Azerbaijan, Kazakhstan outline priorities to prevail in bilateral cooperation Review by Caliber.Az

Azerbaijan and Kazakhstan, which have been successfully cooperating for many years in the transport and oil industry, have recently set a goal to multiply trade and diversify business ties by expanding joint initiatives in the non-oil sector.

Over the past year and a half, these priority trends have been discussed in numerous forums, negotiations at the level of governments and heads of state. The previous day's meetings at the Astana International Forum (AIF 2023) were no exception. The sides discussed the prospects of oil transit, railroad equipment supplies, green energy, etc.

After the signing of the Declaration on deepening allied cooperation and strategic partnership relations in Baku in August last year, as well as the adoption of the Comprehensive Development Cooperation Programme for 2022-2026, Azerbaijani-Kazakh business ties have acquired new goals, implemented projects have received an additional impetus.

The Azerbaijani-Kazakh business forum and 19th meeting of the intergovernmental commission on trade and economic cooperation held in Baku in April 2023 served the same purpose - new contracts were concluded, memoranda and other mutually beneficial documents signed.

Today, the key drivers that bring Azerbaijani-Kazakhstani business ties to a qualitatively new level are the transit of Kazakh oil through Azerbaijan, which kicked off at the beginning of the year, as well as steps to unite the transport and logistics infrastructures of the two countries to make fuller use of the Middle Corridor.

In particular, the Caspian neighbours attach great importance to unlocking the full potential of the Trans-Caspian International Transport Route (TCIT), which plays a crucial role in transshipment of non-oil cargo. In this regard, Astana and Baku aim at improving logistics services, establishing single transport operators, and upgrading technical and tariff conditions, while removing administrative barriers and creating a closed logistics cycle.

Investment projects planned under the initiatives of the Organisation of Turkic States (OTS) also serve as a major factor contributing to the deepening of trade and economic relations between the two countries.

Thus, Baku and Astana are engaged in a number of regional economic cooperation projects. In terms of expanding bilateral trade, developing infrastructure, and implementing bilateral projects in industry, our two countries are certainly among the future main beneficiaries in the region.

This is quite obvious, as Azerbaijan and Kazakhstan, which have an extensive legal and contractual framework of over 120 inter-state and inter-governmental agreements, are consistently expanding their business contacts, including investment and trade contacts. At present, over 1,195 companies with Azerbaijani capital are operating in Kazakhstan, and 210 joint ventures have been created.

According to the Central Bank of Kazakhstan, in 2005-2020 the volume of Azerbaijani investments attracted to the country's economy amounted to $306.5 million. In turn, in recent years the volume of investments of Kazakh companies in the Azerbaijani economy has also increased - $75.7 million was allocated in 2018-2019 alone.

"Azerbaijan is currently among the top 15 investors in Kazakhstan's economy, but the actual business potential of the two countries in terms of investment is much broader. I have held several meetings with Azerbaijan's Economy Minister Mikayil Jabbarov and we have carefully considered this issue," Kazakhstan's National Economy Minister Alibek Kuantyrov said at a briefing ahead of the Astana International Forum.

According to him, the partnership within the OTS, in particular the implementation of joint projects using the resources of the Turkic Investment Fund and the Middle Corridor, contributes to the further strengthening of economic cooperation.

At present, among the most intensively promoted vectors of cooperation are undertakings to diversify the energy potential of Baku and Astana. "Between 12 and 14 tankers of Kazakhstani oil arrive in Azerbaijan every month: The initial agreement between the parties implied the transportation of 1.5 million tonnes of oil in 2023, but taking into account that supplies started in April, 1.125 million tonnes of Kazakh oil will be transported through the Baku-Tbilisi-Ceyhan (BTC) oil pipeline by the end of this year," Azerbaijani Energy Minister Parviz Shahbazov said on the sidelines of AIF 2023 international forum held in Astana in a meeting with Kazakh Trade and Integration Minister Serik Zhumangarin.

Stressing that this is only the beginning of fruitful cooperation, the Azerbaijani energy minister added that in this context Baku-Supsa pipeline can become a great alternative for Kazakhstan's oil supplies.

Earlier national oil companies of Azerbaijan and Kazakhstan - SOCAR and KazMunayGas discussed the issue of a joint venture (JV), which could become a single transit operator with a thorough tariff with capacities for low-cost transshipment of raw materials, use of innovative technologies, including the use of the potential of the pipeline Baku-Supsa.

Joint power transit projects also look very promising. "Kazakhstan and Azerbaijan pay great attention to the development of projects in the field of renewable energy sources (RES) and seek to start exporting "green" energy to the European market.

In this regard, together with our Azerbaijani colleagues, we have already launched a project to lay a high-voltage cable along the bed of the Caspian Sea. This power cable will connect Kazakhstan with Turkey and further with Europe," Kazakh Energy Minister Almassadam Satkaliyev said at a panel discussion within AIF 2023.

A similar position was expressed by Parviz Shahbazov, head of the Ministry of Energy, speaking at the session on "Regional development in the renewable energy sector: alternative ways to ensure energy security". According to the minister, wide use of RES segment potential will allow Azerbaijan to acquire the status of a "green growth" country by 2030, that is, with a clean environment, and along with the export of "green energy" to increase the supply of saved gas.

It was noted at the forum that Baku is as open as possible to investments in RES and invites Kazakh companies to participate in such projects.

However, the energy sector is by no means the only area where Baku and Astana are cooperating incrementally. In particular, ties are expanding on projects to modernise transport infrastructure and rolling stock. At the AIF 2023 forum, the Caspian partners worked out an agreement on the delivery of locomotives produced in Kazakhstan to Azerbaijan.

"Baku has shown interest in buying seven locomotives. We opened a new program which will enable Azerbaijani buyers to be accredited in Kazakhstan and we, for our part, will reimburse transportation costs to Azerbaijani buyers, creating favourable conditions for both parties," Minister Serik Zhumangarin said.

It should be noted that according to the agreement signed in May 2014 with French Alstom Transportation S.A., Azerbaijani Railways CJSC is gradually purchasing about 50 locomotives, which are produced at the facilities of Electric Locomotive Kurastyru Zauyty (EKZ) in Kazakhstan.

Azerbaijani Railways has already purchased the first batch of Prima T8 (AZ8A) AC locomotives, most of which are to be used for freight traffic on the Baku-Tbilisi-Kars (BTK) highway.

"We had useful discussions on the development of trade and economic cooperation between our countries with Kazakhstan's Deputy Prime Minister - Minister of Trade and Integration Serik Zhumangarin," Minister Shahbazov said.

The key goal formulated by Kazakh and Azerbaijani leaders is to bring mutual trade turnover up to $1 billion in the mid-term perspective. And apparently, this goal is quite achievable: in January-December 2022, trade turnover reached $462 million, an increase of 40% compared to 2021.

"The high pace of mutual trade has been kept this year as well: in January-April, the trade volume totalled $183 million, up by an additional $50 million compared to last year's figures. These dynamics gives us reason to believe that this year we will exceed last year's statistics," Minister Zhumangarin said during talks at the Astana Forum.