This week, the media in Central Asia covered several significant diplomatic stories, such as the Astana International Forum and the Central Asia-Italy summit. They also covered important energy stories like Uzbekistan and Bell Energy signing deals worth $660 million and the CPC’s plans to ship one billion tons of crude oil by October 2025. Several sources noted that the eight OPEC+ countries, including Kazakhstan, plan to raise oil production in July, and reports that the international shareholders in Kazakhstan’s Karachaganak oil and gas field are reluctant to invest in a new gas processing plant. Other outlets highlighted Uzbekistan signing 20 investment agreements with companies from China’s Fujian Province and the Kazakhstani-French Investment Forum.

Diplomatic Events:

Italian Prime Minister Giorgia Meloni toured Central Asia last week. On May 28, she arrived in Samarkand for talks with Uzbekistani President Shavkat Mirziyoyev (Kun). Their discussions focused on strengthening the strategic partnership between the two countries. In recent years, bilateral trade has tripled, and joint projects have doubled (Kun). President Mirziyoyev proposed a technological partnership program with some of Italy’s major companies during their meeting. They also outlined the principal areas of future cooperation in the metallurgical, mining, agricultural, manufacturing, and textile industries. Both leaders explored establishing a joint investment fund. Additionally, they indicated their support for several educational initiatives, such as dual-degree programs and Tuscia University opening a branch in Uzbekistan. They also formalized other agreements with Turin, Pisa, and Perugia universities. After their deliberations, the two leaders signed several agreements, including an agreement to expand technical assistance for businesses, establish a certification center in Tashkent, and accelerate the conclusion of a conformity assessment agreement to aid Uzbekistani entrepreneurs in accessing the EU market. They also signed agreements concerning the protection of investments, cooperation in the critical mineral sector, cooperation on sustainable development and environmental and cultural protection, and a partnership between the Climate Fund, the Italian Confederation of Agriculture, and Sogesid and Ansaldo. The two leaders concluded a migration partnership and adopted a joint declaration on enhancing relations. In addition, they committed to reinvigorating the intergovernmental working group and hosting a business forum. The Uzbekistani side also signed several deals with the Italian National Research Council, SIMEST, and Danieli.

Continuing her tour of the region, Prime Minister Meloni arrived in Astana on May 29 (The Astana Times). Upon arrival, she met with Kazakhstani President Kassym-Jomart Tokayev, who highlighted Italy as one of Kazakhstan’s key partners in Europe. Italy is currently Kazakhstan’s third-largest trading partner and its most significant partner in Europe. Both leaders discussed expanding economic and trade ties (The Astana Times). Trade turnover between the two countries increased by 24% in 2024 to $20 billion. President Tokayev noted that Italy has invested $7.6 billion in Kazakhstan in the past twenty years. Both countries signed a joint declaration following their meeting, growing their strategic partnership. Additionally, they signed agreements on the readmission of persons, cooperation in the critical minerals sector, a memorandum on cooperation between Samruk Kazyna Sovereign Wealth Fund and Maire Tecnimont, a cooperation agreement between Samruk Kazyna and Ansaldo, a memorandum on a water management cooperation program, a joint declaration between the Development Bank of Kazakhstan, Cassa Depositi e Prestiti, and SACE, a memorandum of understanding between Samruk Energo and SACE, and a memorandum on cooperation between the Kazakhstani Invest national company and the Italian Trade Agency.

Before Prime Minister Meloni arrived in Astana, a Kazakhstani-Italian business and supply chain forum took place on May 28 (Kazinform). Representatives of several enterprises from both countries, including Samruk-Kazyna, KazMunayGas, Eni, Maire Tecnimont, and Ansaldo Energia, attended the forum. Companies from the two countries signed ten memoranda of understanding valued at $180 million. The deals cover metallurgy, petrochemicals, energy, agriculture, engineering, and digitalization. Addressing the forum, Kazakhstani Prime Minister Olzhas Bektenov noted that bilateral trade in the first quarter of 2025 reached $4.4 billion. Kazakhstani Minister of Trade and Integration Arman Shakkaliev announced the “Made in Kazakhstan with Italy” initiative to increase technological cooperation. The initiative will create industrial clusters specializing in engineering, petrochemicals, and green energy and establish local assembly plants for Italian companies in Kazakhstan’s special economic zones. They also plan to initiate the Digital Supply Chain 4.0 project with blockchain-based tracking, produce 100000 tons of sustainable aluminum and ferroalloys by 2027, and develop a new transport corridor. In addition, they agreed to create a joint investment fund and compile an ESG roadmap. KazakhExport and Italy’s SACE also considered ways to insure export risk.

