Astana Open Dialogue publishes this article by Italian experts Fabio Indeo and Domenico Palmieri — representatives of the Istituto Italiano per l’Asia (ISIA).
SIA is an Italian analytical center that has been accumulating expert knowledge and practical experience in engagement with Asia, the Middle East, and the Mediterranean for more than two decades. Astana Open Dialogue is an independent platform for discussion and development of solutions to key country and regional challenges of our time.
After the national independence in 1991, Kazakhstan and Italy have started to develop bilateral relations, enhancing cooperation not only in the political and security field but also focused on the energy dimension and trade opportunities, thanks to the complementarity of their economies. As a matter of fact, Italy was interested in Kazakh oil and raw materials while Kazakhstan aimed to obtain technology, machinery, equipment, investments and know-how in order to consolidate the recent economic and political independence also allowing the country to fully exploit its huge oil and gas offshore and onshore reserves.
Photo credit: gov.kz
Italy officially recognized the Republic of Kazakhstan on 1 January 1992, together with other six independent republics emerged after the dissolution of the Soviet Union. Eight months later, this recognition was formalized through the official signature of the bilateral protocol on the establishment of diplomatic relations.
Energy partnership has traditionally represented a strategic asset in the relations between Rome and Astana, mainly because this produces mutual lucrative benefits: oil imports from Italy and a technological support aimed to fully exploit the national energy resources for Astana. Today, 90% of total Italian imports from Kazakhstan is covered by crude oil, which accounts for 14.9% of total Italian oil imports.
Energy cooperation has started immediately after 1991, when the ENI Italian energy company offered its great know-how and experience to develop the promising energy sector of this new independent country, also meeting Kazakh ambition to undertake a multivector foreign policy aimed at reducing Russian role in the energy field as well as at opening cooperation with new partners. Kazakh energy sector has represented the main attractive pole for the Italian interests and investments: a large number of Italian small and medium enterprises which work on the oil and gas sector and to realize energy infrastructures invested in Kazakhstan: in addition to ENI, Saipem, Bonatti and Rosetti. Salini-Impregilo Group, Renco and Italcementi realized joint-ventures with Kazakh companies investing in infrastructure and construction industry.
ENI has progressively assumed a position of strategic relevance in Kazakhstan. ENI holds a 29.25% share in the Karachaganak Petroleum Operating BV (KPO) international consortium to exploit the Karachaganak giant oil and gas field, together with British Gas, while Chevron and Russian Lukoil respectively hold 18% and 13.50%. KPO operations are led under a Production Sharing Agreement which will end in 2037.
Moreover, Eni holds a 16.81% working interest in the North Caspian Sea Production Sharing Agreement (NCSPSA) to exploit the giant offshore oil field of Kashagan. Other partners in the consortium are KazMunaiGas – the Kazakh national energy company – , Total, Shell and ExxonMobil, which held a share of 16.81% each. In 2013 the Chinese Company CNPC bought 8.40% share from ConocoPhillips while Japanese Inpex holds a share of 7.56%.
The Kashagan oil field found in 2000’s, represents one of the most significant energy discoveries in recent decades. The field is known for its technical and environmental complexity, given the depth of the reserves and the extreme climatic condition, but it plays a key role for Kazakhstan’s export ambitions because it holds estimated reserves which exceed 13 billion barrels of oil, with a recoverable potential of about 9 billion barrels.
In addition to exploration and production activities, ENI also holds some shares in two of the three existent energy export pipelines in Kazakhstan: as a matter of fact the Italian energy company holds 5% shares of the Baku-Tbilisi-Ceyhan oil pipeline – which delivers Azerbaijani, Kazakh and Turkmen oil to the EU market – and 2% shares of the Caspian Pipeline Consortium (CPC), a pipeline which carries Kazakh oil from Tengiz to the Russian port of Novorossiysk in the Black Sea.
Given the new energy priorities, Italy aspires to become a key partner to support Kazakhstan’s ambitious goal of achieving climate neutrality (eliminating polluting emissions) by 2060, providing know-how, technology and investments offered by Italian companies, thus contributing to the process of diversification and energy transition. Consequently, Eni is working with Kazakhstan to develop an increasing production of renewable energy, through the realization of Badamsha 1 and 2 wind farms in the Aktobe Region, a solar power plant in Shaulder (Turkestan region) and the project to build a gas processing plant – a 250-megawatt hybrid power station – in the Mangystau Region, for which the national company KazMunayGas and Italian Eni have jointly approved the final investment decision.
