|
Sarkaritel.com News and
Features
Oil&gas Kazakhstan on the way of economic diversification
Thursday, February 07, 2008
The role of Kazakhstan for maintaining global energy
security constantly grows. It extremely important, taking into
consideration the fact that the energy component becomes more
and more substantial argument in the global geopolitical
balance.
Along with the search for an effective response to traditional
and new challenges to international stability, the
significance of a security of the global energy balance has
immensely grown in new century. Energy resources have key
significance for improving of living standards and widening of
opportunities of all states. That is why securing of
effective, sustainable and ecologically safe energy supplies
under prices that reflect fundamental principles of the market
economy considers to be one of the most important challenges
for the world community.
As risks accumulate on supplying an ever-growing world energy
demand, the international system is straining to meet the
demands of new players in the global oil & gas game, old
issues such as energy security and resource nationalism, and
new issues like climate change and energy equity.
The oil&gas industry has always been about risk taking and
risk management. The challenge of the 21st century is to
pursue a pathway that allows nations to cooperate in meeting
their legitimate interests to produce and obtain clean,
affordable and secure energy and in establishing rules of the
market that allow industry to compete effectively to satisfy
those needs. The danger is a return to 19th century «beggar
thy neighbor» type policies that threaten the benefits of
globalization and the search for global solutions for global
problems.
It is necessary to achieve stability and security in that
sphere in the frame of comprehensive and coordinated
international approach to avoid tensions.
Kazakhstan has a position in this 21st century game as it
unfolds. The energy security as a key factor of the
international stability is one of main politico-economic
priorities for Kazakhstan. The country is an important element
of global energy infrastructure, that is why considerable part
of the foreign policy of Kazakhstan concentrated on solution
of problems of stable and safe export directions of domestic
hydrocarbon resources.
Kazakhstan is important to world energy markets because it has
significant oil and natural gas reserves.
With sufficient export options, Kazakhstan could become one of
the world's largest oil producers and exporters in the next
decade, possessing approximately 36 bln barrels (5.2 bln t)
proved oil reserves and 3.4 trillion cubic meters of natural
gas, though possible oil reserves could reach 70-75 bln
barrels. Thus, Kazakhstan takes 2nd place among CIS
oil-extracting countries, just after Russia, and 12th – in a
world scale.
Kazakhstan's leadership is laying the foundation for its
integration into the global economy and global energy sector.
Kazakhstan adheres to follow the position of diversification
of ways of transportation of hydrocarbons to world market and
highly effective use of pipeline systems. It is important to
note that Kazakhstan exported more than 57 mln t from 65 mln t
of extracted crude oil in 2006, primarily for European and
Chinese energy markets. Moreover it is officially alleged that
Kazakhstan will be able to produce about 130-135 mln t of
crude oil in 2015, and its export potential will grow to 120
mln t annually.
From the very outset the Government of independent Kazakhstan
have sought to lay the foundations of a market economy, civil
society and democracy – simultaneously through pursuing
economic growth and rising living standards whilst maintaining
stability. The basis of Kazakhstan energy strategy is formed
on the principle of an economic expedience and minimization of
the techogenic impact on environment.
But Kazakhstan's strategic aspiration is to become a modern,
diversified economy with a high value added and high-tech
component, well integrated in to the global economy. The
energy sector is viewed as a good basis to achieve this goal.
At independence in 1991, Kazakhstan had a promising resource
base, from its sizable hydrocarbon reserves to its
well-educated workforce. More importantly, though, it had the
wisdom to move quickly away from the failed policies of the
past. Kazakhstan's leadership embarked on a new -
transformational-course. In a little over ten years,
Kazakhstan implemented a series of broad-based reforms that
brought the country from planned to market economy.
Kazakhstan undertook a process of demonopolization,
privatization, debt restructuring, price liberalization,
customs reform, and tax restructuring.
Kazakhstan established a securities and exchange
commission, liberalized trade, enacted laws on investment,
established a new government procurement process, and reformed
the banking system. The recovery of international oil prices
in 1999-2000, combined with a well-timed national currency (tenge)
devaluation and a bumper grain harvest, pulled the Kazakhstan
economy out of recession in 2000.
The Government has embarked upon an industrial policy designed
to diversify the Kazakhstan economy away from over dependence
on the oil sector by developing innovative heavy and light
industry. Surely, full dependence on natural resources and
world prices makes a national economy vulnerable.
Kazakhstan has enjoyed impressive economic growth over the
past seven years, buoyed by increased oil exports, as well as
by bold economic reforms, prudent fiscal policies and economic
initiatives that were instituted in 1999.
Those measures boosted a constant and stable growth of the
national economy and the well-being of people. For instance
Kazakhstan can boast a high level of GDP growth, which reached
11879.8 bln tenge (US$98.5 bln, +8,7% to 2006) in the end of
2007. Gold and currency reserves peaked US$40 bln, up from
meager US$3.5 bln in the middle of 2001.
At the beginning of 2003 the Government of Kazakhstan has
adopted The Innovative Industrial Development Strategy for the
years 2003-2015. The Strategy came at the time when basic
economic reforms have been completed successfully replacing
the old system of economic relations with market economy.
