Oil Fuels Kazakh EU Relationship

Europeans have been fascinated by the oil of the Caspian Basin ever since the Greeks located the myth of Prometheus, the titan who took fire from the heavens and brought it to mankind, in the region. Today, Kazakhstan’s rapidly developing energy resources are in demand from potential customers around the world. But nowhere is the hunger for them greater than in the industrial nations of the European Union.

Kaynar Kozhumov, the director of the Agency for Research of Investment Profitability, told participants of the seminar Kazakh Oil and Gas Industry: Current Trends and Forecasts in Astana on July 2 that Europe was now by far the biggest consumer of Kazakhstan’s oil. The seminar was organised by the Kazakh branch of LUKOil Overseas.
Kozhumov said that although an increasingly large proportion of China’s oil comes from Kazakhstan, that total amounts to only 12 percent of annual Kazakh production. By contrast, 60 percent of annual oil production is exported to Europe, with 15 percent being retained for domestic use.

And Martin Hutchinson, a financial columnist for Reuter’s Breaking News and an expert on emerging markets, told EdgeKz that Europe’s need for Kazakh energy resources was certain to grow in coming years. “The relationship between Kazakhstan and Europe is a natural match because Europe is resource short and Kazakhstan has massive natural resources in energy and raw materials such as copper and rare earths – and these are exactly the areas that the Europeans need most,” Hutchinson said. “The Europeans also want to diversify so they are not totally dependent on Russia for their natural gas imports, and although Kazakhstan is a close trading partner of Russia, it will be a welcome additional source of gas and other resources.”

“All the Kazakhs have to do is to prove to the Europeans that they can be a reliable partner. And given the track record of some of their potential rivals, that should not be at all difficult for them,” the financial analyst said.
European Commission President Jose Manuel Barroso has come to the same conclusion. “The EU is the largest foreign investor in Kazakhstan. Two thirds of this investment goes to the field of energy,” he recently acknowledged.

When Barroso met with Kazakhstan’s Prime Minister Karim Massimov in Brussels in May, he noted, “The EU is already a major trading partner and the biggest investor in Kazakhstan. And we want our trade and investment relations to improve.” Barroso told Massimov,
“We fully support Kazakhstan’s accession to the World Trade Organization and we are ready to work swiftly and constructively to bring this accession process to a successful conclusion.”

Barroso said that during his meeting with Kazakhstan’s prime minister, they also “discussed the importance of Kazakhstan as an energy partner of the European Union. We have made solid progress in this area over the years and I am convinced that the new PCA (Partnership and Cooperation Agreement) that we are negotiating will bring new opportunities for cooperation also in the field of energy.”

A 2006 Memorandum of Understanding between the EU and Kazakhstan on energy issues outlines two road maps for cooperation on enhancing energy security and industrial cooperation. It includes a regular exchange of information concerning respective energy polices, cooperation on energy transportation infrastructure and on the development of environmentally clean technologies. The development of a Western China to Western Europe transportation corridor ensures that this cooperation is going to intensify.

As Commissioner Barroso told Prime Minister Massimov, “Kazakhstan is a key country in Central Asia and a leading partner for the European Union in our ambition to increase and improve our ties with this important region of the world. In fact, we have been improving very much our bilateral contacts with Kazakhstan.”

That energy partnership looks certain to keep the lights on in Europe and the oil fields busy in Kazakhstan for many years to come.

Date: 2016-01-03; view: 833