QR Briefing: 2/23/2023
Author: Richard Spooner
Feb 23, 2023
CPC's new feature, QR Briefing, is a summary and analysis of events and trends in the Republic of Kazakhstan (RK). With the decision to switch Kazakh language to a Latinized alphabet, which will be implemented in stages from 2023-2031, the country's name is now being rendered as Qazakstan, and Qazak Republic (QR) is gaining momentum, especially among young people, as a new acronym for the country, replacing RK, to resonate with President Tokayev's rebranding of the country as Jana (new) Qazakstan.
UAE’s AD Ports Group and RK’s Semurg Invest to Build New Terminal at Kuryk
In another sign that the Trans-Caspian International Trade Route (TITR) is taking hold, it was announced February 14 that Abu Dhabi Ports and Semrug Invest, a local Kazakhstani company engaged in developing infrastructure in the Mangistau Region, where the ports of Aktau and Kuryk are located, intend to construct a new export terminal at the port of Kuryk, with commissioning planned for 2025.
Kazakhstan’s Minister of Industry and Infrastructure Development Marat Karabayev met recently with representatives of Abu Dhabi Ports. “During the meeting, the parties discussed prospects for implementing investment projects in the field of transport and logistics, including the construction of a multifunction terminal together with Semrug Invest,” the Ministry’s press service reported.
The parties likewise discussed cooperation with Kazakhstan’s national railroad operator, KazTemirZholy (KTZ), on enhancement of the TITR through integrating KTZ information systems with the Abu Dhabi Ports logistics platform.
Kazakhstan is interested in developing cargo traffic with the UAE via the so-called Green Line that would include Turkmenistan, Uzbekistan, Iran, and Kazakhstan, according to a statement by the Ministry of Foreign Affairs in Astana.
As for the terminal at Kuryk, to be called Sarzha, Semrug Invest stated that the project includes a container yard and coastal base to support marine operations.
Government Reverses Course on Controversial New Media Law
On February 16, the office of Astana Akim Zhenis Kassymbek refused to approve a public rally against proposed amendments to Kazakhstan’s Law on Mass Media. According to representatives of Legal Media Center, an Astana-based NGO, the revised law would strengthen government control over the media. The organization's lawyer, Gulmira Birzhanova, said the plan was to hold a rally on February 18 for about 200 participants. The Akimat’s decision against allowing the meeting cited another rally planned for the same location on the same day.
“We wanted to read an appeal to the President at this rally and then send it to him. There would have been journalists and members of our working group present who would have voiced their disagreement with the bill," Birzhanova stated.
The Ministry of Information and Social Development authored the amended mass media law, in which the government seeks to combine two existing laws – On Mass Media, and On Television and Radio Broadcasting. In early February, the latest version of the bill was published for public review. Numerous lawyers and journalists opposed it, asserting that it facilitates censorship and would, in effect, prevent journalists from practicing their profession. Diana Okremova, the director of Legal Media Center, stated that ordinary social network users should also be concerned about the new bill.
Then, six days after city authorities refused to approve the rally criticizing the draft law, Minister of Information Darkhan Kydyrali announced that its provisions would be reviewed to consider the criticisms voiced. During a break in a meeting with the Prime Minister, he said several articles would be revised once the Ministry’s legal experts meet with “colleagues” critical of the new law. “Before the bill gets to the Majilis, work needs to be done. We invite colleagues who are critical of the bill to join the Majilis working group. We are aware of the criticism,” the Minister stated.
As to specific provisions in the draft law, the Minister believes that the introduction of a press card for journalists is acceptable. As to allowing the dissemination of information during emergency situations, which was a sensitive and controversial issue during last year’s January Events, he said to journalists on the sideline of the government meeting, “I agree with your comments. It is envisaged that obtaining a special permit will be required only in exceptional cases, like during a military operation. In other cases, conditions will be created for journalists to operate freely. We are discussing your comments with the relevant agencies. We know that in fact the work of journalists in emergency situations is effective. Therefore, we are trying to defend the rights of journalists in this matter. The issue is being reconsidered by the Ministry of Internal Affairs. The bill is being discussed not only by our ministry, but also by other agencies,” Kydyrali explained.
Such a sequence of events would have been most unlikely under Kazakhstan’s first president and will be seen as evidence that President Tokayev’s promise to create “a State that hears you” is being fulfilled.
Action Taken on Harassment and Assault of Journalists
As reported in last week’s QR Briefing, President Tokayev recently called on law enforcement agencies to crack down on mistreatment of journalists in Kazakhstan. An interagency task force was created, and on February 21, police detained 18 individuals and charged them with various acts of intimidation aimed at bloggers and members of the press.
According to the Ministry of Internal Affairs, between September of 2022 and February of this year, criminal acts were committed in Almaty and Astana against six journalists and bloggers, including instances of damage to real estate, threats delivered to homes, arson against automobiles, false reports of a terrorist act at a journalist’s address, and unlawful dissemination of personal data on the Internet.
At present, according to a statement from the Ministry, investigative operations are underway to consolidate the evidentiary base.