Kazakhstani Economy Minister Serik Zhumangarin met with the head of Tramite Group, Gianantonio Tramet, to discuss expanding cooperation in the agricultural sector (Kazinform). They also explored the new joint agricultural investment fund. Initially, the fund will control €500 million, with annual turnover expected to be around €1 billion. Italian investors, including SIMEST, will control 51% and Baiterek Holdings 49%. The fund aims to establish joint supply chains of agricultural products and a platform to facilitate the purchase of more Kazakhstani produce. They noted that seven major food companies in Italy are interested in establishing production facilities in Kazakhstan. Finally, they highlighted AGRIQA Asia’s €200 million agro-industrial cluster in Turkistan.

On May 30, Prime Minister Meloni attended the Astana International Forum, where she called for courage in looking beyond old geographical boundaries (The Astana Times). She also noted that Italy was the first European country to develop relations with Central Asia and foregrounded the need to cooperate in critical minerals, energy, and combating climate change. Prime Minister Meloni also attended the Italy-Central Asia summit on May 30, along with all the heads of state from Central Asia (The Astana Times). In their deliberations, the leaders prioritized economic and trade ties, specifically increasing agricultural exports to European markets. They also explored connectivity, energy, and environmental sustainability. President Tokayev noted that Kazakhstan remains one of the top oil exporters to the EU, remarking that oil exports to Italy increased by 27% to over 30 million tons in 2024. However, he emphasized his country’s commitment to sustainable energy production and thanked Italian companies for their involvement in such projects. He also proposed a joint research center focusing on critical minerals and invited Italian universities to open branches in Kazakhstan. President Tokayev also revealed plans to double container traffic along the Trans-Caspian International Transport Route in three years (Kazinform). Last year, container traffic on the route increased by 62% to 4.5 million tons. Meanwhile, President Mirziyoyev highlighted the potential of practical and result-based cooperation, focusing on security, trade, industrial, technological, cultural, and energy cooperation (Kun). For instance, he advanced the idea of a Central Asia-Italy Scientific and Educational Consortium and a Central Asia-Italy Business Club. The summit concluded with the adoption of a joint statement. The leaders agreed that Kyrgyzstan will host the next summit in 2027.  

On May 28, Rwandan President Paul Kagame arrived in Astana for an official visit (The Astana Times). During his meeting with President Tokayev, they explored ways of increasing bilateral cooperation in agriculture, trade, digitalization, and transport. Kazakhstani Foreign Minister Murat Nurtleu also met his Rwandan counterpart, Olivier Nduhungirehe, on May 28. They highlighted the importance of increasing contacts and cooperation, particularly in digitalization, given Kazakhstan’s e-Gov system and Rwanda’s Smart Rwanda Initiative. Bilateral trade declined 94.3% from $6.7 million in 2023 to $381,700 in 2024. However, in the first quarter of this year, trade turnover reached $104,700, an increase of 14.4%. President Kagame also attended the Astana International Forum.

Renewable Energy:

This week, the second ministerial roundtable on the Kambarata-1 HPP occurred in Dubai (24.kg). Energy ministers from Kazakhstan, Uzbekistan, and Kyrgyzstan attended the meeting. Representatives from the three countries confirmed their commitment to the project. They also explored the project’s updated feasibility study, social and environmental assessments, cost estimates, and grid modernization. Officials from the World Bank also attended and stated their readiness to provide technical assistance. The Kambarata plant is expected to be built on the Naryn River in Kyrgyzstan and have a capacity of 1860 MW. It is considered a key regional initiative strengthening Kyrgyzstan’s and the region’s energy security.