Badamsha 1 and 2 respectively entered into service in 2020 and in 2022 each of them has an installed capacity of 48 MW, for a total of 96 MW, able to support Kazakh attempts to achieve carbon neutrality.
Concerning political and trade relations, a large number of official state visits and high level political meetings show the strengthening of a reciprocal partnership based on trust and dialogue.
During the visit of the former President Nazarbayev in Rome in 2009, Italy and Kazakhstan signed the important Strategic Partnership Treaty between these two republics, in addition to several intergovernmental agreements and memorandum of understanding on trade and economic cooperation.
Recently, the visit of the Kazakhstan’s Minister of Trade Arman Shakkaliyev – which took place in Rome on March 2024 – represented a further step in the fruitful bilateral cooperation existing between the two countries, enhanced within the framework of the upgraded strategic partnership signed in January 2024 following the first official visit in our country of Kazakh President Jomart Tokayev. During the summit, Italy and Kazakhstan committed to increase bilateral trade cooperation, expecting that trade turnover with Italy will increase from the current $14.5 billion to $20 billion in the coming years.
Following the meeting with the Italian Minister of Economy Adolfo Urso, both parties highlighted the strong mutual interest in promoting and strengthening economic and commercial relations between the two nations, but not more limited the traditional areas of cooperation (oil & gas, Made in Italy products) but exploring new ones: one of the identified priorities is represented by a promising collaboration in the supply of critical minerals (Kazakhstan holds huge reserves of minerals), necessary for the development of strategic economic sectors such as green technology, hybrid vehicles, defense industry.
Among different mineral reserves, Kazakhstan holds the world’s largest reserves of chromium and the third largest of manganese, a strategic mineral as it is progressively used by the world’s major car companies (such as Volkswagen and Tesla) to replace cobalt and nickel in electric vehicle batteries. According to the two ministers, this cooperation is fundamental to guarantee the strategic autonomy of our continent, which is heavily dependent on refined minerals processed and exported from China.
From this perspective, the visit of the Kazakh trade minister is in continuity with the participation of President Tokayev at the roundtable on investments in January 2024, during which 16 trade agreements were signed in various sectors (for a value of 1,5 billion dollars), particularly on renewables energy sources and clean energy production, as well as investments in technology. Moreover, Kazakh President also reaffirmed that his country could become a significant supplier of critical minerals and rare hearth materials for Italy and the EU, considering that these minerals are key components for the green technology development.
Between 2020 and 2024, Italy was among the main destination countries for Kazakh exports: a sharp increase in Italian imports from Kazakhstan, which reached a share of 18.9% (on total Kazakh exports) in 2023, growing exponentially to 24.2% in 2024, a share that places Italy in first place in the ranking of destination market of Kazakh exports. Italy imports an ever-increasing amount of raw materials from Kazakhstan, such as iron, lead, steel, zinc, tin (ISTAT-ICE)
Kazakh demand of Italian goods is growingly oriented to the “Made in Italy” label, the Italian production of luxury articles such as fashion products, clothing, shoes, furnishing, even if the main share of Italian exports is represented by machinery and goods serving the energy and petrochemical sectors.
In conclusion, Kazakhstan and Italy share a lot of combined interests to further cement their relations in the coming years, developing an inclusive partnership aimed at expanding trade and energy cooperation also looking at new perspectives. One of the convergent interests will be to jointly work in order to promote Kazakhstan’s role as a key linchpin in the Middle Corridor project, to develop an alternative east-west trade route which have to attract financial investments to realize connecting infrastructures. During his speech when he visited Italy, also Tokayev expressly invited Italian companies to be involved in the realization of these strategic infrastructures which will increase Kazakhstan’s position as trade hub between East and West.
Domenico Palmieri is a specialist in geopolitics and international relations. Since 2020, he has held the position of Secretary General of ISIA.
Fabio Indeo is an ISIA analyst, PhD in Geopolitics, and a visiting fellow at the University of Siena. He collaborates with leading analytical centers, including The Hague Research Institute, ISPI, Rabdan Academy, and others.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of The Astana Times.
