How foreign investments are transforming the economy and life in Kazakhstan.
Kazakhstan, possessing some of the world's largest oil and gas reserves, is actively attracting international capital for the development of its natural resources. In addition to the tremendous potential for growth in the national economy, these investments directly impact the lives of ordinary Kazakhstanis, reports inbusiness.kz citing Orda.kz.
Over nearly 30 years of its modern history, Kazakhstan has attracted $441 billion in foreign direct investment. Leading countries in terms of investment volume include the Netherlands, the USA, Switzerland, China, and Russia. Statistics indicate that the most attractive sectors for foreign capital are mining and quarrying, manufacturing, wholesale and retail trade, as well as transportation and warehousing.
"Foreign investors have injected capital, provided advanced technologies, and offered highly qualified labor. Their investments have fostered the growth of our energy sector: over the past 30 years, oil production has tripled. Consequently, Kazakhstan has entered the top five countries with the highest growth rates in oil production. Looking to the future, we aim to exceed the threshold of 100 million tons per year,” stated President Kassym-Jomart Tokayev at the end of October.
In the annual FDI Standouts Watchlist, Kazakhstan ranked sixth in macroeconomic development and foreign direct investment attraction for 2023. Authorities have repeatedly emphasized that the country faces an ambitious task: to attract an additional $150 billion in foreign direct investment by 2029.
Resources and Technologies
With the attainment of independence, Kazakhstan faced the necessity of conducting an independent financial and economic policy, in other words — generating revenue, which was impossible without harnessing vast natural resources and developing infrastructure. To tackle these challenges, it was vital for the country to attract foreign capital, knowledge, and technologies.
In 1991, the country’s leadership adopted the Law on "Foreign Investments," marking a significant milestone in Kazakhstan's recent history. This law protects investors' rights and outlines support measures. The first major partner and, in essence, a pioneer in Kazakhstan became the American energy company "Chevron."
The company was interested in a new market with high potential, while the country was keen on attracting foreign investments for the effective exploitation of natural resources and the development of its nascent economy.
Immediately after Chevron's entry into the country, other major international oil and gas companies followed: ExxonMobil, Shell, Total, Lukoil, and Eni. They participated in various projects related to the development of oil and gas fields such as Tengiz, Karachaganak, and Kashagan. These companies brought modern technologies, finances, created jobs, and generally contributed to the modernization of the oil and gas sector.
Thousands of Jobs
"Chevron" is the largest foreign investor, playing a key role in the Kazakh economy through its participation in the joint venture "Tengizchevroil" (20% of shares belong to JSC NC "KazMunayGas"). TCO develops one of the largest oil fields in the country — Tengiz. Since the beginning of this year, direct payments from "Tengizchevroil" to the Kazakh economy have amounted to $8.4 billion. Since TCO began operations in 1993, this figure has reached $198 billion.
"Chevron" invests billions of dollars in the development of Tengiz, the continuous increase of oil production, infrastructure improvements, and the implementation of modern technologies. The enterprise accounts for about a quarter of all oil production in Kazakhstan. TCO has become the largest taxpayer, contributing 3.7 trillion tenge to the state treasury in 2023 alone. The Tengiz field generates up to 22% of all tax revenues in the country.
As oil production projects develop, the need for labor increases. Foreign investors actively create jobs for Kazakhstanis — specialists with varying levels of expertise. Opportunities for training, skill enhancement, and acquiring international experience are being opened for them.
The company "Chevron" develops social projects in the regions where it operates, supports local businesses, and invests in the education of Kazakh specialists, while simultaneously promoting the growth of several other sectors.
Special attention is given to the nationalization of personnel. By the end of Q3 2024, the share of domestic specialists at TCO reached 95%.
Support for Local Industries and Infrastructure Development
Another important process, beneficial for both Kazakhstan and the investors themselves, is the support of local industry. Maintaining a balance between the interests of Kazakh producers and foreign companies is a powerful catalyst for sustainable economic growth and improved quality of life.
Large foreign companies invest in local production, thereby fostering regional economic growth. They bring modern technologies and innovative solutions, helping to modernize and improve the quality of produced goods or offered services. Additionally, investments create jobs for local residents, lowering unemployment levels in the regions.
The activities of a major foreign investor stimulate infrastructure development — roads, logistics centers, energy, and water supply systems. In the regions where they operate, railway lines are modernized, and social facilities such as schools, hospitals, and sports complexes are established.
"Chevron" actively develops local production. In 2003, the company commissioned a polyethylene pipe plant in Atyrau. Six lines produce 16,000 tons of polyethylene pipes annually. This Kazakh enterprise has begun producing goods that previously had to be imported due to modernization.
Foreign capital plays a crucial role in supporting companies that lack their own funds and working capital for launching and developing projects. For these purposes, the Ministry of Energy of Kazakhstan, together with the oil and gas corporation "Chevron," established a Direct Investment Fund. The fund's budget is around $248 million. The primary goal of the fund is to stimulate the country’s economic development and increase the share of local content across various sectors. Investments will be directed not only to the oil and gas sector but also to Kazakh enterprises operating in other fields.
Last year, the fund signed agreements worth $41 million with Kazakh companies top.kz and Orhun Med Limited. These contracts will allow for business expansion and the implementation of new technologies. In September 2024, two more investment agreements were announced. One of them is for $19 million with a renewable energy producer in the Mangystau region, "Rare Metal Company." The investments will be directed towards the consolidation of three wind farms in the Mangystau region: Fort-Shevchenko Wind Farm, Service Wind Farm, and Jangiz Wind Farm. This will create the largest group of wind farms in the region with a total capacity of 58.6 MW.
The second invested project is with Everest Development LLP. $20 million will enable the creation of a modern factory complex that will produce goods for residential construction and renovation.
Other Sectors
Foreign investors are investing in energy, including both traditional sources — coal and gas, as well as renewable sources — solar and wind power stations, helping Kazakhstan evolve towards green energy.
Foreign capital also aids the development of another key sector — mining. Foreign companies actively invest in the exploration of deposits, as well as in the processing and export of metals. Furthermore, our authorities are attracting foreign capital for the modernization of mines and improvement of environmental standards.
Foreign companies are also interested in developing the chemical industry, hospitality, financial, and agricultural sectors.
Ecology and Green Technologies
Many Western companies investing in oil extraction strive to minimize their impact on the environment. They pay special attention to this, adhering to the latest environmental standards. TCO employs advanced methods to optimize oil extraction while actively working to reduce environmental impact. In recent years, specialists have focused on lowering carbon emissions and increasing energy efficiency at their facilities. For instance, the company is implementing projects for carbon dioxide capture and the use of renewable energy sources.
Foreign investors have played a crucial role in establishing Kazakhstan as a significant global player in the energy market. International companies operating in our country ensure stable currency inflows, create jobs, contribute to infrastructure development and innovation, and enhance the qualifications of local specialists. All this, in turn, supports the diversification of the economy and its long-term resilience.