Indian-Kazakh energy ties deepen
by John C.K. Daly
While the global recession has blindsided the world's oil market, harming the revenue stream of many major producers,
Kazakhstan is seeking to overcome the fiscal setback and is looking to the future to diversify its energy exports. A
key ingredient in Astana's efforts is its burgeoning uranium production, and it has focused its attention squarely on
a rising Asian economic powerhouse -- India.
Underlining the deepening ties between Delhi and Astana, Kazakh President Nursultan Nazarbayev will begin an official four-day state visit to India, crowned by his attendance as chief guest for India's Republic Day celebrations, the first Central Asian leader so honoured.
Beginning in 1992, Nazarbayev has made three earlier trips to the subcontinent. During his fourth visit India and
Kazakhstan are expected to initial several pacts, including a civil nuclear agreement. Nazarbayev and his delegation
will hold discussions with Indian Prime Minister Manmohan Singh, President PratibhaPatil and other high-ranking
In the requisite diplomatic niceties preceding Nazarbayev's visit, Kazakhstan's Ambassador to India Kairat Umarov told that "the Kazakh side is ready to cooperate with India because India's reputation is very high," adding that "since all formal hurdles have been overcome, there is a clear road to cooperate."
The relationship represents a marriage made in heaven, as India finally and fully breaks out of the international
criticism heaped upon it for its civilian nuclear energy program, which Delhi removed from International Atomic
Energy Agency safeguards, while Kazakhstan develops a potentially lucrative and permanent market for its uranium
exports. The arrangement dovetails nicely with the Kazakh government's intentions to boost its uranium exports to
become the world's leading producer, with Astana planning to increase output nearly 400 % over the next decade.
While this year Kazakhstan's uranium production quota is set at 11,900 tons, in 2008 Kazatomprom uranium production increased 28 % to 8,521 tons, still falling short of planned output by 1,080 tons. In 2007 Kazatomprom produced 6,637 tons of uranium.
Global recession notwithstanding, within the next two years Kazakhstan intends to boost its uranium output to 18,000
tons, overtaking Canada and Australia to become the world's largest producer of uranium. Kazakhstan's plans do not
stop there, however, as Astana seeks to reach an annual uranium production target of 30,000 tons.
Astana is betting that, although uranium prices fell by 40 % in 2008 in the global economic downturn, the reverse is temporary and the sticker shock of record-high oil prices will continue to raise global interest in nuclear power.
To sustain its economic progress, Delhi is increasingly interested in nuclear electrical power generation. While
Indian reactors currently account for 3 % to 4 % of the country's power needs, Delhi believes atomic energy is
critical to India's future economic growth, and has 19 plannedand proposed nuclear power reactors.
Indian media report that the Nuclear Power Corp. of India during Nazarbayev's visit is likely to sign a three-year contract with the Kazakh state-owned Kazatomprom nuclear holding company to obtain uranium for its new generation of pressurized heavy water reactors, which, unlike India's earlier indigenous nuclear reactor program, will be under International Atomic Energy Agency safeguards. Under the proposed agreement, NPCIL will begin to import at least 120 tons annually of Kazatomprom uranium.
NPCIL is not putting all its eggs in the Kazakh basket, having recently signed an agreement with France's public
industrial AREVA concern for 300 tons of uranium, while also seeking a similar arrangement with a Russian firm to
import 200 tons of uranium annually.
Kazatomprom is also broadening its contacts, in the last few years seeking out potential partners in Russia, Japan and China in an attempt to ensure that, rather than remain simply a source of raw uranium, it eventually can participate in all stages of the nuclear fuel production cycle. If Kazatomprom's ambitions come to pass, then by 2015 it will produce 30 % of the world's uranium, while via joint ventures it will be in a position to supply 12 % of the global uranium conversion market, 6 % of the enrichment market, and 30 % of the fuel fabrication market.
Kazakh-Indian energy cooperation is not limited to nuclear fuel. Getting more bang for its rupee, on Jan. 15 Indian
Oil Secretary Raghav Sharan Pandey told that following Nazarbayev's visit India expects to sign an agreement with the
Kazakh government for India's state-run explorer Oil and Natural Gas Corp. overseas arm ONGC Videsh to receive up to
a 40 % share in Kazakhstan's Caspian Satpayev exploration block.
Satpayev, one of seven projects being developed under Kazakhstan's state Program of Development of the Kazakh sector of the Caspian Sea, consists of the three prospective structures of Satpayev, Eastern Satpayev and Karina, which are estimated tocontain up to 253 mm tons of recoverable reserves, which is equivalent to 1.85 bn barrels.
Accordingly, Kazakhstan and India need each other to make their energy dreams come true. Both economies have
weathered the global economic downturn fairly well, but the bureaucracies in both countries will have to be prodded
to move the contracts from paper to reality. In the case of Kazakhstan's Caspian oil, India is behind a pack of
Western companies that have been operating there for years.
Reflecting this reality, Pandey commented on India's interest in Satpayev, "We will be happy if they allow us some stake."
While Astana's government energy accountants grapple with the global collapse of oil prices, one thing is certain --
India's energy demands can only increase.
Accordingly, Nazarbayev should attempt during his visit to make Pandey as happy as possible.