Nazarbayev and Putin Pledge “God-Given” Friendship

The message from the Kremlin may have been about peace and partnership following signature of a border agreement with Kazakhstan on January 18, but long-term attention promises to be on an energy deal that will furnish Russia with a stake in one of Central Asia's largest natural gas deposits.

The treaty, signed in Moscow by Russian President Vladimir Putin and Kazakhstani President Nursultan Nazarbayev, defines the 7,500-kilometer-long frontier between Russia and Kazakhstan, the world's longest land border. The document, six years in the making, acts as "confirmation of Russia's recognition of Kazakhstani sovereignty" Putin told a news conference after the signature ceremony. "It means that people living on either side of the border will feel comfortable," the Russian news agency Novosti quoted Putin as saying.

"This border does not divide our countries and our people, but unites them," Nazarbayev added, the Kazakhstani television news station Khabar reported. "I think that [the] signing of the border treaty is also a historical landmark for Russia and a great event, because all talks about disparity, about great Russia – somebody even speculated about imperialism - are ending now."

At the heart of the border deal lies an agreement for the joint development of the Caspian Sea's Imashevskoye natural gas field, Kazakhstan's second-largest natural gas field and an energy source once disputed by both Moscow and Astana. Kazakhstan had traditionally insisted on ownership of the gas condesate deposit, located along the border with Russia, but the agreement signed by Putin and Nazarbayev recognizes both countries as having equal rights to the field. The territory will be developed by the Russian energy giant GazProm and the Kazakhstani state oil company KazMunaiGaz.

We "have achieved a mutually-acceptable decision on one of the most difficult sectors of the border at the intersection of Astrakhan and Atyrau Regions", ITAR-TASS quoted Putin as saying. "The border here runs through the Imashevskoye gas condensate deposit. We have agreed to share this sector and the deposit itself equally."

Russian energy industry lobbyists have long lobbied for intensive investment in Kazakhstan's oil and gas sector as a means of retaining Russia's own competitive edge. Yuri Shafranik, head of the Russian Oil and Gas Union, has called for investment of no less than $1 billion per year in Kazakhstan's hydrocarbon sector to prevent the country from becoming Russia's "serious rival" in the global oil game. Kazakhstan tentatively plans to export 3 million barrels per day of crude oil by 2015. Such a volume is more than Russia exports today and would make Kazakhstan one of the world's top six oil exporters.

In January 2004, Russian oil players secured a major deal when KazMunaigaz gave Russian energy company LUKoil a 50-percent stake in a 40-year production-sharing contract for development of the Caspian Sea's Tyub-Karagan field, which has estimated oil reserves of 100 million tons. Already, company officials say, LUKOil has put $1.5 billion into Kazakhstan over the past eight years, making it the country's largest Russian investor.

Russia has also been eager to maintain its influence over energy transit routes from the Caspian Basin. The Kremlin has pressed Nazarbayev to agree to a 15-year deal under which Kazakhstan would commit to exporting at least 15 million tons of crude oil per year via the Baku-Novorossisk pipeline.

A draft document, currently under discussion with Astana, would outline transit terms through Russian territory until 2020. Though Kazakhstan has signaled its willingness to prioritize Russia for crude oil transit to overseas markets, the agreement has yet to be finalized.

Such deals provide a welcome antidote to Nazarbayev's increasingly bitter ties with the West. In relations with Moscow, the Kazakhstani leader has not encountered any criticism of his domestic policies, the status of human rights or the extent of government corruption. Instead, Putin and Nazarbayev focus on promoting economic and political cooperation and offer unqualified praise for the history of ties between Russia and Kazakhstan.

"We were given by God to one another," the Kazakhstani state news agency KazInform quoted Nazarbayev as saying, "and our duty is to pass on what was created by our ancestors to our children and grandchildren."

Trade volume demonstrates the extent of this mutual support pact. Bilateral trade between Russia and Kazakhstan reached $7 billion in 2004, a 21 percent increase since 2003. Also in the works is a broadcast and communications satellite, to be launched with Russian assistance and financed by Kazakhstan.

"Significant prospects," according to Putin, are also seen in military-technical cooperation. The two leaders signed an agreement at the Kremlin on the protection of intellectual property rights during such cooperation. One notable milestone in that partnership was struck in January 2004, when the two leaders agreed to extend a lease agreement for the Baikonur satellite launch pad until 2050, with Moscow forking over $115 million per year to Astana for usage of the site.

Left off the summit agenda was Ukraine's Orange Revolution, an event that spelled a significant setback for Russian foreign policy and placed a question mark over the fate of such post-Soviet organizations as the Common Economic Space, a collective that unites Russia, Kazakhstan, Belarus and Ukraine. [For background see the EurasiaNet Insight archive]. Putin stated only that "serious attention" had been given to post-Soviet integration, within the frameworks of the Commonwealth of Independent States, Collective Security Treaty Organization, Eurasian Economic Commonwealth, Shanghai Cooperation Organization, and the CES, and gave special notice to Kazakhstan for its receptiveness to such bodies. Nazarbayev, for his part, noted that members of the Collective Security Treaty Organization (Russia, Belarus, Kyrgyzstan, Tajikistan, Armenia and Kazakhstan) will be "thankful to Russia" for the opportunity to buy armaments from Russian manufacturers at domestic prices.

"Russia is Kazakhstan's long-term strategic partner," Nazarbayev said, "as we hope Kazakhstan is for Russia."