Kazakhstan is looking for economic and energy diversity to sustain growth in the coming decades.

Kazakhstan, a Central Asian landlocked country with oil and gas reserves, is focusing on renewable energy and infrastructure development, both of which will considerably boost its foreign trade and shipping. The ongoing world exhibition EXPO 2017, being held in Kazakhstan’s capital Astana under the broad theme of “Energy”, is expected to provide a strong momentum to sustainable energy, one of the sustainable development goals (SDGs) of the United Nations’ 2030 Agenda.

Kazakhstan’s First Deputy Foreign Minister Mukhtar B. Tileuberdi recently made a strong pitch in New York for renewable energy, and also explained that it was necessary to further develop his country’s infrastructure in an effort to “reach out” to the markets both in the region and outside it.

Kazakhstan’s First Deputy Foreign Minister Mukhtar B. Tileuberdi
Kazakhstan’s First Deputy Foreign Minister Mukhtar B. Tileuberdi

“Hosting the EXPO 2017, which symbolises international cooperation and technological advances, for the first time in Central Asia, is a milestone not just for our country but the entire region,” Tileuberdi said in an interview with the AJOT held at the Kazakhstan mission to the UN in New York. Tileuberdi asserted that renewable energy is at the heart of the solution to the challenge of promoting growth, creating jobs and improving living standards while protecting the planet for future generations.

Economic Diversification

Like many of the major oil-producing countries which are diversifying their economies and reducing their dependence on oil and gas, Kazakhstan is also trying to diversify its economy and reduce its reliance on fossil fuels.

Indeed, Kazakhstan has set the goal of meeting half of its domestic power needs from renewable resources by 2050.

According to Tileuberdi, the EXPO exhibition – it runs until September 10, with the participation of 115 countries and 23 international organizations - will strengthen Kazakhstan’s transition to a “modern and sustainable economy”.

Tileuberdi averred that the engineering and scientific achievements showcased at the EXPO can provide a strong momentum to the transition to green economies around the world.

The huge infrastructure set up for staging the gargantuan exhibition would benefit the country, according to Tilieuberdi. “When EXPO 2017 finally closes its doors on September 10, the buildings and infrastructure will have new uses to drive the modernization of the economy. The concrete and lasting benefits these will bring will far outweigh any costs,” he said.

Astana has also developed its urban infrastructure, including a new high-tech airport terminal, the region’s largest railway station, and an upgraded public transportation system. Kazakhstan is also setting up special economic zones aimed at attracting foreign companies and transforming Kazakhstan into Central Asia’s logistics hub.

Top Five in Energy Exports by 2020

Kazakhstan is projected to become one of the world’s top five energy exporting nations by 2020. Neighboring countries, including Turkey, could meet their huge appetite for energy and grain and meat demand from Kazakhstan. Indeed, countries such as Turkey stand to benefit from Kazakhstan’s Western-Europe-to-Western-China transportation corridor, also called “the Silk Road of the new millennium”.

Kazakhstan and Turkey agreed on an Action Plan to carry out their ambitious four-year New Synergies economic program from 2012 to 2015; this has spurred bilateral Kazakh-Turkish trade which jumped 200% from $1.9 billion in 2010 to $4 billion end of 2012. By end 2012, Kazakhstan’s investments in Turkey had reached $978 million. Turkish investment in Kazakhstan had reached nearly $859.8 million. Both sides say that bilateral trade will increase to $10 billion “in the coming years”.

Many experts predict that Central Asia could become a more attractive source of energy supply than the oil-supplying Gulf countries. “For Turkey, for example, Central Asia would be safer and more stable in terms of its political systems and also the lack of internal threats to the states in the region,” one German expert, preferring to remain anonymous, explained; also, Central Asia is located far away from the conflict-ravaged Middle East.

Kazakhstan’s dry ports are of strategic significance for Central Asia. Besides Khorgos in the east, Kazakhstan’s lesser known port Aktau, located in the west, aspires to become a trans-Eurasian transport and trade hub.

Aktau is today a bustling center of the oil industry. But as a core component of a national shift to build a logistics industry to diversify the economy away from being solely reliant on resource exports, Aktau is attempting to develop into a great crossroads of Eurasia directly linking it with China to the east, Russia to the north, Iran to the south, and Azerbaijan, Turkey, and Europe across the Caspian Sea to the west.

Logistics hub

The rail connection from Khorgos to Aktau port will enable cargo to be transported along the Caspian Sea and the Caucasus to Europe as well as to the south by Iran to the Gulf. With the new railway line connecting Georgia and Turkey, cargo can now be shipped via Aktau over the Caspian Sea and then by rail through Azerbaijan and Georgia for delivery in Turkey and beyond, according to experts at DHL which is considered a pioneering forwarder on this transport route.

Kazakhstan’s growing importance as a logistics hub is also attracting key logistics players from around the world. Besides the presence of Turkish construction and logistics companies, major Asian countries, particularly Japan, China, South Korea and India, are also eyeing Kazakhstan as an important link to the lucrative Central Asian markets.

Nippon Express, for example, recently signed a MoU with Kazakhstan’s railroad company Kazakhstan Temir Zholy (KTZ) for developing container traffic from China, Japan and South Korea to Europe and, particularly, Central Asia and the Caucus.

KTZ Vice President (Development), Arman Sultanov, has been commenting that the railway company would provide trans-shipment, processing and handling at Khorgos-Eastern Gates port, which will reduce the cargo transit time between Asia and Europe.

KTZ had, a few months earlier, signed an investment agreement with COSCO Shipping Corp. and China’s Lianyungang port for the joint development of the Khorgos-Eastern Gate Special Economic Zone (SEZ). Lianyungang is China’s largest ocean port with a handling capacity of more than 200 million tonnes and five million containers per year.

Chinese investors are acquiring 49% of Kazakhstan’s inland port to create a large regional hub for the consolidation and distribution of cargo flows between Asia and Europe.

Dubai-based DP World also signed a MoU with the Kazakhstan government to develop a Port Community System (PCS), a one-stop electronic platform developed by DP World subsidiary Dubai Trade that enables the exchange of multimodal data. The joint venture from the KTZ and DP World collaboration would implement and manage the PCS system which will automate the multimodal logistics processes into a single Eurasian Transcontinental Corridor.

KTZ and DP World are setting up a joint venture to implement and manage the PCS system which with the help of automation will convert multimodal logistics processes into a single ‘Eurasian Transcontinental Corridor’.