The Eurasian politic-economic: Kazakhstan in focusEconomy 15 January 2022
Estimated time of reading: ~ 4 minutes
Written by: Nenad Stekić
Submitted on: 14.01.2022
The New Year has come and so the Kazakhstan emerging region-wide geopolitical catastrophe. This article will briefly present Kazakhstan’s natural energy resources and its instrumentalization of potential political clashes, as well as its economic development indicators.
Kazakhstan ranked 15th in the world in 2017 with 85 trillion cubic feet (Tcf) of proven gas reserves, accounting for about 1% of the world’s total natural gas reserves of 6,923 Tcf. Kazakhstan has proven reserves of 156.6 times its annual consumption rate. Kazakhstan had proven crude oil reserves of 30 billion barrels as of January 2018, according to the Oil & Gas Journal (OGJ), making it the second–largest endowment in Eurasia after Russia and the 12th–largest in the world, just behind the United States. Kazakhstan has the Caspian Sea region’s largest proven oil reserves.
Kazakhstan produced 1.965 million barrels per day of crude and condensate in 2019. In 2018, it increased by 4.8 percent to 1.814 million bpd. Kazakhstan produced 1.73 million barrels per day of crude oil in 2017. According to the US Energy Information Administration’s February Short-Term Energy Outlook (STEO), Kazakhstan will produce 2.03 million barrels of oil and other liquids per day. Kazakhstan’s net crude oil exports are expected to fluctuate between 1.42 and 1.55 million barrels per day (bpd) through 2027, according to Business Monitor International, as production from the prolific Kashagan and Tengiz fields increases. Kazakhstan’s three large refineries are rapidly expanding production.
The government has announced plans to build a fourth refinery to increase refining capacity and light oil product and fuel production.
The World Bank reports that Kazakhstan’s economy is showing signs of recovery this year, after experiencing the worst contraction in the last two decades. The external environment has generally improved, resulting in a 5.8% increase in the value of Kazakhstan’s exports in the first quarter (Q1) of 2021 over the fourth quarter (Q4) of 2020.
Compared, China’s economy recovered faster than expected in Q1 2021, while the eurozone’s economy took another hit due to COVID-19’s resurgence. Kazakhstan’s oil production increased by 6% in Q1 2021, compared to the lowest output in Q3 last year, thanks to a relaxed OPEC Plus production quota and a gradual recovery in global demand. Short-term economic indicators also point to an uptick in domestic economic activity, particularly in the services sector. The decline in retail trade and transportation cargo has slowed.
Construction activity steadily increased, by a policy that allows retirees to withdraw a portion of their savings and a government program that encourages residential investments. The state of business is expected to gradually improve. The economy is expected to grow by about 3.2 percent 2022 which is lower than the pre-pandemic growth rates of 2017–19. In seasonally adjusted terms, real GDP increased by 1.9 percent in the first quarter of 2021 compared to the fourth quarter of the previous year, though it still contracted by 1.6 percent year over year.
As part of the global effort to combat climate change, Kazakhstan also made a significant commitment to achieve carbon neutrality by 2060. To put these initiatives into action, Kazakhstan needs better policy coordination, better public administration, improved effectiveness and results in public budgeting, reduced market distortion, and a level playing field for the private sector, all of which have been long-standing reform issues. The Kazakhstan Economic Update contains findings on the factors affecting Kazakhstan firms’ slow productivity growth, which is one of the country’s major development challenges. Productivity is critical for long-term growth and rising living standards.