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china eyes aktau for infrastructure and energy investments

China Eyes Aktau for Infrastructure and Energy Investments

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Aug 10, 2018

Nearly as remote as its eastern counterpart Khorgos, the city of Aktu serves as Kazakhstan’s lesser-known gate to the West. Like Khorgos, Aktu is attempting to develop into a crossroads at the core of Eurasia that will connect China, Russia, the Middle East, the South Caucasus, Turkey, and Europe across the Caspian Sea to the west. The strategic geographic location of the city, which allows it access to natural resources in the Caspian basin, makes it an attractive destination for China; at the same time, China is seeking alternative energy transportation routes that bypass Russia. In addition, the Kazakh government is also trying to build a global economic hub in Aktau to diversify the economy away from being solely reliant on resource exports. However, relatively few non-energy investments have taken hold. China Eyes Aktau for Transportation and Natural Resources Aktau’s strategic geographic location and easy access to natural resources in the Caspian basin have made it the ideal stop on China’s Belt and Road Initiative. In May 2015, Kazakhstan’s President Nursultan Nazarbayev announced a plan to build a railway in cooperation with China from Khorgos on China’s border to Aktau. The scheme dovetails with a $2.7 billion Kazakh project to modernize its locomotives and freight and passenger cars and repair 450 miles of rail. This provides an alternative trade route for China to import energy from the Caspian region and export finished goods to Europe without passing through Russian territory. China is also actively investing in downstream oil & gas refinery in Aktau. Deputy Head of the local government of the Mangystau region Sholpan Ilmukhanbetova recently said that Kazakhstan’s KazAzot JSC and China’s Inner Mongolia Berun Group Co. Ltd. will build a gas chemical complex worth over one trillion tenges in Aktau (almost 3 billion USD). This project is scheduled to commence sometime Fall 2018. KazAzot has already reached an agreement with the Chinese partner on the establishment of a joint venture, which will become the parent company for a number of legal entities. The Kazakh side will have a 39 percent share in the project, while the Chinese side - 61 percent. Special Economic Zone “Seaport Aktau” The main objective of the Aktau's investment strategy is to create a favorable environment in which to expand extra-budgetary sources of financing, capital investments, and state support for effective investment projects. In order to attract foreign investments, Kazakhstani authorities established a special economic zone (SEZ) at Aktau port where investors can set up manufacturing and warehouse operations without paying any corporate income tax, land tax, property tax, value-added tax on imported goods and land rent. The government tries to turn the seaport into a hub to transport goods produced in the SEZ to foreign markets via the Caspian Sea. However, relatively few non-energy and non-Chinese investments have taken hold. Steel, chemical products, and petrochemical products are still the main commodities that are being shipped out of Aktau. (Sources: Forbes, Financial Times, trend.az, Nikkei Asian Review) Photo: Port Aktau, Kazakhstan. (c) Adobe Stock

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