trade and integration. Like Ukraine, Central Asian nations stand to gain from U.S. investment, particularly in energy infrastructure and broader economic development. If implemented effectively, rare earth revenues could be retained within the region, supporting long-term local growth. For the United States, enhanced access to Central Asian resources represents a step toward greater energy security and reduced strategic vulnerability. While China and Russia maintain structural advantages, Washington now has a meaningful opportunity to deepen its presence in Central Asia and forge enduring partnerships.

Oil Price

KazMunayGas Sees No Risk from Falling Oil Prices, Prepares for Market Fluctuations

Kazakhstan’s national oil company KazMunayGas (KMG) has developed contingency strategies to manage volatility in global hydrocarbon markets and says it is fully prepared for any changes in oil prices. As of the morning of May 5, Brent crude had dropped to $59.30 per barrel and WTI to $56.19, the lowest levels since April 9, following the OPEC+ decision to increase production. In response to questions at a media briefing, KMG Deputy Chairman Aset Magauov said the company foresees no significant risks despite this sharp decline. “Analysts expect oil prices to average around $65 per barrel this year, though no one can predict with certainty,” Magauov stated. “We don’t see any risks for KazMunayGas. We have prepared for various scenarios and identified measures to optimize our expenses. In principle, we are ready for any fluctuations.” KMG, which accounts for 26% of Kazakhstan’s total oil production and 80% of the domestic refining market, supplies roughly 70% of its crude oil to the domestic market. This oil is processed at Kazakhstan’s major refineries to ensure stable fuel and lubricant supplies. According to Magauov, the cost of domestic supply remains well below export prices, insulating KMG from international volatility. “Even while export prices fluctuate, domestic prices remain stable and significantly lower than the lowest export benchmarks,” Magauov said. “Therefore, the majority of our sales, around 70%, are unaffected by global market movements. Moreover, exports of gasoline and diesel are limited, with nearly all production sold domestically.” Magauov also noted ongoing discussions with Russian energy firm Tatneft on the potential joint development of the Atyrau refinery. As previously reported by The Times of Central Asia, Kazakhstan’s antitrust agency proposed privatizing state-owned stakes in the Pavlodar and Atyrau oil refineries, moves that could reshape the sector’s competitive landscape. Meanwhile, Energy Minister Yerlan Akkenzhenov announced in April that Kazakhstan aims to double its domestic oil refining capacity by 2040, from 17.9 million tons in 2024 to 38 million tons annually.

Oil Production

Kazakhstan Braces for Economic Fallout from OPEC+ Output Hike

The latest OPEC+ decision to boost oil production in a strained global market threatens to push Kazakhstan closer to recession and further inflation. On May 3, OPEC+ members agreed to a significant increase in oil output for June. Leading financial outlets, including Bloomberg, suggest that the move is intended to penalize member states that have consistently breached their production quotas, most notably Kazakhstan and Iraq. The announcement triggered a sharp drop in oil prices. Production will rise by 411,000 barrels per day in June, following a tripling of output in May from the originally planned volume. Analysts attribute the shift to Riyadh’s growing frustration with non-compliant members. According to Rystad Energy analyst Jorge Leon, a former OPEC official, Saudi Arabia aims to “financially wear down” these states while aligning with U.S. President Donald Trump’s push for lower energy prices. Kazakhstan’s Overproduction at Tengiz Despite repeated assurances from Kazakhstan’s Ministry of Energy that they would honor OPEC+ agreements, the country exceeded its January quota by 32,000 barrels per day (bpd), producing 1.5 million bpd versus an allotted 1.468 million. This surge followed Tengizchevroil LLP’s launch of a new expansion phase at the Tengiz oil field in the Atyrau region, elevating output there to 870,000 barrels per day, 45% above the 2024 average. The expansion is expected to add 12 million tons annually to Tengiz’s crude production. Tengizchevroil is a joint venture comprising Chevron (50%), ExxonMobil (25%), KazMunayGas (20%), and LUKOIL (5%). Falling Prices and Criticism of OPEC’s Tactics Following the OPEC+ announcement, Brent crude futures fell to $59.30 per barrel on May 5, with U.S. WTI at $56.19. Some analysts argue Kazakhstan is being unfairly targeted. As Reuters reports, Kazakhstan contributes only 5% of OPEC+ production and under 2% of global output. Analysts at the Stankevicius Group note that larger producers such as the UAE, Russia, and Iraq have repeatedly breached quotas without facing similar scrutiny. They argue that Saudi Arabia’s surge in production undermines the cartel’s objectives more than Kazakhstan’s actions. “Saudi Arabia, which has sharply increased its oil production, is causing even greater damage to the OPEC+ agreement by encouraging lower prices," the analysts claimed. "In other words, Kazakhstan is maintaining a balance of interests and the interests of other cartel members. Meanwhile, other members are allowing themselves to disrupt the market balance.” Planning for a Downturn Oil revenues are central to Kazakhstan’s state budget, prompting government officials to prepare for a potential downturn. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin stated in April that contingency plans are being developed for scenarios where oil prices fall to $55 or even $50 per barrel. However, the national budget is pegged to a $75 per barrel benchmark. According to analyst Murat Kastaev, social obligations make spending cuts politically infeasible, leaving the government reliant on increased transfers from the National Fund and a probable weakening of the tenge. While GDP growth could slow to 3-3.5% at current prices, a sustained drop to $40-50 per barrel may trigger a recession...

