Global Economics

Caspian Canal Could Boost Kazakh Trade


To boost his oil-rich country's access to markets, Kazakhstan's President plans a 700km link between the Caspian and Black seas

With an eye on global trade, Kazakh leaders want to build a new canal to bridge the Caspian and Black seas.

Kazakh President Nursultan Nazarbaev's proposal to build a new canal to connect the Caspian and the Black seas reinforces his ambition to enhance petroleum-rich Kazakhstan's competitiveness and gain access to bigger markets.

The Kazakh leader's call to build a 700-kilometer "Eurasia Canal" would, he says, transform landlocked Kazakhstan and all Central Asian countries into maritime states, enabling them to significantly increase trade volume.

While the canal would traverse Russian territory, it would benefit Kazakhstan through its Caspian Sea ports.

"The Central Asian and Caspian regions are rich in energy resources & but these reserves have to be delivered to world markets," Nazarbaev told participants at an international economic forum in St. Petersburg, Russia, in mid-June. The new canal, he said, would be a "powerful corridor" providing an outlet to global markets.

Nazarbaev wants to build a shorter, more direct channel between the Caspian and Black seas, supplementing a canal, the Volga-Don, which is a longer route and was completed more than 50 years ago. Nazarbaev has emphasized his desire to work with Russia on the plans.

Shortly after promoting the idea in St. Petersburg, Nazarbaev said in Ust-Kamenogorsk, Kazakhstan, "We have heard some of our Russian colleagues say that Kazakhstan will bypass Russian territory. But we will not bypass anyone. We are searching for routes that will benefit the export of Kazakh products. I say to Russia: let us build a canal!"

PLANNING STAGE

Amirkhan Kenshimov, deputy chairman of the committee on water resources at Kazakhstan's Agriculture Ministry, told TOL a few possible routes for the canal are now being scrutinized by a working group at Kazakhstan's Academy of Sciences. The group is expected to make recommendations by the end of the year.

"All the routes are planned to be laid entirely in Russian territory," Kenshimov said. The expansion of the existing Volga-Don shipping canal is not excluded but this would be the longest route, he said.

The Volga-Don canal links the lower Volga River, flowing into the Caspian Sea, with the Don River, which feeds the Sea of Azov to the north of the Black Sea. For a decade, tens of thousands of prisoners constructed that 101-kilometer canal. Completed in 1952, the waterway links the rivers at their closest point in Russia's Volgograd province.

This network allows an important shipping network between the Caspian and Black seas, and ultimately the Atlantic via the Mediterranean. Kenshimov says, though, that the capacity of the Volga-Don does not meet today's needs.

Serik Primbetov, deputy secretary-general of the Eurasian Economic Community (EAEC), has told local media that the existing Volga-Don canal can carry up to 13 million metric tons per year. The EAEC comprises the former Soviet republics of Belarus, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.

But some shippers complain of limited capacity and access to the Volga-Don route.

REGIONAL BENEFIT

The Kremlin actively supports building a new canal. In April, Russian President Vladimir Putin proposed an international consortium to build a second leg of the Volga-Don, a call that was freshly reiterated by First Deputy Prime Minister Sergei Ivanov. Ivanov has welcomed private and foreign capital, including that of Central Asian states, to expand the Volga-Don.

The RIA Novosti news agency quoted Ivanov as saying a concession to expand the canal is attractive to Russia's partners. "Joining the concession will actually turn Azerbaijan, Kazakhstan, and Turkmenistan into maritime countries," he said.

Kazakh authorities are optimistic about lining up investors for the Caspian -- Black seas project, which they estimate will cost $6 billion and take up to 10 years to build.

In St. Petersburg, Nazarbaev called for constructing a canal that would an almost straight shot across the North Caucasus, nearly 1,000 kilometers shorter than sending goods via the Volga-Don network. Half the distance is already covered by navigable reservoirs in the Kuma-Manych Depression of southern Russia.

GREATER CAPACITY THAN VOLGA-DON

According to Primbetov, the new canal would be 80 meters wide and 6.5 meters deep, accommodating vessels with a load-carrying capacity of 3,500 -- 5,500 tons as well as newer ships of up to 10,000 tons. Planners estimate the time to deliver cargo from the Caspian to the Danube at nine to 12 days.

The new canal's traffic handling capacity would be about three times greater than the Volga-Don canal. The canal would link the Caspian and Don via the Kuma and Manych rivers.

According to Kenshimov, governments and private businesses could participate in funding the Eurasia canal.

Kazakhstan possesses enormous fossil fuel reserves, other minerals, and metals for export. With its booming energy sector, economic reform, good harvests, and foreign investment, the country enjoyed double-digit growth in 2000 -- 2001 and 8 percent or more per year in 2002 -- 2006. Per capita gross domestic product in Kazakhstan last year was about $9,400, lower than in Russia ($12,200), but more than four times higher than in neighboring Uzbekistan.

Possessing about 26 billion barrels of proven oil reserves and 1.8 trillion cubic meters of natural gas, the country aims to produce as much as 3 million barrels of oil per day by 2015. This would lift it into the ranks of the world's top 10 oil-producing nations. It is the world's ninth largest country in land area and shares borders with China, Russia, Kyrgyzstan, Turkmenistan, and Uzbekistan.

Kazakhstan exported 52.3 million tons of oil in 2006, of which about 80 percent traveled through Russian pipelines. Main oil export routes are the Caspian Pipeline Consortium and the Atyrau-Samara oil pipeline to Russia, and Kazakhstan-China oil pipeline to China.

Kazakhstan is currently planning to build a port on the Caspian coast to transport its oil to the Baku-Tbilisi-Ceyhan pipeline when the gigantic Kashagan oil field starts production. But the country "can't depend on a single pipeline," Deputy Energy and Mineral Resources Minister Bolat Akchulakov told Dow Jones Newswires in late June. "It's an issue of diversification of export routes for us so that should something happen with one pipeline we have alternative routes of transportation."

Maksut Sarsenov, a political analyst from Kazakhstan's Association of Sociologists and Political Analysts based in Almaty, said a new canal "will give advantages to Kazakhstan, Russia, and other countries, which should have no objection." Goods from the region would reach different countries via the Mediterranean and the Atlantic more cheaply because of reduced transport costs and shipping time.

Along with Kazakhstan and Russia, the interested parties are Azerbaijan, Iran, and Turkmenistan, surrounding the Caspian; and Turkey, Romania, Bulgaria, Ukraine, and Georgia, bordering on the Black Sea in company with Russia.

ENVIRONMENTAL CONCERNS

But Bakhtiyar Albani, deputy head of Kazakhstan's Tabigat environmental union, is skeptical of benefits which the nation could reap of the new canal, calling the project "a dangerous utopia which can be reached but will finally result in colossal losses."

"The difference between the ecological systems of the Black Sea, which is a distant arm of the Atlantic Ocean by way of the Mediterranean Sea, and the Caspian Sea, can lead to a catastrophe," he told TOL. "The new trade route will undermine the environment, people's health and the economy."

He maintained that the project sprang from Nazarbaev's ambition to build "the project of the century."

Kenshimov, however, said the ecological impact of the project is being scrutinized thoroughly because "when the two seas are linked with each other, they will have a uniform flora and fauna."


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus