Kazakhstan Corrects Its Mistakes

   Much has been done since then: the Sovereign Wealth Fund Samruk-Kazyna was set up to ensure economic stability, legislation was improved, institutions and organizations emerged to coordinate the actions of businesses and government, and small and medium enterprises were expanding and so on.
But no one is immune to mistakes, especially the emerging markets. As usual, there was a redistribution of investment and labor resources into the commodity sector. Businesses were focused on earning easy profits and lost interest in manufacturing innovative products. Meanwhile, the global crisis made adjustments reflecting the harm in such trends. Now it has become clear that time was lost, and Kazakhstan has no future without industrialization.

   This is how the State Program for Accelerated Industrial-Innovative Development of the Republic of Kazakhstan was created and approved by presidential decree over a year ago. The main idea behind the paper is that for the small amount of time left until 2015, Kazakhstan will have to begin manufacturing innovative products of the second and third technological process stage while leaning on its raw materials sector. Creation of a service industry is assumed through the already established connections, for example, between the representatives of petroleum companies and machine toolers. Special clusters are to be built around specific commodities businesses for the medium and small businesses.

   This is especially important in light of the fact that  the global economic crisis has almost left Kazakhstan's oil and gas complex unaffected. The industry’s inertia showed in projects that take years, or even decades to complete.  Today, the oil and gas complex faces two important challenges: to maintain the stability of its development and at the same time become an engine for industrialization of the entire country.

   The Program for the Development of Oil and Gas Sector in the Republic of Kazakhstan for 2010–2014 must become a guide for action. More than $34 billion are to be allocated for implementing the program – a truly huge sum of money. Suffice it to say that the industry received only 87 billion dollars over the past twenty years.

   By 2014, oil production in Kazakhstan will have grown to 85 million tons per year, while natural gas volumes will be around 54 billion cubic meters a year.
Production will be enhanced by the addition of more commercial production fields in the Tengiz and Karachaganak regions, as well as by the implementation of projects located in the Kazakh sector of the Caspian Sea at the Kashagan field. The country’s leadership is determined to make the national JSC NC KMG the locomotive behind the development of the oil and gas sector. Its will focus on increasing the share of the government involvement in the production of hydrocarbons, direct participation in large-scale oil and gas projects and completion and start-up of new deposits, financing and performance of geological survey works.

   The drafters of the program have paid particular attention to oil exports and the enhancement of oil export capacities, as Kazakhstan intends to