by Yuri Sigov, Washington
The high level oil prices combined with the continuing political instability in several countries of the Middle East and North Africa make more urgent the need for close cooperation between the countries-exporters of "black gold" which remain unaffected to global crises.
Although, such countries may differ quite substantially both in area and population, as well as in economic and technical potential, their cooperation in the feld of energy would not only bring good dividends to themselves, but also play an important role in stabilizing the world oil and gas markets, and help to avoid the crisis for those, who still imports signif-cant volumes of energy sources. These mutually benefcial prospects include the expansion of energy cooperation between Central Asian countries, especially Kazakhstan, with the states of the Arabian (Persian) Gulf, that are being very close to one another in geographical sense, however, until relatively recent time they have showed mutual interest only indirectly.
Coordination of international oil prices is possible even without being in the OPEC
It is known that Kazakhstan is among the top ten countries of the world on oil reserves, and in Central Asia Kazakhstan plays a keyrole in supplying "black gold" through Russian territory to the North as well as to the West across the Caspian Sea and Azerbaijan to the European markets, and also eastwards to China.
According to the strategic plans of its economic development Kazakhstan in the next fve years will increase export of oil (over 20 years of independence, oil production in Kazakhstan has tripled, and natural gas increased up to fve times), thereby being one of the few regions of the world where it will be possible to increase production volumes when it falls in a number of present leading exporting countries of the "black gold". In addition, for the end of 2012 Kazakhstan is planning to begin industrial oil extraction at Kashagan - the largest feld on the Caspian, making the republic one of the key players in the oil production and oil exports not only regionally, but also globally. The gas supplies from Kazakhstan abroad also will be expanded, plus Astana will play an increasingly important role as transit country on natural gas supplies from Turkmenistan, and in perspective – Azerbaijan’s supplies to the western regions of China. All of this cannot help attracting an interest from the Arab Gulf countries, which play a leading role in world energy markets and venues, and at the same time they are interested in the coordination of policies to maintain high prices for energy resources with those who supply them to major world markets from other regions of the world, including Central Asia.
It is noteworthy that if the Arab Gulf countries almost with their full complement are being leading and the most infuential members of the Organization of Petroleum Exporting Countries OPEC, Kazakhstan, like other oil producing countries of the post-soviet territory (Russia, Azerbaijan) is not in-cluded to this organization. Nevertheless, Kazakhstan would be able to closely cooperate with Saudi Arabia, Kuwait and United Arab Emirates (the largest oil exporters in the region) and Qatar (the main player in the Gulf on the export of natural gas) as to maintain high international energy prices as well as when discussing new routes for pipelines in various directions. It is important to note the fact that Kazakhstan has no political or economic disputes with the Arabian Gulf countries, between Astana and the capitals of the Gulf monarchies a steady dialogue is maintained at the highest level and at the level of business cooperation, which also creates very favorable conditions for strengthening inter-regional and bilateral cooperation. Also the very mutual energy interests make such Kazakhstani connections with the countries of the Arabian Gulf truly proft-able and attractive for both parties. Except the energy sector there are not so much economic interests of the Arabian Gulf countries in the post-soviet space, particularly in Central Asia.
But in cooperation with Kazakhstan such interests are being from the very beginning and this would be a good idea to be used by Astana in its own plans as well as in expansion the interest of leadership of the Arabian monarchies in republics neighboring to Kazakhstan.
For its part, Kazakhstan could have been much more actively using the potential of the Arab Gulf countries, included to OPEC, for pushing its interests to the world markets of oil export. Especially considering the fact that Astana in the nearest fve or seven years can expand its export capacity of energy resources in the direction of Chinese and European markets.
Saudi Arabia, UAE and Qatar - the most potentially lucrative partners for Kazakhstan in the energy sector. But about the other Gulf countries Astana should not forget
Based on the current volumes of oil and gas export Saudi Arabia and the UAE could be regarded as the most benefcial partners for Kazakhstan in the Arabian Gulf on oil sector, and Qatar - on the export of natural gas. As for Riyadh and Abu Dhabi, Astana has already established close ties with them both at the level of heads of state and in economic cooperation.
It should be recognized that the potential of this cooperation is obviously not used to full capacity, especially regarding the sale of oil through the "swap replacement supplies" at the markets, which have the most favorable geographical location both to the region of Central Asia and the Arabian Gulf. So, with beneft for itself Kazakhstan would cover volumes of oil supplies to the western regions of China for Saudi Arabia and the UAE. And the Arab Gulf countries could no less successfully promote and supply Kazakh oil quota to markets of many African states as well as South-Eastern Asia countries, India and Pakistan. There is a good chance for Kazakhstan to strengthen cooperation on gas supplies to world markets with Qatar - one of the world's key exporters of liquefed natural gas. This is especially actual due to the fact that Kazakhstan is one of the key players on the gas market of western China that poten-tially will be of interest for Qatar in the case of laying the Trans - Asia gas pipeline from the Arabian Gulf region, Iran and Pakistan to the Caspian Sea and Central Asia.
