Russian President Vladimir Putin and Kazakh President Nursultan Nazarbayev began a two-day summit March 19, with a host of topics slated for discussion. The meeting comes at a dynamic time for Kazakhstan, as Astana -- much to the Kremlin's vexation -- is being pulled in different directions. Russia is most concerned about U.S. and Chinese influence over Kazakhstan; however, Europe is laying the groundwork to put new pressure on Astana.
Kazakhstan's enormous reserves of natural gas -- and, to a lesser but still important extent, oil -- put the country in a great position for economic and political gains. Estimates show that Kazakhstan holds just under 3 trillion cubic meters of natural gas -- far less than Russia, which has the world's largest reserves, but enough to rank 11th in natural gas reserves. Kazakhstan's oil reserves amount to approximately 30 billion barrels.
However, Kazakhstan's geography makes getting these reserves to market difficult. Kazakhstan sits just below Russia, its biggest competitor for energy markets. It is just west of China, which is desperate for energy sources, but burdened with huge distances between those sources and China's main population. Kazakhstan also is not too far from the vast European energy market. This has kept Kazakh energy -- and politics -- in play among the many forces.
Traditionally, Kazakhstan has remained politically close to Russia; it is a member of the Collective Security Treaty Organization (CTSO) that comprises most of the former Soviet states, and most Kazakh exports go through Russia. Because of this close relationship, Moscow has been continually worried about U.S. and Chinese cooperation with Kazakhstan. Putin and Nazarbayev are slated to discuss Kazakhstan's recent agreement to aid NATO by sending troops to Afghanistan. Russia is giving NATO logistic help in Afghanistan because the Russians know the Afghan terrain well, but actual troop cooperation between Kazakhstan and NATO terrifies the Kremlin. Putin is proposing that Kazakhstan play a larger role in the CTSO to counter Astana's new Western ties.
Kazakhstan has also done business with Western companies, which are responsible for developing most of the country's oil and natural gas fields. Russia has always tolerated Western involvement in Kazakhstan for three reasons. First, Russia did not want the heavy burden of funding Kazakhstan's fields. Second, Russia did not have the technology to tap some of the Kazakh reserves, especially those in the Caspian, where the terrain is treacherous and challenging. Third, Kazakhstan's exports were going through Russia, so the Kremlin had a direct say in how Astana conducted its energy development.
Russia's moves against other actors in the region have put Kazakhstan in a tough spot. In November 2006, Russia clamped down on one of the few non-Russian-controlled pipelines carrying Kazakh oil to market through its territory. The Caspian Pipeline Consortium (CPC) pipeline ran from Kazakhstan's Tengiz oil field to the Russian port of Novorossiysk. The Kremlin said the CPC -- controlled by U.S. firm Chevron Corp. -- was not paying off its debt fast enough. To make the line more "effective," Moscow could raise transit fees to the point that the CPC could go bankrupt. Since Russia's meddling with foreign-owned lines caused Kazakhstan's exports to suffer, Astana is looking to non-Russian export routes, even though they are pricier and more difficult.
Other than Russia, Kazakhstan's choices for energy partners are the United States, China, and Europe -- and the United States is too far away and has no real leverage in Kazakhstan.
China is the logical choice. As Nazarbayev began his meeting with Putin, Kazakh Prime Minister Karim Masimov was on his way to China to meet with regional leaders and discuss possible energy infrastructure deals. Astana is negotiating with Beijing to build natural gas and oil pipelines, though the routes are undetermined -- and in doing so, Astana is competing with Russia, which is planning pipelines of its own to reach the Chinese market first. In the end, China will be unwilling to fight with Russia if it looks like Beijing's cooperation with Astana would create a standoff.
But the newest pressure on Kazakhstan for resources is from Europe, which has had difficulties with Russian supplies since Moscow began using those resources as political leverage. Though Russian oil and natural gas is the closest and easiest to tap, Europe is looking for security and diversity. Kazakh energy is a possible replacement for Russian energy.
Already on line is the Baku-Tbilisi-Ceyhan (BTC) pipeline that runs from Azerbaijan through Georgia and then to Turkey, where the oil can be put on tankers in the Mediterranean. The BTC currently pumps 300,000 barrels per day (bpd) of Caspian crude, but is planned to carry 1 million bpd by 2008 -- half of which will come from Kazakhstan. The BTC is not the easiest, fastest, or cheapest way to ship Caspian crude to Europe, especially considering that Kazakh oil comes from the wrong side of the Caspian. However, it is one of the first major non-Russian import routes for crude to Europe in years.
The idea of a trans-Caspian natural gas pipeline -- from Kazakhstan and Turkmenistan across the Caspian Sea to Azerbaijan and then onward to Georgia, Turkey, and ultimately Europe -- recently has been resurrected. The trans-Caspian line would be tricky, though, because of the legal issues surrounding the Caspian Sea. Technically, Kazakhstan should have Russia's approval for a trans-Caspian line, but since Russia's claim to Caspian waters has never been legally decided, the project could proceed without Russian permission. Even so, a trans-Caspian line would involve the Caspian's tough terrain and the prospect of dealing with the Turkmenbashi's successor.
Nazarbayev has been invited to the Energy Summit of Europe in May to discuss all the alternative means of getting Kazakh resources to market -- a practical discussion, since Europe is looking for non-Russian energy sources and Kazakhstan is looking for partners for non-Russian energy export routes. Though it is Kazakhstan's newest suitor, Europe has the cash, technology, and desire for non-Russian resources to push for more projects with Kazakhstan -- giving the Kremlin a tough fight in the energy sector and for Astana's affections.
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