Experts: Kazakhstan, Azerbaijan Have Lots in Common, Will Benefit from More Coop

The recent World Economic Forum in Baku was attended by experienced senior Kazakh executives in the fields of oil and gas and banking, including Sabr Yessimbekov and Aidan Karibzhanov. Both provided The Astana Times with their views on regional cooperation.

Sabr Yessimbekov, President, Chamber of Commerce and Industry of Kazakhstan

The main cooperation between our two countries is concentrated around the oil and gas sectors. Moreover, Azerbaijan’s strategic location necessitates us to always view Azerbaijan as a transit country, together with Georgia. Why has there has been a lot of talk about it today? The answer is simply that there is no other way to get oil to Europe, via a route that would not go through Russia, other than through these two countries.

Kazakhstan’s KazTransOil (KTO) has recently purchased the Batumi Oil Terminal and there are specific points of juxtaposition. Again, why? Because Azerbaijan has bought the railroads of Georgia to transport, so to say, “our” oil and for that reason we have to negotiate with them. I wouldn’t look at them as competition, even though as countries we are very similar. We’re developing and moving in the same direction, we are in the same boat. I see here more positive aspects than anything else.

A strong Azerbaijan is very good for us. First, it means security, because our hydrocarbon resources will travel through it safely. There are questions of competitiveness because historically Baku and Azerbaijan have developed as an oil economy.

They were talking today about investing in four oil tankers for themselves and are planning to transport oil from Kashagan to Baku across the Caspian Sea. Our guys are simply not making it on time to build these tankers, as it is quite complex. In their mind they’re thinking, why bother when they (the Azerbaijanis) will be acquiring their share of the pie through tariffs anyway?

How the oil from the Kashagan field will be reaching the markets is another question. The Azerbaijanis are strongly developing their oil capabilities and we should be proud.

As I said, a strong Azerbaijan is a lot more important and better for us. And if they ever want to reach the Chinese market, then they will have to go through us.

Aidan Karibzhanov, Chairman of the Board of Directors, Visor Holding

Kazakhstan and Azerbaijan have a similar structure of their economies, although Azerbaijan’s dependence on oil and gas is even more acute than Kazakhstan’s. There are similar positive traits: a comfortable price for oil provides high revenues for the government, but on the other hand there are obvious signs of the “Dutch disease” generating a one-sided development of the economy.

Not for nothing did [Azerbaijan’s President] Ilham Aliev talk about diversification and the development of information technology (IT) and about the need to double the non-resource sector of GDP by 2020. All countries know what they need to do. Here, there was a panel discussion about oil and gas, where the leaders of Azerbaijan’s industry talked about the development of oil chemistry and more modern, sophisticated refineries. So the challenges faced by Kazakhstan and Azerbaijan are very similar, getting rid of excess dependence on oil and gas and developing other segments of the economy.

As far as how these ideas are going to be realized is another question, because we have been doing this for a long time and there are specific problems that exist. Oil dependence and the “Dutch disease” are a bit more difficult to get rid of than, say, smoking.

Another aspect that Azerbaijan and Kazakhstan have in common is that for a long time both countries had few opportunities to export their resources. Russia has been the only corridor through which they could pass and countries have succeeded in 20 years in diversifying their routes. Azerbaijan’s diversification looks to Turkey, through Georgia, while our path has an Asian character.

So apart from us using the Russian pipelines and the Baku-Tbilisi-Ceyhan pipeline, we also have China which is a big partner. While the methods of diversifying the export routes are different, in essence both countries have succeeded in meeting their challenges.

Speaking of cooperation and integration, apart from the traditional areas of tourism and cultural exchanges, which are always great, I think there are a few points that are very important.

One is based on what I just said about oil and gas: a certain coordination between the two countries in defending their interests in the region for export of hydrocarbons is the most important geopolitical issue that the leaders and governments need to work on. So far, there is a good level of relations between the oil and gas sectors of the two countries, and their politicians. It is necessary that we understand the interests of both countries.

A second point is the transfer of technology, specifically technologies that diversify for the benefit of local wealth, without harm to the quality of production of the oil and gas sector. This is a question of human capital and training. So, I think that more horizontal contacts between sectors and companies of the two countries will be of benefit.

A lot of people from Kazakhstan have come here, not only from the government but also from business. The Azerbaijan experience is of real interest to everybody in Kazakhstan. We want to learn what is made better there, or where perhaps they can learn from us. In principle, the process is quite interesting.

Transcribed by Yelden Sarybay.

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