Oil and Gas:

The Egyptian company Bell Energy will invest $660 million into several projects in Uzbekistan’s Karakalpakstan region (Daryo). A delegation concluded the deal with Bell Energy during a working visit to the UAE. They signed five memoranda of understanding on constructing underground storage facilities for petroleum products, developing the Kayraktas gold deposit, producing energy from waste, establishing bamboo plantations to produce bioethanol and aviation fuel, and a social initiative to improve child welfare. Last week, Bell Energy also held talks with Uzbekneftegaz on upgrading production facilities.

Kazakhstani Prime Minister Olzhas Bektenov recently met with CPC General Director Nikolay Gorban (Orda.kz). They discussed oil transportation and investment projects like modernizing the Tengiz–Novorossiysk pipeline. They explored plans to increase oil transportation through the CPC significantly. There are plans to increase throughput from 53.7 to 72.5 million tons on the Kazakhstani section and from 67 to 81.5 million tons overall. In addition, they anticipate total crude shipments reaching one billion tons by October 2025, after the completion of the CPC Bottleneck Elimination Project. Gorban noted that they had successfully repaired the Kropotkinskaya station following a Ukrainian drone attack earlier this year. He also mentioned that they completed a project with KazTransOil to connect the pipeline and the T. Kasymov station.

The eight OPEC+ countries, including Kazakhstan, announced a significant hike in oil production in July (Interfax). The increase amounts to an additional 411000 barrels per day. The groups made a similar decision in May and June. However, they also reaffirmed their commitment to compensating for overproduction since January 2024 (OPEC). OPEC+ is raising oil production quicker than expected despite prices remaining low. This increase comes as Kazakhstan has warned OPEC that it will not lower production despite earlier committing to compensate for its previous overproduction (Reuters). Earlier, Reuters reported that Russia and Saudi Arabia were mulling significant increases in production to punish their overproducing OPEC+ partners, such as Kazakhstan (Reuters).

Speaking to reporters after a meeting with Italian Prime Minister Meloni, Kazakhstani Deputy Prime Minister Roman Skylar noted that Russia is facing difficulties equipping three combined heating and power plants in Kazakhstan (Kursiv). He acknowledged that if the Russian side failed to deliver the necessary equipment, the Kazakhstani government would have to find another investor. He said the issue was related to the “subsidized interest rate for the equipment” and obtaining concessional export financing for the project. Under the deal, Russia is supposed to supply Kazakhstan with concessional funding for the plants in Kokshetau, Semey and Ust-Kamenogorsk. The government expects the projects to cost $2.4 billion. While Kazakhstan’s Samruk-Kazyna will remain the owner of the plants, the government appointed Russia’s Inter RAO as the principal contractor.  

In the first four months of 2025, Tajikistan’s extractive industries reported the production of 6.9 billion somoni in resources, nearly doubling their output compared to the same period last year (Kazinform). Coal production increased by 12.6%, while crude oil and gas rose 2.9 times. The amount of metal ore mined grew 1.9 times, while the extraction of other minerals increased by 44.2%. However, Asia Plus reported this week that Tajikistan experienced significant losses of electricity in 2024, totaling 1.3 billion kilowatt hours or 20.5% of production (Asia Plus). They also noted that the authorities collected only 83.5% of payments for electricity. Moreover, only 89.9% of households paid for the electricity they consumed. Central Asian countries, especially Tajikistan and Kyrgyzstan, continue to experience electricity shortages due to insufficient production and inefficient grid networks.  

