Focus of the Issue: Russian Vector
On the Way to the Common Economic Space
Alexander Yakovlev, Trade representative of the Russian Federation in the Republik of KazakhstanThe Republic of Kazakhstan is one of the closest countries for the Russian Federation. Historically, Russia and Kazakhstan have strong friendship. In recent years, a significant contribution to the development of trade and economic relations of our two countries was made by the formation and functioning of the Customs Union between Russian, Kazakhstan and Belarus, as well as the formation of the Common Economic Space of three countries.
Assessing the current state of the Russian-Kazakh relations, it should be noted that among the countries of the world, Russia is still the main trading partner of Kazakhstan and it ranks the first place in Kazakhstan’s goods turnover. According to the data of the RK Agency on Statistics and summarizing the results of 2013, the goods turnover between our countries amounted to more than 23 billion United States dollars. Russia’s share in the total sales volume of the country is approximately 18%. Russia also holds the first place for the product supply to Kazakhstan and the fourth place for the import of the Kazakh products. The largest share of Kazakhstan’s exports to Russian is held by the mineral products (41.1%), metals and metal articles (24.2%), machinery, equipment and vehicles (10.3%) and chemical products (14.1%). The main share of the Russian exports to Kazakhstan is held by the fuel and energy products - 29%, machinery and technical products – 23.7%, metals – 15.6% and chemical products -11.2%.
Cooperation in the investment sphere also affects the development of the economies of our countries. The business community of Russia and Kazakhstan directly participates in the development of this sphere. In 2013, more than 800 million United States dollars of the direct investment were forwarded to the Kazakhstan’s economy by Russia. More than 20 large Russian companies, such as JSC Gazprom, JSC LUKOIL, Rusal United Company, JSC Mechel, successfully implement their projects in Kazakhstan. In Kazakhstan the work is being done on the creation of the assembly production of multipurpose helicopters, developed by JSC Kamov.
Cooperation between the two countries in the petroleum industry has a long history, and it is expanding from year to year. I would like to highlight some of the most large-scale joint projects. Gas transmission system of the Republic of Kazakhstan with its entire infrastructure communications is associated with the pipeline system of the Russian Federation, Uzbekistan and Turkmenistan, which plays an important role in the development of the gas industry of the countries’ economy.Thus, JSC Intergas Central Asia (subsidiary of JSC KazTransGas) and JSC Gazprom successfully cooperate in the gas sector for many years.Since 2003, Intergas Central Asia directly provides services to Gazprom on the transportation of the Central Asian and Russian gas through the territory of Kazakhstan.In January 2011, JSC Gazprom and JSC Intergas Central Asia have concluded the medium-term contracts for the transportation of natural gas through the territory of the Republic of Kazakhstan for the period of 2011-2015 under the terms of "capacity provided".Multiannualproduction communications between the companiesallowed developing the more acceptable forms of cooperation with the mutual interests.
Another confirmation of the friendly and mutually beneficial cooperation between Kazakhstan and Russia was the establishment in 2001 of a joint venture between JSC NC KazMunayGaz and JSC Gazprom – KazRosGaz, which performs the export of the Kazakh gas from the Karachaganak field into the West Kazakhstan region through the Orenburg-Novopskov main gas pipeline.In 2008, for the first time, JSC Intergas Central Asia and KazRosGaz have signed the long-term contract (up to 15 years) for the gas transportation for export.As a matter of priority,KazRosGaz meets the needs of the domestic market of Kazakhstan, through the counter deliveries of Karachaganak gas from JSC Gazprom.This equivalent circuit allows carrying out the stable gas supplies into Aktobe and Kostanai region, as well as into the southern regions of Kazakhstan at the prices, significantly lower than if deliveries were made by the market principles.
On September 7, 2010, Russia and Kazakhstan have signed the intergovernmental AgreementonJoint Geological Studyand ExplorationofCross-border Imashevsk Gas Condensate Field.
In April 2011, JSC Gazprom and JSC NC KazMunayGaz have signed the Agreement on Definition of LLP KazRosGaz as the operator of Imashevsk field. Imashevsk field is located 60 km north-easterly from Astrakhan on the territory of the Russian Federation and 250 km south-westerly from Atyrau in the Kurmangazy district of Kazakhstan. Its proven gas reserves are more than 100 billion m3.