In the first decade of its independence Kazakhstan was
successful in fostering market-based institutions, the
country’s energy industry saw a rapid growth and the banking
sector has taken the leading positions within the CIS
countries.
However, being aware of the economy’s heavy reliance on the
energy and minerals sectors the Kazakhstan Government adopted
an ambitious three-stage New Industrial Development Strategy
to ensure sustainable development of the domestic economy
through its genuine diversification, creation of new
competitive industries, modernisation and expansion of the
existing infrastructure with the ultimate goal of moving from
an extraction-based industry to a service and technology based
economy.
On top of the successfully operating National Oil Fund and
Development Bank of Kazakhstan, first ever institution of the
sort in the FSU, established back in 2000 and 2001
respectively new development institutions have been
established in 2003 within the Strategy, all deriving millions
of dollars from oil revenues. These new institutions are the
Sustainable development Fund «Kazyna», Export Credit
Corporation, Centre for Engineering and Transfer of
Technologies, Centre for Market Research and Analysis and
others.
Now country's investment potential is based on minerals and
raw materials. Because their exploitation creates considerable
part of the national gross product, the quality and extent of
deposits utilization and the reproduction of raw material
reserves play decisive role in the present and future of
Kazakhstan.
For example, it is supposed that exploitation of the oil and
gas field Kashagan which is one of largest fields in the world
will make Kazakhstan one of the major producers of
hydrocarbons not only on the regional, but also on the
international level.
Oil&gas sector of Kazakhstan has attracted almost all leading
energy companies of the world, Total, Shell, Eni, ExxonMobil,
BG, Lukoil, CNPC among them. According to certain estimates,
Kazakhstan is going to attract in the nearest ten years US$30
billion for development of big oil fields, the country's
economy will grow by 3.5 times. Moreover, net oil revenues for
the state budget have already peaked US$24 bln since 1995
until the end of 2006.
At the same time, Kazakhstan Government's top priority is to
encourage foreign direct investments into industry,
agriculture, innovation, processing sectors in order to
decrease the dependence of the domestic economy on energy and
extracting sectors, and to ensure continued growth of
Kazakhstan's economy.
Aiming at attracting foreign direct investments Kazakhstan
carries out the policy of ensuring stable macroeconomic
environment and realizes other measures which contribute to
the improvement of investment climate in the country. The
Government, the National Bank and development institutions
pursue the coordinated policy directed to ensuring sustainable
economic growth with low inflation rate and budget deficit not
higher than it is envisaged.
Thus, Kazakhstan was constantly working on improvement of the
investment climate.
The EU and the USA have recognized Kazakhstan, first in CIS,
as a country with market economy in 2001 and 2002
respectively.
In October 2002 international rating agency Moody's upgraded
Kazakhstan by two notches to Baa3, thus Kazakhstan has become
the first country in the CIS to reach investment grade status.
Standard & Poor's in 2004 upgraded Sovereigns rating to
BBB/Stable/A-3. In October 2004 the Fitch upgraded
Kazakhstan's local currency rating to BBB/Stable. In January
2005 the Organization for Economic Cooperation and Development
(OECD) has upgraded Kazakhstan's country export risks rating,
moving it from the 5th to the 4th group of risks.
Moreover, thanks to the sufficient level of stability of the
domestic economy, financial crisis, exacerbated during autumn
months of the last year, exerted an insignificant impact on
the development tempo and investment attractiveness of
Kazakhstan.
Experts say that Kazakhstan’s economy has accumulated more
than 80% of all foreign direct investments for Central Asian
region, and the World Bank listed Kazakhstan among Top 20 of
the most attractive countries of the world for investors.
Thus, the annual value of the foreign direct investments,
accumulated in 2006, grew up to US$14.8 bln (+17,5% to 2005),
so the total influx of FDI in the period from 1995 to 2006
reached US$51.2 bln.
It is important that Kazakhstan, thanks to its economic
progress, has become an investments’ donor since 2003. The
total value of Kazakhstan investments abroad exceeded US$10
bln and continues to grow constantly. Most of them were
assigned to Russia and other CIS countries, though Kazakhstan
companies actively invest in Europe, Turkey and Israel.
For instance, in a close future Kazakhstan business is ready
to invest approximately US$2.5 bln in the economy of
Kyrgyzstan, that is more than four times higher of the annual
state budget of that Central Asian country, the equal
investment will be invested in Russia, and about US$1 bln – in
Georgia. Recently Kazakhstan State oil company KazMunaiGaz has
bought 75% stake in Romanian oil company Rompetrol Group NV,
which possesses several refineries and 630 filling stations in
7 European countries, for US$2.7 bln.
Without doubt, such positive changes will contribute a lot to
the further diversification of Kazakhstan economy, based on
the investment openness, and finding a real and sustainable
balance within the process of economic development.
Artyom Ustimenko,
Head of the analytical department
«KazEnergy» magazine
E-Mail :
newseditor@sarkaritel.com |