Kazakhstan Addresses Forecasts of Natural Gas Deficit
Warnings have sounded since June of 2022, when QazaqGaz Chairman Sanzhar Zharkeshov stated, “A gas shortage is predicted starting in 2024. The needs of the domestic market will exceed available gas resources by about 1.7 billion cubic meters. If urgent measures are not taken, gas exports will cease in 2023.” At that time, Zharkenov cited a surge in applications from new large-scale consumers, including projects to convert coal-burning thermal power plants to gas and to launch new gas-powered petrochemical plants.
Meanwhile, production of natural gas held steady in 2022 – 53.3 billion cubic meters, or 103% of the target – while exports were down 15%, likely to store volume for future demand and due to restrictions at the Orenburg gas processing plant in Russia, which handles output from Kazakhstan’s largest gas field, Karachaganak, causing deliveries for the year to drop by 6%. Also contributing to the decline in exports were unscheduled repair and maintenance stoppages at the Tengiz and Kashagan fields. Meanwhile, according to Minister of Energy Bolat Akchulakov, domestic consumption of natural gas in 2022 was up 7% over 2021.
Going forward, reduced exports might be a necessary means to satisfy increasing internal demand, which Akchulakov called a top government priority. On February 21 it was announced that Tengizchevroil (TCO), operator of Kazakhstan’s largest oilfield, which also supplies natural gas, will henceforth supply gas only to the domestic market, with national gas company QazaqGas responsible for distribution. Before the announcement, 87% of TCO’s natural gas output was already going to the domestic market. The company’s General Manager for GR and PR, Darmen Aronov, noted that the Government had approached TCO in the summer of 2022, at the request of President Tokayev, to work out the issue of redirecting the remaining 13% to the domestic market.
Kazakhstan Announces 4-month Ban on Export of Refined Petroleum Products
The State Revenue Committee of the Ministry of Finance announced the measure on February 8, which will cover gasoline, as well as diesel and other home and auto fuels, while lubricants will be exempt from the ban.
From November 2021 to May 2022, there was a ban on the export by truck of the same products, later extended for six months. In January 2023, Kazakhstan reintroduced the same ban on export by truck. For the next four months, that ban will apply to the export of refined petroleum products by any means of transport.
As with the above note on directing natural gas production from export markets to internal consumption, the ban on exporting fuel products is aimed at avoiding shortages and controlling prices to avoid the kind of social unrest that erupted last January in Zhanaozen and quickly spread across the country.
Gas Supply and Regional Relations
Neighboring Uzbekistan and Kazakhstan face similar issues with the supply of natural gas and fuel products that factor into recent attempts by Russia to create a tripartite ‘gas union’ with its two Central Asian neighbors. Blocked to a considerable degree from European markets, Russia is keen to deliver oil and gas eastward and southward, offering 25% discounts from Brent on its crude oil and new arrangements to supply gas to Kazakhstan and Uzbekistan for both domestic consumption and transit to China.
In addition, Russia has recently made overtures to Turkmenistan, the remaining major supplier of natural gas in the region, that is seeking, under new President Serdar Berdimuhamedov, to diversity its gas exports away from dependance on the Chinese market. Ashgabat is building an internal network of spur pipelines to connect its major gas fields and enable multi-vector exports, including, perhaps, to a gas hub in Türkiye that presidents Erdoğan and Putin have discussed since last October, and which was likely discussed by Presidents Berdimuhamedov and Erdoğan in September at the Organization of Turkic States summit in Samarkand, Uzbekistan.
Thus, while neither Kazakhstan nor Uzbekistan would welcome any union, gas or otherwise, with Russia, domestic supply issues critical to economic (and social) stability require that all avenues for supply of natural gas be examined.
EBRD Forecasts Growth in Central Asia
In 2023 and 2024, GDP in Central Asian countries will grow by an average of 4.9% and 5.4%, respectively, according to a newly released EBRD report. This is the most rapid growth rate for any region where EBRD is present for the two years in question and is due to an influx of investment in infrastructure, high energy prices, and the relocation of Russian business. According to the forecast, real GDP will grow the most in Tajikistan (8%), Kyrgyzstan (7%), and in Turkmenistan and Uzbekistan (6.5% each). In Kazakhstan, growth will be 3.5%.
It is also noted that in five countries of Central Asia and the South Caucasus (Kyrgyzstan, Kazakhstan, Uzbekistan, Armenia and Georgia) an increase in real wages was recorded in September-October 2022, underpinned by growing exports and imports, increased investment flows, high energy prices, and the arrival of educated migrants from Russia.
Exports from the European Union, the United Kingdom, and the United States to Central Asia and the South Caucasus have increased dramatically, often for the purpose of intermediary trade, aka ‘parallel import,’ where goods are exported to Caspian region countries and then resold to Russia. In Armenia and Kyrgyzstan, such trade amounted to 4-6% of GDP, leading to growth in the logistics industry.
The EBRD also predicts that Russia's GDP will fall by 3% in 2023, while in 2024, the Russian economy will decrease by another 1%. In 2022, the Russian economy declined by 2.7%, according to Finance Minister Anton Siluanov.