By the way, Kazakhstan has successfully developed such collaboration on "mutual exchange basis" with another state, overlooking the Arabian (Persian) Gulf - Iran. Kazakhstan's oil is sold by Iran to nearby markets, while the same amount of oil Kazakhstan in return to Iranian supplies sales in China markets, as well as to European customers.
For Kazakhstan the expansion of energy co-operation with Iran would be one of the important components of foreign trade policy for today. But here Astana will have to con-sider a hard struggle for spheres of both political and economic infuence, which is led by the two largest countries in the region -Shiite Iran and Sunni Saudi Arabia. Kazakhstani leadership should bear in mind that Riyadh and Tehran – are unapologetic rivals of the region, and the observance of fne political balance in the Gulf for Astana is of paramount importance. Such consideration of the interests in the Arabian Gulf region Kazakhstan should abide for the reason that there are still tense relations between Iran and the United States (Astana has established very close ties with them not only in "big politics", but also in energy industry) . Besides, consider-ing the obviously incomplete "revolutionary processes» of so-called "Arab spring", conse-quences of which may still very ambiguous effect on the entire state of global energy markets.
Investments from the Arab Gulf countries to the energy sector of Kazakhstan - and why not?
Investment area is of particular interest in further expansion of cooperation between Kazakhstan and the monarchies of the Arabian Gulf. It's no secret that, immediately after the collapsion of the Soviet Union, Kazakhstan had to urgently seek the external sources of fnancing for a wide range of en-ergy projects, and for keeping mining and transportation infrastructure in good condition.
The largest U.S. energy companies were the frst to come to Kazakhstani energy market, and today the American capital remains a key one in the energy complex of the republic (the total amount of the U.S. investments to Kazakhstan is over 11 billion U.S. dollars). Such American companies as "Chevron", "ConocoPhillips" and others have created in Kazakhstan successfully operating joint ventures, and they are intended to work in the Kazakh energy market for the long term. At the same time European companies have signifcantly activated in the Kazakh energy market. They invest money less than Americans, but it is worth considering at the same time that more than 40 percent of all investments received by Kazakhstan from abroad accounted for the EU.
Energy giants from France ("Total"), Italy ("ENI") and Spain ("Repsol") invested considerable resources to a number of projects on oil production in Kazakhstan shelf of the Caspian Sea. And energy supplies from Kazakhstan to Europe by 2015 will be able to ensure nearly a quarter of all energy needs of States inside the EU. Should not be forgotten that so far it is not withdrawn the issue of laying the Trans-Caspian gas pipeline "Nabucco", in which key roles should play exactly European com-panies. And by the EU is Kazakhstan, as well as other potential participants of this project (Azerbaijan, Turkmenistan) expecting a minimum of 12-15 billion euros in investments.
And there is not less aggressive and active work on the investment market of Kazakh-stani energy from neighboring China. Chinese companies with the full support of the state intend to further expand their investment opportunities in Kazakhstan and deploy to the maximum both oil and gas fows of Kazakhstan itself, as well as of nearby Central Asian states to their side (including the use of Kazakhstan as a transit country for Turkmen gas supplies). On this background the Arab Gulf countries have very large fnancial resources, which to the mutual beneft with these states Kazakhstan would use both to modernize its energy industry (buying advanced Western equipment and training national staff in Europe and the U.S.) and for the construction of alternative pipelines to new markets and potential oil and gas importers. Yes, Saudi Arabia, Qatar and the UAE still have more funding not only to the territory of Kazakhstan but also to other Central Asian projects for construction of mosques and religious, trade objects, offce and hotel space. But investment cooperation in the feld of energy between Astana and the Gulf monarchies is quite possible and it should be pushed and promoted. It's no secret that the Gulf Arabs - very slow people, they do not hurry in decision-making, but at the same time very pragmatic and capable to count a prospect and real benefts. Therefore, if there is a political stability, investment climate is quite comfortable and cooperation with leading European partners is successfully carried out, fnancial cooperation of Kazakhstan with key states of the Arab Gulf might be a very promising area of inter-regional ties.
Taking into account the fact that in the near future Kazakhstan will be one of the few energy exporting countries in the world that will continue to grow production of "black gold", the Arab investments could play an important role in strengthening the position of Astana as a main energy player in the whole Central and Southwest Asia, as well as help the Arab Gulf States to obtain fnancial and political dividends from such cooperation with Kazakhstan. After all, with all existing business contro-versies, the economy volumes and membership in various international cartels and other energy associations, Kazakhstan and the Arabian Gulf countries still have very much in common - and on this basis it would be wise for both sides to look for the points of convergence of mutual interest. And, if such cooperation is supported by mu-tual will and desire (including - at the highest level), then the Arabian Gulf has every chance to become an important partner for Astana not only in the Middle East but also at the global energy level.