Kazakhstan: Gas Shortages Force Astana to Look Elsewhere

The government of Kazakhstan is looking to two of its neighbors on the Caspian Sea to solve a domestic gasoline crisis. Almaty has entered into talks with Turkmenistan and Azerbaijan, two states that are not only rich in oil as is Kazakhstan, but also boasts of stronger infrastructure to develop their natural resources. The Kazakh government has resisted initiatives that would see gas and oil prices rise as a result of the shortage, and would like to avoid this possibility by increasing imports.

There are two principal causes for the Kazak fuel shortage, both of which are tied to the Russian economy. Due to current sanctions placed on Russia, the price of fuel in Russia, from which Kazakhstan imports a third of its energy, is much higher than it is in Kazakhstan and in other states throughout Central Asia. Exacerbating the crisis is the Kazakh Central Bank’s decision to devalue the Kazakh tenge back in February of this year.

The decision to raise prices was made as a result of the Russian ruble decreasing in value following large capital outflow and general economic uncertainty in Moscow due to its activities in Ukraine. The issue of gas prices, thus, can be traced to Kazakhstan’s overwhelming dependency on Russia, particularly as it pertains to its energy sector.

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