Kursiv has reported that foreign shareholders in the Karachaganak Petroleum Operating Company (KPO), the owner of the Karachaganak field, are reluctant to invest in a gas processing plant at the field (Kursiv). Nurlan Zhumagulov, an energy expert who runs the Energy Monitor Telegram channel, reported the news. The plant will cost around $3.7 billion. However, the foreign shareholders are only willing to cover $2.7 billion and want the Kazakhstani government to provide $1 billion in financing. He added that the government would likely reject these terms but emphasized that production in the field would continue. Nevertheless, he admitted that negotiations over extending the production-sharing agreement were unlikely to proceed. The government has already replaced the current construction contractor but is expected to stick with Hyundai Engineering as the general contractor. According to earlier reports, the government issued an ultimatum to the field’s stakeholders, ENI and Shell, to approve the plant by June 2025 (Kursiv). The field holds 1.2 billion tons of oil and 1.35 trillion cubic meters of natural gas and is being developed under a 40-year production-sharing agreement signed with an international consortium.

In the first four months of 2025, Kazakhstan’s oil exports fell by 20% or 12% year-on-year to $16.4 billion, a reduction of $2.2 billion (Kursiv). Exports to all markets, including China and the EU, declined. A decline in shipments and lower oil prices drove this trend. Brent crude prices have decreased 9% year-on-year. However, Kazakhstan only exported 15.4 million tons in the first quarter, down 2.5 million tons or 14% year-on-year. Nevertheless, the government feared a steeper contraction after a Ukrainian drone attack on the Kropotkinskaya pumping station of the CPC, which carries 80% of Kazakhstani oil exports. Despite the attack, shipments along the CPC increased 3.8% over the quarter. The decrease can be attributed to Asian markets, such as China and South Korea. In the first quarter, China’s oil imports fell by 1.5% overall, accounting for half of the decline in Kazakhstani oil exports. South Korea has also completely halted all oil imports from Kazakhstan. Meanwhile, Kazakhstan has substantially increased domestic production, with the Third Generation Plant at the Tengiz field beginning operations in January. Overall, domestic production rose 7.4% to 24.6 million tons in the quarter. The Ministry of Energy has reaffirmed its goal of increasing oil production by 10% from 87.7 million tons to 96.2 million tons.

Investment:

On May 26, a delegation from China’s Fujian Province visited Tashkent (UZ Daily). During their visit, they signed 20 agreements with various Chinese companies, including Xiamen ITG Group, Fujian Xinwancheng Investment, Fujian Sitong Stone Company, and Fuzhou Fuqiang Precision, boosting bilateral trade and investment. The agreements concern various sectors, such as construction, textiles, mining, and manufacturing. The Agency for Foreign Investment Attraction signed a memorandum of understanding with the China International Fair for Investment and Trade to promote Uzbekistan’s investment potential.

Between May 21 and 23, Uzavtosanoat met with several Italian auto companies to explore localizing auto parts production in Uzbekistan (Kun). They met with the Mayor of Turin, Stefano Lo Russo, ahead of a business forum in 2026 involving companies from Turin to be held in Uzbekistan. Over 120 Italian companies attended an automotive business forum in Turin, including Webasto, Magna, Marelli, Sogefi, and Pininfarina. They established multiple working groups to advance these localization efforts. They also finalized a cooperation agreement with the Polytechnic University of Turin and a deal to provide funding through Italy’s Green Fund for a project to introduce hydrogen-fueled public transport in Uzbekistan. This forum comes amid Italian Prime Minister Giorgia Meloni’s visit to Central Asia.

Kazakhstani and French enterprises finalized 15 agreements during the Kazakhstani-French Investment Forum in Astana on May 28 (The Astana Times). The concluded agreements concern several sectors: energy, tourism, healthcare, and water management. For instance, Air Liquide and the Kazakhstani government signed a deal to expand domestic fuel production capacity. The French digital services company Clever Cloud also signed an agreement with QazCloud to collaborate on AI, and the Akimat of Karagandy approved a deal with the French company Suez on water management. Kazakhstani Prime Minister Olzhas Bektenov and French Minister Delegate for Foreign Trade, Economic Attractiveness and French Nationals Abroad, Laurent Saint-Martin, attended the event. Prime Minister Bektenov highlighted that Kazakhstan is France’s principal partner in Central Asia, accounting for 80% of its trade with the region. Last year, trade surged by 31% to $5.5 billion. France is also one of the largest EU investors in Kazakhstan, with 200 French companies investing over $20 billion, such as Total Energies, Danone, Lidea, Lactalis, EDF, Orano, Axens, Assystem, and Schneider Electric. Bernard Fontana, the Chairman and Chief Executive Officer of EDF, one of the prospective contractors for Kazakhstan’s first nuclear energy project, attended the forum. She emphasized the potential contribution of EDF to the project and the importance of ensuring sovereignty in nuclear energy.

