Economic Developments - May 2018

Kazakhstan wants renewable energy to reach 50% of its energy mix by 2050, with intermediate targets of 3% by 2020 and 10% by 2030. Participants at a high-level policy dialogue on Renewable Energy Investment identified several barriers that are still faced by investors and also best practices, policies and tools to overcome them.

Central Asia’s first auction of renewable energy sources to reduce costs of electricity generated by renewable energy sources will be held in Kazakhstan. Most effective projects offering the lowest electricity tariffs will be selected.

Kazakhstan’s state-owned energy company KazMunayGaz will export 7 billion cubic meters (bcm) of gas this year and increase the quantity to 10 bcm by 2019. Apart from technical problems, KazMunayGaz will face severe competition from Russian Gazprom, which is currently building its Sila Sibiri (Siberian Power) gas pipeline, from Far Eastern Yakutia to China, to ship its first annual gas supply of 38 bcm by 2019. Riddled with financial and technical problems, Kazakhstan is currently unable to develop its oil infrastructure. Over last five years, value of China’s oil and gas imports from Kazakhstan has fallen from US$8.7 billion, in 2013, to US$853.4 million in 2017. One explanation is that from 2014 on, China started importing more Russian oil. Kazakhstan is seeking to diversify its hydrocarbon export routes from the unpredictable and politically volatile Chinese energy market which is the major export destination for Kazakhstan’s oil and gas. Kazakhstan’s hydrocarbon production has risen steeply since 2017, after relaunch of Kashagan oilfield, boosting its export potential. Kazakhstan will increase its oil output by 29% and gas production by 33.3% which will allow this year’s exports to reach 17.4 bcm. Meanwhile, mounting anti-Chinese sentiment in Kazakhstan following reports of political persecution of ethnic Kazakh and Uyghur minorities in China undermine closer economic ties. Kazakh nationalists often criticize their government for failing to limit the number of Chinese workers brought into Kazakhstan by Chinese oil companies, which, they claim, pose a security threat.

Kazakhstan plans to join the international transport multimodal corridor established between Uzbekistan, Turkmenistan, Iran and Oman as part of 2011 Ashgabat Agreement. This will enhance the volume of cargo transportation from Kazakhstan to member countries and bring benefits including preferential customs tariff regimes. India acceded to Ashgabat Agreement recently. 

National Iranian Oil Company has stated that Iran is prepared to enter into a gas-swap deal that would transfer Turkmen gas to Pakistan. Iran said that the proposed pipeline to transport gas from Turkmenistan to India (TAPI) was unlikely to become operational. Turkmenistan is currently experiencing its worst economic crisis since it became independent in 1991. Turkmen government is desperately seeking new export routes for its major export: natural gas. This deal could be a blow to TAPI, since it would make TAPI less important for Pakistan and India.

Kazakhstan’s foreign trade turnover increased by 25% to US$69.5 billion last year. The country’s exports increased by 30% and reached US$48.3 billion; imports grew by 15.5% to US$29.3 billion. Over four years from 2013 to 2017, share of manufacturing exports in Kazakhstan’s total exports increased from 23% to 32%. In the first two months of this year, exports exceeded US$8.8 billion, which is 27.4% – US$1.9 billion – higher than in same period last year.

Turkmen President Gurbanguly Berdimuhamedov inaugurated a new international cargo and passenger seaport at Turkmen bank of Caspian Sea. Inauguration was marked with massive celebrations. The port occupies 1.358 million sq. m. Its wharf stretches for 3,600 meters. The sea port hosts the ship building and ship repairing factory, which will allow to build 4-6 ships and will process up to 10,000 tons of steel per annum. Construction of the $1.5 billion port started in August 2013.

 

 May 30, 2018

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About the Author

Ambassador Ashok Sajjanhar

Former Ambassador of India to Kazakhstan, Sweden and Latvia; President, Institute of Global Studies and Distinguished Fellow, Ananta Centre

Ambassador Ashok Sajjanhar belongs to the Indian Foreign Service and has acquitted his responsibilities in the diplomatic service for 34 years. He was Ambassador of India to Kazakhstan, Sweden and Latvia and has worked in senior diplomatic positions in Indian Embassies/Missions in Washington DC, Brussels, Moscow, Geneva, Tehran, Dhaka and Bangkok and also at Headquarters in India. He negotiated for India in the Uruguay Round of Multilateral Trade Negotiations and in negotiations for India-EU, India-ASEAN and India-Thailand Free Trade Agreements.

He contributed significantly to strengthening strategic ties and promoting cultural cooperation between India and USA, EU, Russia and other countries.Ambassador Sajjanhar worked as head of National Foundation for Communal Harmony to promote amity and understanding between different religions, faiths and beliefs. Ambassador Sajjanhar has been decorated by Governments of Kazakhstan and Latvia with their National Awards and by Universal Peace Federation with Title of ''Ambassador of Peace.'' Currently Ambassador Sajjanhar is President of Institute of Global Studies, New Delhi. He writes, travels and speaks extensively on issues relating to international relations, foreign policy and themes of contemporary relevance and significance. He appears widely on TV panel discussions. Ambassador Sajjanhar is interested in reading, music and travelling. His wife Madhu is an economist and an educationist. They have a son and a daughter both of who are accomplished singers. Their son passed out of Yale University and their daughter is pursuing her PhD at University of Minnesota.