Russia, Kazakhstan mull trade revival
By Sergei Blagov
Russia and Kazakhstan have reiterated pledges to boost their bilateral economic
and energy partnership. However, the two have proved slow to complete existing
energy projects, while bilateral trade has also declined.
During a meeting in Moscow between Russian Prime Minister Vladimir Putin and
his Kazakh counterpart, Karim Masimov, Putin argued that bilateral trade was
down to about US$13 billion in 2009 due to the global economic crisis. In 2008,
trade between Russia and Kazakhstan amounted to $20 billion.
Nonetheless, Putin urged the further development of bilateral trade and noted
that Kazakhstan remained Russia's third-largest post Soviet trade partner. In
2009, Russian exports to Kazakhstan amounted to $9.15 billion, according to
Russian customs
statistics. Therefore, Russia continued to enjoy a healthy trade surplus as
Kazakhstan's exports to Russia only reached $3.68 billion.
In response, Kasimov pledged to develop bilateral energy cooperation, notably
Kazakh electricity sales to Russia. He also suggested boosting ties in the
nuclear industry and space sectors. However, no agreement was announced on
earlier plans to create a joint nuclear power company.
Meanwhile, in the immediate aftermath of the talks between Putin and Masimov,
Russian and Kazakh utility entities moved to intensify cooperation. On March 5,
the Russian Energy Ministry said that Russian and Kazakh energy companies,
including Inter RAO UES, FSK UES and KEGOC, had agreed to finalize and sign by
March 15 an agreement on electricity sales until 2013.
In September 2009, Russian President Dmitry Medvedev and his Kazakh
counterpart, Nursultan Nazarbayev, pledged to develop the bilateral energy
partnership and agreed to create a joint company to implement civilian nuclear
power projects. Medvedev suggested integrating the power supply systems of both
countries, while Nazarbayev promised to increase electricity supplies from
Kazakhstan to Russia's Siberian regions to help tackle power shortages in the
aftermath of the Sayano-Shushenskaya hydropower plant disaster in August 2009.
Moscow sent an economic delegation to Astana ahead of the meeting between Putin
and Masimov. On March 2, Masimov met Russian Deputy Prime Minister Igor
Shuvalov in Astana. During his Central Asian tour, Shuvalov pledged to
contribute to energy projects in the region. However, in their official
statements, Putin and Masimov made no mention of two major bilateral projects:
the Orenburg gas plant and the Caspian Pipeline Consortium (CPC).
In March 2005, Russian gas giant Gazprom announced its plan to set up a joint
venture with Kazakhstan's state-owned company, KazMunaiGas, to process at the
Orenburg gas plant the natural gas from the Karachaganak field, near the
Russian border in northwestern Kazakhstan. In December 2007, KazMunaiGaz stated
that it expected the creation of the Orenburg joint venture by mid-2008. In
September 2009, Russian officials insisted that the Orenburg gas processing
plant would process 17.6 billion cubic meters (bcm) of Kazakh gas annually by
2012.
However, also last September, Kazakh officials argued that Gazprom's joint
venture with KazMunaiGas to process natural gas at Orenburg might be further
delayed due to the development of the Karachaganak gas field taking longer than
expected. The venture's future was expected to be clarified by the end of 2009,
but subsequent bilateral meetings failed to issue any clarification, and five
years after the original announcement the final joint venture deal remains
elusive.
During the meeting in Moscow on March 3, the sides also failed to address
cooperation in the CPC, which owns the Baku-Novorossiysk pipeline. The CPC has
been operating at relatively low rates, partly due to Kazakhstan's reluctance
to commit more crude oil to the pipeline.
In April 2006, Moscow and Astana agreed to more than double crude oil
deliveries via the CPC from 28 million tons per year in 2005. In May 2008, they
agreed to increase the capacity of the CPC from 32 million tons per year to 67
million tons per year by 2012. Moscow has long urged Nazarbayev to agree to a
long-term deal, under which Kazakhstan would commit to exporting more crude oil
via Russian pipelines. However, a binding oil transit deal between both
countries has also failed to materialize.
Furthermore, Astana has repeated its interest in alternative pipeline routes.
On March 2, following talks in the Kazakh capital with Romanian President
Traian Basescu, Nazarbayev suggested creating a new route through Azerbaijan
and Georgia to the Black Sea in order to funnel Kazakh oil from the giant
Kashagan field to Romania by tanker, delivered from the Black Sea port of
Constanta to Trieste in Italy.
The new route would serve as part of the European Union-supported international
transport program: Transport Corridor Europe-Caucasus-Asia. Therefore,
Kazakhstan has apparently sought to limit its dependence on Russian oil
pipelines. Subsequently, energy and oil transit deals between Russia and
Kazakhstan continue to prove elusive.
Prior to working as Moscow-based independent researcher and journalist, Dr Sergei
Blagov was a newswire reporter. He spent nearly seven years reporting
from Hanoi, Vietnam, between 1983 and 1997.
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