By Daniel Hunter
Companies have signed deals worth more than £700 hundred million pounds during the historic first visit by a British Prime Minister to Kazakhstan.
Prime Minister David Cameron became the first British premier to visit Kazakhstan when he touched down there yesterday. A business delegation of 30 small and large companies from a diverse range of sectors including energy, high tech manufacturing, education, architecture and financial and professional services sectors have joined the Prime Minister for this historic trip.
Trade and Investment Minister Lord Green, Charles Hendry, the Prime Minister’s Trade Envoy to Azerbaijan, Kazakhstan and Turkmenistan are accompanying the Prime Minister. The Prime Minister will use the two day visit to Kazakhstan to help British businesses build new relationships in what is the leading Central Asian economy.
The UK and Kazakhstan already enjoy a strong trade and investment relationship based on free market access, significant two-way trade and regular dialogue at senior levels. The UK is one of the largest investors in Kazakhstan, having provided almost £10 billion of total foreign direct investment since the country’s independence in 1991. UK exports to Kazakhstan in 2012 were valued at £375 million, but the country remains a source of untapped potential.
Trade and Investment Minister Lord Green said:
"Kazakhstan is emerging as the dominant economy in central Asia and offers many opportunities for British businesses small and large across a wide variety of sectors. This first ever trade delegation led by a British Prime Minister demonstrates our commitment to strengthen the trade and investment links between our two countries.”
Since 2000, the economy of Kazakhstan has been one of the ten highest performing economies in the world. The World Bank predicts that it will become a high income country by the end of the decade.
There are significant and attractive development opportunities for British companies of all sizes across multiple sectors but especially in oil and gas where leading British companies including BG Group and Shell have long-term investments. Kazakhstan is currently developing the Karachaganak gas condensate field, one of the largest in the world and the Kashagan oil field, the largest deposit found in the last 30 years. The British government is confident that UK expertise and knowledge in this sector means that the UK is well positioned to secure a significant proportion of contracts due for award within the next 18 months with a value in the order of US$5 billion (£3.3 billion).
In addition to oil & gas there are also high profile opportunities in other sectors. There is growing co-operation in the vocational education and skills development arena. Kazakhstan has a large well-funded programme to expand, improve and modernise the sector.
Kazakhstan is hosting Expo 2017 in Astana. The theme of the Expo will be ‘Future Energy’. This presents commercial opportunities for UK companies in many sectors including renewables and green technology sectors as well as in architecture, event security and publicity. Kazakhstan will also host the 2017 Winter World Student Games which presents opportunities for British companies in design, construction and event management. Kazakhstan also has an ambitious new space technology development program and is devoting funds to further develop their scientific and technical knowledge.
Several British and Kazakh companies are expected to sign a number of contracts and memorandums of understanding to pave the way for closer co-operation between businesses from both countries in a number of areas.
Among the deals to be announced today in Astana are:
Dando Drilling International, based in West Sussex and a former two time Queen's Award winner for international trade today signed a MOU with the Kazakhstan government regarding a joint venture for the local production and assembly of mineral exploration, water well and geotechnical drilling rigs. The MOU is worth $33 million (£22 million) and will safeguard 50 jobs in the UK and create an additional 20.
North East-based Kilfrost, a global leader in de/anti-icing products, will sign a MoU with the Mayor of the City of Asana. The MoU is potentially worth around £50 million over the next five years, subject to contract negotiations, and there is the expectation for further growth.
UK Export Finance, has signed an agreement with United Chemical Company of Kazakhstan to collaborate on the possibility of offering export credit loans to assist the financing of a $4billion Integrated Petrochemical Complex and Infrastructure Project in Kazakhstan. UKEF will consider providing a guarantee for export credit loans of up to $800 million (£526 million) to support British companies bidding for contracts on the projects. One such company is Petrofac, which is part of an international consortium bidding for the engineering, procurement and construction (EPC) contract for a polyethylene production unit.
Petrofac, a leading international service provider to the oil and gas industry, has signed a MOU with KazMunaiGas Exploration Production JSC. The MOU allows the parties to explore opportunities to improve the efficiency of oil production and increase production from the mature Emba fields of KMG EP’s 100% subsidiary EmbaMunaiGas JSC.
SUN Gold Ltd, part of an international group that has invested in the UK since the 1980s in various sectors and has made significant investments in Kazakhstan, has announced it will increase its joint venture investment in the Yubileinoye gold mine. The joint venture's total stake in the mine, including prior investments, will total $400 million (£263 million). Production in the mine is expected to commence by the end of 2015.
Guildford-based Surrey Satellite Technology has signed a contract with Ghalam LLP for the collaborative design and development of the Kazakh Science and Technology Satellite system, which will include training for up to 18 Kazakh engineers. Under the terms of the contract Surrey Satellites will construct new optical satellites for future Kazakh space missions.
Atkins, the UK-headquartered design, engineering and project management consultancy, signed a MOU with sovereign wealth fund “Samruk-Kazyna” JSC to establish and develop long-term cooperation. This agreement is for an extendable period of 12 months. It covers potential projects around the areas of Aktau and Astana and is focused on the future provision of multidisciplinary design, project management and engineering services.
Virgin Mobile Central & Eastern Europe (VMCEE) and Kazakh Telecom JSC (KT) has entered into a Memorandum of Understanding (MOU) to investigate the feasibility of launching a Virgin branded telecommunications company offering innovative mobile and related services including broadband and TV to Kazakh consumers using Kazakh Telecom’s LTE, 3G and broadband network capabilities and infrastructure.
Aberdeen-based Wood Group will sign a joint venture for the repair and maintenance of turbomachinery rotating equipment. The joint venture is worth almost $5 million (£3.2 million) in people, equipment and training. Wood Group has recruited 4,000 people in the UK in the past year and is looking to hire many more in the next 12 months as a result of an increase of demand for its services from around the world.
Hampshire-based Optasense, a QinetiQ company, has signed a partnership agreement with Avencom, a leading technology supplier to Kazakhstan oil and gas companies, to provide its world leading Distributed Acoustic Sensing services. This technology will help companies in Kazakhstan to detect and prevent leaks in pipelines before they occur.
The Institute of Directors (IOD) announced its partnership with the Sovereign Wealth Fund “Samruk-Kazyna” JSC, to share its expertise in international corporate governance and executive education and to foster trade links with IOD members and the wider UK business community.
Churchill College in the University of Cambridge will sign a MOU with Kazatomprom to provide bespoke executive education through its subsidiary, the Møller Centre for Continuing Education.
In July, UCL will announce it will run a four-week Summer School for 40 Nazarbayev University School of Engineering students. The inaugural Summer School, which offers an exciting academic and cultural experience, forms part of UCL’s long-term partnership with Nazarbayev University.
The British Council has announced two new partnerships: A MOU with the Astana Mayor’s Office to support UK-Kazakhstan collaboration in the fields of education, training (including volunteering and English) and culture as part of Kazakhstan’s preparations for Expo 2017. The British Council has also signed a MOU with Orleu, the national teacher training organisation to support access to the best UK training and learning resources. As part of this, 250 Kazakhstan funded trainees will come to the UK each year for study at UK universities and colleges. This is expected to be worth £750k per annum to the UK sector.