Kazakhstan Emerges as Investor Nation

Kazakhstan is quietly becoming a creditor nation. While Kazakhstan still needs and solicits large-scale foreign direct investment for its own needs, including transport, pipelines and energy infrastructure, the Central Asian nation has started buying into foreign energy-related ventures.

The range of Kazakhstan's foreign investment activity suggests that Astana wants to create a dense web of interdependencies. The aim of President Nursultan Nazarbayev's administration is to prevent Kazakhstan from becoming dependent on any single suppler, customer, or investor.

This vision helps explain why Kazakhstan is engaging in bilateral cooperation in space with Israeli leaders, giving Israel access to the Baikonur Cosmodrome as a launching site for microsatellites. These microsatellites will be equipped with Israeli technology and be used for mapping, reconnaissance, and telecommunications from which Kazakhstan too will undoubtedly benefit.

Turning to Europe, Foreign Minister Kasymzhomart Tokayev recently told EU officials that the Caspian Basin, including Kazakhstan, was capable of supplying up to 25 percent of Europe's energy needs. Tokayev also revealed that Kazakhstan is mulling investment opportunities in the Burgas-Alexandropoulos and Odessa-Brody-Gdansk pipeline projects.

In addition, he sharply criticized Lithuania for rejecting Kazakhstan's interest in the Mazeiku Neft refinery, which supported a Russian bid for that facility.

Kazakhstan earlier sought to obtain a share in the Druzhba-Adria pipeline project, which would pump energy from the former Soviet Union to Hungary Slovakia, Croatia, terminating at the Adriatic Sea port of Omishal. Beyond pipelines, Kazakhstan is pondering investments in oil processing facilities and gas networks in Bulgaria that would potentially bolster supplies to the Burgas-Alexandropoulos pipeline.

Romania, for its part has initiated a five-part project to bring Kazakhstani oil through the Black Sea to European markets in a projected Constanta-Trieste pipeline. This route could potentially link up with the Druzhba-Adria network. It should be noted that Kazakhstani interest in all of these European pipelines is driven by a desire to create a network free of excessive reliance upon exclusively Russian-built, or Russian-owned pipelines.

This intention also explains Kazakhstan's participation in the Silk Road project to open up both land-based and sea-and-land-based transportation networks connecting Europe and Asia. Obviously Kazakhstan would serve as a hub for two-way traffic if the Poti-Baku-Aktau-Almaty container trade route opens up. The same would also be the case with the planned Kars-Akhalkalaki-Tbilisi-Baku railway line. Inside Kazakhstan, new railway lines are being built to integrate disparate regions and to connect to these wider projects.

In order to assure access to the Black Sea and beyond to European markets, Kazakhstan has started forging closer relations with Georgia -- a key transit nation in several pipeline projects. Kazakh firms are now investing in Georgian energy and transportation networks.

Kazakhstan's energy and economic projects are not confined to oil and gas, or to Europe. An oil pipeline connecting Kazakhstan to China opened late last year and a gas pipeline is being discussed as well. In Central Asia, Kazakhstan is investing considerable amounts in Kyrgyzstan and in Uzbekistan.

Kazakhstan stands to replace Uzbekistan as the supplier of gas to Kyrgyzstan to compensate for gas cutoffs due to earlier political tension between Bishkek and Tashkent. Japan and Kazakhstan have also been conducting a long-term energy dialogue, with Kazakhstan soliciting Japanese investment and Tokyo is seeking to discuss projects in oil, gas, and uranium with Kazakhstan.

Kazakh officials contend that their country has about 25 percent of global uranium stocks and has the second largest amount of known reserves in the world. They say that this production, which is increasing to meet growing global demand could help avert potential shortages. Japanese investments in Kazakhstan in return for Kazakh energy sales could help it diversify its energy base, and, again, escape overdependence upon China or Russia.