LUKOIL, Russia’s largest private oil company, jointly with JSC NC KazMunayGaz participates in implementation of the Khvalynskoye project (Russian sector of the Caspian Sea). The Khvalynskoye field belongs to the North aquatory of the Caspian Sea, where the license area of LLC LUKOIL-Nizhnevolzhskneft is located. In April 2011, the interdepartmental Committee on the Development of Subsoil Use Conditions and Preparation of the Draft Production Sharing Agreement (PSA) was established at the Khvalynskoye field. Since 2011, the project participants are negotiating with the state authorities of the Russian Federation at the level of working groups and interdepartmental commission on the text of the PSA and PSA feasibility study.
Also Kazakhstan and Russia are actively cooperating on the oil pipeline growth project of the Caspian Pipeline Consortium (CPC). The ceremony of the construction work start took place on July 1, 2011 in Atyrau. In April of the current year, the first phase of the growth project was completed on the territory of Russia. The whole project is expected to be completed by the year 2015, at that, the pipeline capacity will increase up to 67 million tons per year.
The project on establishment of the filling station chain, owned by JSC Gazpromneft, is successfully developed on the territory of Kazakhstan. Today, LLP Gazpromneft-Kazakhstan is one of the most promising marketing enterprises and the official dealer of JSC Gazpromneft. The company owns a chain of 56 filling stations under Gazpromneft brand, located in Astana, Almaty, Taldykorgan, Shymkent, Taraz, Turkestan, Saryagash, Issyk, Kentau, Karaganda, Almaty, South Kazakhstan and Zhambyl regions; as well as 10 regional representative offices. According to the results of 2013, the total volume of investments amounted to approximately 30 million United States dollars. LLP Gazpromneft-Kazakhstan carries out the wholesale and retail sale of petroleum products made by the Omsk oil refinery.
The major joint project in the energy sector is the modernization of Ekibastuz state district power station - 2, the construction of the third and fourth power blocks of station with capacity of 500 MW, performed by JSC InterRAO UES together with JSC Samruk Energo. Project cost is approximately 930 million United States dollars. Significant project is the construction of the fertilizer manufacturing company, owned by JSC MCC EuroChem through its subsidiary company – LLP EvroHimUdobreniya in Zhambyl oblast of Kazakhstan. The total project cost is 2 billion United States dollars. In the telecommunication sector of Kazakhstan, OJSC Vimplekom provides its services under the Beeline brand, expands the population coverage level and implements the communication standards of new generation. LLP KaR-Tel is the project participant from the Kazakh side. The amount of investment is expected to reach 1.5 billion Unites States dollars. Cooperation between Russia and Kazakhstan in the space sector and in the field of peaceful atomic energy use may be selected among the promising areas.
Cooperation in the financial sector is alsoexpanded: a number of major Russian banks, such as Sberbank, Alfa-Bank, VTB Bank, Russian Agricultural Bank, Promsvyazbank, opened their branches and representative offices.
The Sberbank’s activities in Kazakhstan should be especially noted. According to the results of 2013, the Bank's assets increased by more than 40%, and the Bank took the 5-th place on the assets volume among the banks of Kazakhstan. The customers’ deposits were increased by 47.5%. Nowadays, JSC Sberbank has a branch network, consisting of 100 structural subdivisions, 15 of which are affiliates. In addition, according to the results of 2013, Sberbank is the best in the implementation of the Business Road Map 2020 program.
According to the RK Agency of Statistics, approximately 10 thousand representative offices and enterprises with participation of the Russian capital are registered in the Republic of Kazakhstan. Five years ago, this amount constituted 4 thousand. Starting its activities in Kazakhstan, the Russian company becomes not only the employer, but also the Kazakh taxpayer, and actually, it is the Russian investments. This situation provides evidence of the favourable investment environment in Kazakhstan. For example, the VAT rate in Kazakhstan equals to 12%, in Russia-18%, the rate of social tax in Kazakhstan is 14%, in Russia-34%, income tax in Kazakhstan is 10% and in Russia - 13% , the property tax in Kazakhstan is 1.5% and in Russia - 2.2%.