Oil Refining And Petrochemistry
Green Hydrogen, Biodiesel, LNG – the Future of Kazakhstan’s FES
Azamat Kozhanov, Managing Director of the Investment Task Force Division of NC Kazakh Invest JSC, answers Petroleum's questions.
– Mr. Kozhanov, what is the current situation in the foreign direct investment market?
– This is probably one of the most frequently asked questions today, considering the socio-political events in January this year in Kazakhstan and the current geopolitical situation in the region.
After the tragic events of January, it was essential for us to maintain the confidence of current investors working on several initiatives in the Republic of Kazakhstan. Being a subordinate company of the Ministry of Foreign Affairs of Kazakhstan, we are engaged in support of investment projects at the government level.
It so happened that within the framework of our mandate, key private equity transactions with foreign participation pass through us. We act as strategic consultants for foreign investors when working on various initiatives and projects. Therefore, it was vital for us to convey the main message addressed to the international community on behalf of the Head of State to every investor that all the obligations of the state to foreign investors remain unshakable and will be fulfilled according to the agreements.
So, according to our plan, we notified all investors, and the results, to be honest, were pleasantly surprising. Out of 70 large potential transactions involving foreign capital, only one investor notified about the project's suspension. But even then, after a month and a half, they resumed negotiations.
Here it is necessary to pay tribute to the Ministry of Foreign Affairs of Kazakhstan and the Deputy Prime Minister – Minister Mukhtar Tleuberdi, as detailed work was done on interstate consultations and meetings with the business community of all countries with historical and current economic interests in Kazakhstan.
I can state that the investment climate has gradually recovered. In fairness, I must say that investors have always been interested in Kazakhstan. And now, no one doubts the new fair political course. It is clear that this helps a lot in our work.
Speaking about the current situation related to external factors, we see that there is already an outflow of capital from the Russian Federation. Foreign companies either freeze their activities or close companies, or resell them. Someone transfers their companies into trust management. It affects us in one way or another. It affects us in different ways. It all depends on the industry, company profile, etc.
Some large companies with major projects in Russia have already stopped these initiatives, and some are starting to look at other opportunities in the region. This is also a fact.
– Interesting… You mentioned major investment projects in your jurisdiction. What projects are we talking about if it's not a trade secret?
– No, it's not a secret. Except for investment projects that the investors have not yet announced. As you understand, public companies are susceptible to such issues.
Among the significant investment projects in the processing industry, we see great interest in the agro-industrial complex. As you know, there are projects in the agricultural sector related to the fuel and energy complex.
If we look at it from the strategic importance point of view, then projects in the field of transport and logistics play an important role here. This industry has become particularly relevant in the current situation. If we talk about projects in chemistry and gas chemistry, there are also interesting cases. One of the projects involves complex conversion related to methanol production and further processing. Now the issue of allocating the volumes of commercial gas needed for production is at the final stage. The company has already received the technical specifications. A new type of product for the country. The amount is more than 200 million US dollars. An interesting case.
Another project is also, in essence, a new type of product for the country – LNG. An investor company is from Canada. It intends to build a modular plant in the central part of Kazakhstan. But at the same time, the primary consumer of products will be companies in the mining and metallurgical complex, which will use natural gas motor fuel products. The investor sees potential demand, and a feasibility study has been done.
Investment volumes are also of average value – about 150 million US dollars at the first stage. But there is an interesting fact. The investor plans to develop the field and direct the volumes for processing. In the future, the investor plans to build the raw material base himself. But for the formation period, the project expects support from the state. The question is not easy, as it is directly related to the price of the resource. Historically, this has been one of the systemic issues in the industry.
There are also other projects that were previously announced in the media and are being worked out as part of the overall industry development plan. Well, everyone knows about them.