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What does the new deal with China mean for Kazakhstan?

Last month's announcement that China has signed 30 new cooperative agreements with Kazakhstan worth $10 billion, including oil and gas deals, is the latest sign that the nation is becoming one of China's key global partners - and may even be edging ahead of Russia in the relationship stakes.

One of the key deals made between Kazakhstan and China is a new joint-venture logistics base, and an increased focus on interconnectivity with highways, railways, ports, air routes, and oil and gas pipelines, which indicates the start of a long journey between the two nations.

Burgeoning benefits

Kazakhstan is now China's second largest trade partner in Commonwealth of the Independent States, with China itself being the largest export market of Kazakhstan, and the volume of trade between the two countries is increasing by around 20 per cent every year.

This relationship has been bolstered by increased cooperation in the field of oil and gas, with Kazakhstan's national oil and gas company KazMunaiGas and the China National Petroleum Corporation announcing recently that they are to work on increasing the oil recovery and utilisation of accompanying gas at fields in southern Kazakhstan.

The agreement states that both KMG and CNPC will expand technical cooperation in the oil and gas industry, including boosting oil recovery at the fields in the South Turgai basin in Kazakhstan.

Overtaking Russia?

This agreement - and others such as greater cooperation on gas utilisation in the Kyzylorda region of Kazakhstan through research into turning the accompanying gas into liquid hydrocarbons - has led some analysts to claim Kazakhstan is arguably ahead of Russia in terms of its oil recovery efforts with China.

The new deal between KazMunaiGas and CNPC is similar to the agreement between the Russian and Western companies to cooperate in increasing the productivity of mature fields, according to some experts who note that enhanced oil recovery is of paramount importance to KMG.

One Russian analyst - Igor Ivakhnenko - believes that Kazakhstan has a major advantage over his home nation, as some Russian companies have lost European and US partners due to the Western sanctions - a problem that does not affect Kazakhstan, making CNPC an "absolutely reliable partner".

He added: "Perhaps, the creation of threefold oil and gas projects on the territory of the allied countries would be an effective measure for the development of the Eurasian energy partnership as an alternative to the previous investment and political priority of the West."

Additional developments

The relationship between Kazakhstan is further bolstered by the agreement between Kazakh national atomic company Kazatomprom and the Chinese General Nuclear Power Corporation (CGNPC), to expand and deepen mutually beneficial cooperation in the field of nuclear energy.

With several important agreements signed in the fields of energy, oil and gas, as well as transport, it appears that Kazakhstan's relationship with China is only just hitting its stride, with potential for significant beneficial developments in 2015 and beyond.

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