Home / Business Focus
Thu, Jun 07, 2001 - Page 19 News List

Kazakhstan begins oil, gas boom as foreign investment pours in

While other former republics of the USSR founder, Kazakhstan is booming and is being transformed almost over night into a modern nation by foreign investment attracted by the largest oil find in the last 30 years

REUTERS , KARCHAGANAK, KAZAKHSTAN

A Kazakh worker fixes wiring and pipes of a gas processing plant near the Karachaganak oil and gas field in northwestern Kazakhstan. One of the world's largest construction projects, worth over US$3.5 billion, is under way in the middle of the Kazakh steppe. Underground lie vast reserves of oil and gas, and the consortium, Karachaganak Integrated Organisation, is preparing to extract them beginning in 2003.

PHOTO: REUTERS

To reach this corner of northwestern Kazakhstan from the country's largest city, Almaty, first take your life in your hands and board a tiny and exceedingly uncomfortable Soviet-made Yak-40 aircraft.

Rattle over the vast and barren Central Asian steppe for nearly six hours to Uralsk, then drive an hour and a half to Aksai. From there it is a mere half hour to Karachaganak.

Remote it may be, peaceful it is not.

For here in the middle of the steppe, one of the world's largest construction projects is under way at a cost of more than US$3.5 billion. Underground lie vast reserves of oil and gas, and an international consortium, Karachaganak Integrated Organisation, is preparing to extract them.

At its peak the project will employ more than 10,000 people, mostly Kazakhs, and will place orders for a huge range of goods and services with Kazakh companies. Already a complete city for the workers is being built, as well as a bewildering range of gleaming hi-tech plants to process oil and gas.

Such scenes are being repeated, or soon will be, across the country.

Kazakhstan, the size of Western Europe but with just 15 million people, has colossal reserves of oil, gas and a whole host of other mineral resources, mainly metals.

It has also been conspicuously successful at attracting the huge sums of investment needed to develop them. Some of the world's largest oil and gas companies, the likes of ExxonMobil, Shell, BP Amoco, Chevron, BG plc and many others, are in Kazakhstan.

There is a long way to go. The biggest oilfield in the country, Kashagan, which may be the world's largest find in 30 years, is only now being explored and is years from producing.

Exports are limited by a lack of pipelines from the landlocked country to markets, and Russia, Iran and Turkey, backed by the US, are vying to ensure the precious liquid passes through their favoured route.

But already, 10 years after independence from the Soviet Union at the end of 1991, the Kazakh economy is picking up.

Expectations are high that within 10 to 15 years, and certainly by 2030 -- an arbitrary date selected by the government -- Kazakhstan should become rich in the way Gulf Arab states did on the back of oil from the 1970s onwards.

The signs of coming wealth are everywhere. Construction is going on at a relentless pace in the new capital, Astana, now being transformed from a sleepy steppe town into an impressive centre following President Nursultan Nazarbayev's decision to move the government from Almaty.

Towns near the oilfields are also changing. Atyrau, the country's oil capital, is getting a facelift. Sleepy Uralsk, near the Karachaganak field, has new schools, hospitals and cultural centres provided by the consortium, which must spend US$10 million a year on local social projects.

Life in the old capital, Almaty, with its wide tree-lined streets and a spectacular backdrop of readily accessible mountains, is becoming easier and more comfortable all the time as the economy improves.

Given the changes taking place, the country's central bank chairman, Grigory Marchenko, complained last month that the credit ratings assigned to Kazakhstan by international agencies were unjustifiably low.

"Some of our ratings are as low as in 1996. This can hardly be explained," he told a news briefing, adding that outsiders failed to distinguish properly between the differing pace of economic development in former Soviet republics.

This story has been viewed 3234 times.
TOP top