Trade and Economic Cooperation between the Russian Federation and the Republic of Kazakhstan
Economic contacts between Russia and Kazakhstan are intensive and dynamic; their comprehensive nature is noteworthy.
Trade Relations
Kazakhstan remains one of Russia's principal foreign trade partners.
Trade between Russia and Kazakhstan totalled $19.7 billion in 2008, an increase of 19.3% compared to 2007. Russia's exports to Kazakhstan grew 12.1% to $13.3 billion, and imports from Kazakhstan increased 37.8% to $6.3 billion in 2008.
In January and February 2009, bilateral trade fell 41.8%, to $1.4 billion, compared to the same period of 2008. Russian exports to Kazakhstan plunged 39.5% to $1 billion, and imports from Kazakhstan dropped 46.8% to $0.4 billion.
Russia mostly exports mineral goods, machinery, equipment and vehicles, food and agricultural raw materials, and chemical goods to Kazakhstan. It imports from Kazakhstan mineral products, metals and metal goods, chemical goods and rubber.
Economic Cooperation
Cooperation between fuel-and-power sectors of the two states is particularly close. A major portion of crude oil extracted in Kazakhstan is delivered to foreign markets through Russian territory.
Crude oil transit is determined by the long-term intergovernmental agreement of June 7, 2002, with at least 15.5 million tons of crude oil a year being delivered through the Atyrau - Samara pipeline, and up to 5.5 million tons of crude oil a year pumped through the Makhatchkala-Tikhoretsk-Novorossiisk pipeline network.
In addition, crude oil produced in Kazakhstan is shipped through the territory of the Russian Federation by the Caspian Pipeline Consortium. The governments of Russia and Kazakhstan hold 50% of the CPC and the rest belong to the producing companies that financed the construction of the pipeline's first stage. In 2007, the pipeline network of the Caspian Pipeline Consortium (which connects Tengiz, Astrakhan and Novorossiysk, and is to transport 28 million tons in its first stage (it should go up to 67 million tons)), was used to transport more than 25 million tons of crude oil extracted in Kazakhstan.
Cooperation in natural gas recovery is determined by the long-term intergovernmental agreement of November 28, 2001.
Since 2002, KazRosGas Closed Joint Stock Company (a joint venture between "Gazprom" and "KazMunaiGas" of Kazakhstan) has been supplying natural gas from the Karachaganaksky gas field to the Orenburg gas refinery. In 2007, 7.5 billion cubic meters of natural gas and 2.6 million tons of condensed gas were delivered to Orenburg. Natural gas recovered in Kazakhstan is supplied to the markets of CIS constituent states through the Russian territory. In 2007, the amount of natural gas transited through Russia was 8.5 billion cubic meters, compared to 7.5 billion of cubic meters in 2005.
Cooperation in electric power sector
Since 2000, the electric power systems of Russia and Kazakhstan operate concurrently, with Russia and Kazakhstan supplying electric power and coal to one another.
In July 2005, Russia and Kazakhstan made a decision to establish a Russian-Kazakh joint venture as part of the Ekibastuzskaya Power Plant-2 Open Joint Stock Company, and to develop their joint programme designated for the consolidation of their electric power markets.
Cooperation in peaceful application of nuclear power
Since 2002, both states have been jointly extracting uranium in Kazakhstan. Zarechnoye Closed Joint Stock Company, a joint venture of Kazakhstan, Russia, and the Kyrgyz Republic, is in operation, with a design capacity of 500 tons of uranium a year and an annual output worth approx. USD 36 million.
Russia and Kazakhstan have worked out a schedule of integration of their nuclear industry enterprises in pursuance of their Joint Statement Regarding Cooperation In Peaceful Application of Nuclear Power, made by the Presidents of Russia and Kazakhstan in St.Petersburg in January 2006. This statement serves as the basis for the implementation of a comprehensive cooperation programme designated for peaceful use of nuclear power.
Following the understanding reached between the Presidents of Russia and Kazakhstan in Uralsk on October 3, 2006, regarding the accession of Kazakhstan to Russia's initiative to establish an International Uranium Enrichment Center in Russia, a respective Agreement was executed on May 10, 2007.
Trans-regional relations are being developed. 76 of the 89 constituent members of the Russian Federation have established trade and economic relations with Kazakhstan. Cooperation between Russia and Kazakhstan is particularly intensive on the Kazakh border. Cooperation in this region represents cross-border trading: Kazakhstan supplies coal from Ekibastuz to the power plants in the Urals and Siberia in exchange for the electric power generated by the latter's power plants; mineral raw materials are supplied by Kazakhstan to the ore dressing factories of the Southern Urals in exchange for their output; crude oil and condensed gas are supplied by Kazakhstan to Russian refineries based in Samara, the Orenburg region and Bashkortostan, and oil products and gas are supplied to Kazakhstan.
Trans-regional and border trade makes up to 70% of the overall bilateral trade turnover between Russia and Kazakhstan.
Cooperation in investment operations
Major Russian investors in Kazakhstan are LUKoil ($4.5 billion), Gazprom ($1 billion), Inter RAO UES ($0.2 billion), and Rusal ($0.4 billion). Other big investors are state corporation Rosatom, Rosneft, Bank VTB, VEB, Mechel, Severstal and many other companies. Total accrued Russian investment in Kazakhstan exceeds $7 billion.
There are some 3,000 companies with Russian capital in Kazakhstan.
The Eurasian Development Bank was set up in accordance with an agreement between the governments of Russia and Kazakhstan signed in Astana in January 2006. Its head office is located in Almaty.
The Russian-Kazakh Intergovernmental Cooperation Commission has been in operation since 1997. Its eleventh session was held in Astana on November 26, 2007.
The Russian-Kazakh Intergovernmental Cooperation Commission has specialized subcommissions responsible for Baikonur-related issues, near-border cooperation, interbank and investment cooperation, foreign trade, transportation, fuel and power sectors.