Environment:

An International Conference on Glacier Protection took place in Dushanbe from May 30 to 31 (Asia Plus). The conferences explored glacier melting, water access, and threats to small island countries. Following discussions, the conference adopted the Dushanbe Declaration. The declaration underlines the threat melting glaciers pose to the water supply for millions of people. It called for the rapid reduction of greenhouse gas emissions, the installation of glacier monitoring technology, increased research and information sharing, and the development of solutions. The conference also announced the creation of a coalition of governments, international organizations, and research institutes to combat the rapid melting of glaciers, improve coordination and information sharing, and attract investments. The head of the World Meteorological Organization, Andrea Celeste Saulo, emphasized the need to provide more funding for research. They also proposed integrating environmental studies into school curricula. In addition, the conference created an international fund to support the installation of monitoring equipment, scientific research, and the restoration of water sources. During the conference, Tajikistan was formally accepted into the International Union for the Conservation of Nature, a body of governments and other expert organizations. In his speech, President Rahmon noted that glacier melting has accelerated in recent years. He highlighted that one-third of the world’s glaciers had already disappeared. In 2023, glaciers lost 600 gigatons of water. Overall, the acceleration of glacier melting poses significant challenges regarding water security for regions such as Central Asia.

Economic Forecasts:

The Kazakhstani recently released the results of a survey conducted among representatives of financial organizations (Kursiv). Inflation expectations increased. Respondents expect inflation to be 10.7% in late 2025, compared to the previous figure of 10.6%. Inflation expectations for 2027 also rose from 6.1% to 6.8%. Inflation stood at 10.7% in April. As a result, they have also increased their forecasts for the base interest rate from 15.9% to 16.3% for late 2025, from 14.3% to 14.5% for 2026, and from 11.5% to 12% for 2027. However, they now expect GDP growth of 5% instead of 4.7%. GDP grew by 6% in the first four months of 2025. Nevertheless, they expect growth to slow in 2026 and 2027 to 4.5% and 4.3% respectively. They downgraded their estimates for crude oil prices to $69.30 per barrel in 2025, down from $75. Meanwhile, they anticipate $66 per barrel in 2026 and $66.20 in 2027. Regarding the Tenge, they expect it to weaken against the U.S. Dollar. They forecast the exchange rate to range from 510 to 514 Tenge per U.S. Dollar in 2025, 532 to 540 Tenge per U.S. Dollar in 2026, and 550 Tenge per U.S. Dollar in 2027. Lastly, they anticipate exports dropping from $92.2 billion to $91.1 billion in 2025, while imports will decline to $75.1 billion from $75.3 billion. These figures come amid news that Kazakhstan failed to meet its fiscal goals in 2024, such as reducing the non-oil budget deficit, which excludes revenues from extractive industries (Kursiv). The government attributes this to surprisingly high revenues from oil export duties, totaling $3.4 billion instead of the planned $2.9 billion. This is the only oil revenue reported under the budget rather than the National Fund. The Public Finance Management Concept through 2030 outlines a reduction in the non-oil deficit to 5% of GDP. In 2024, they planned to reduce it to 7.9%. However, it was slightly higher at 8% or $22.6 billion. Total GDP was marginally lower than expected at $286 billion instead of $287 billion. Nevertheless, the budget deficit was less than expected at 2.7% of GDP instead of the forecasted 2.9%. In 2025, revenues will fall from $45.8 billion to $41.7 billion, while expenditures will fall from $50.3 billion to $49 billion, resulting in a deficit of $8.7 billion or 2.7% of GDP.