Airports

Vietnamese Investment Group Eyes Airport Purchase in Kazakhstan

Vietnam’s SOVICO Group, the new owner of Kazakh airline Qazaq Air, is considering acquiring or managing an airport in Kazakhstan, according to Deputy Prime Minister and Minister of National Economy Serik Zhumangarin. SOVICO Group, one of Vietnam’s leading investment conglomerates, operates across sectors including finance, aviation, energy, and digital transformation. The group also owns VietJet Air, an international low-cost airline with a fleet of 85 aircraft. In 2024, SOVICO acquired Qazaq Air, a domestic carrier the Kazakh government had been trying to sell since 2023 for KZT 10.2 billion (approx. $19.7 million). However, the final sale price was significantly lower: KZT 2 billion (approx. $3.8 million), according to Transport Minister Marat Karabaev. Qazaq Air currently serves 14 domestic routes, four of which are state-subsidized and four international destinations. New Brand, Broader Ambitions During a Kazakhstan-Vietnam business roundtable in Astana on Tuesday, it was announced that Qazaq Air will be rebranded as VietJet Kazakhstan. “We highly appreciate the intention of SOVICO Group and VietJet Air to manage Qazaq Air under the new brand,” said Nurlan Zhakupov, Chairman of the Board of Samruk-Kazyna JSC. “Expanding the route network will enhance regional connectivity and foster new economic growth.” Zhumangarin mentioned that SOVICO Group is actively exploring options to either acquire or manage a Kazakh airport. “The company is large, rapidly expanding, and maintains numerous international partnerships. An airline needs a base airport, and they are considering establishing one here,” he said. Strategic Infrastructure Interest SOVICO has also signaled its interest in modernizing regional airport infrastructure, specifically in the Turkestan and Kyzylorda regions, a move seen as part of its broader strategy to expand operations in Central Asia. In 2023, bilateral trade between Kazakhstan and Vietnam reached nearly $1 billion, although it dipped slightly to $879 million by the end of 2024.

Export

Kazakhstan Reduced Fish Exports Last Year

Kazakhstan exported 23,400 tons of fish products in 2024, marking a decline from the previous year despite an overall 7% growth in domestic fish production. The figures point to a significant rise in domestic consumption of fish. According to the Ministry of Agriculture of Kazakhstan, 72 enterprises are currently engaged in fish processing, with 20 of them supplying products to the European Union. Kazakhstani fish products, over 50 types in total, are exported to 21 countries. However, the 2024 export volume fell short of the 25,300 tons reported in 2023, which included 11,800 tons of processed fish, a slight increase over 2022. In contrast, domestic consumption has surged. The domestic market absorbed 94,600 tons of fish products in 2024, up 7% compared to 2023. “The state actively supports the development of aquaculture. Subsidies to the industry have increased ninefold since 2021, reaching KZT 4.5 billion ($8.7 million) in 2024. Kazakhstan provides reimbursement of up to 25% of investment costs, 30% of feed costs, and 50% of the cost of purchasing young fish, broodstock, and veterinary drugs,” the Ministry of Agriculture stated. The number of fish farms in Kazakhstan has doubled in the past three years, reaching 600. In 2024, investments in fixed assets in the fishing industry exceeded KZT 5.2 billion ($10.1 million). Despite this growth, concerns remain about the ecological health of regional fish stocks. As previously reported by The Times of Central Asia, the Caspian sturgeon population has plummeted by 90% amid an ongoing environmental crisis.

Cyberattacks

Cyberattacks Double in Kazakhstan in Early 2025

Kazakhstan experienced a sharp increase in cyberattacks during the first quarter of 2025, with 30,000 information security incidents recorded between January and May, double the number reported during the same period in 2024. According to data from research agency Ranking.kz, the most significant growth was observed in botnet-related activity, including spam mailings, password cracking, and remote system intrusions that cause service disruptions. Such incidents surged to 17,600 in the first quarter of 2025, compared to just 1,700 a year earlier. Conversely, attacks involving computer viruses, worms, and Trojans declined by 17.9% year-on-year, totaling 7,900 cases. However, phishing attempts targeting Kazakhstani users rose by 37.2%, reaching 2,000 reported incidents. Other categories saw a decrease. Cases involving inaccessibility of internet resources dropped by 48.1% to 112, while distributed denial-of-service (DDoS) attacks fell to 23, down from 30 in the same period last year. Incidents of unauthorized access or modification of digital content also declined slightly, with nine reported cases versus 13 previously. Despite the rise in cyber threats, Kazakhstan’s IT sector continues to demonstrate robust growth. In 2024, the value of services in computer programming, consulting, and related fields reached 1.5 trillion tenge (approximately $2.9 billion), a 36.3% increase compared to 2023. Since 2016, the volume of services in this sector has expanded more than tenfold, and by over fivefold since 2019. Regionally, Almaty and Astana dominated the sector, accounting for 90.2% of all IT services provided. Almaty led with KZT 853.1 billion ($1.6 billion), followed by Astana with KZT 486.7 billion ($950 million). The lowest activity was recorded in the Ulytau region, with only KZT 712.3 million ($1.3 million) in services. Separately, The Times of Central Asia previously reported that a Chinese firm involved in cyber intelligence operations had been active in Kazakhstan for several years, accessing telecom data over an extended period.