Atyrau’s blend of historical significance, economic prosperity, and strategic positioning makes it a unique and promising location for global investors. With continued efforts toward diversification and sustainable growth, the region is set to remain a dynamic force in Central Asia's economic landscape.
Atyrau, a city in western Kazakhstan, offers a compelling case for investment. Nestled on the cusp of Europe and Asia, Atyrau is more than just a geographical crossroads; it’s an economic hub that combines strategic location, abundant natural resources, and a growing infrastructure.
Kazakhstan, and by extension Atyrau, continues to attract significant FDI. In the first half of 2023, Kazakhstan received $4.1 billion in net FDI, an 86% increase compared to 2022. This growth is fuelled by investments in manufacturing, infrastructure, and renewable energy. Atyrau, as a cornerstone of the national economy, is a key beneficiary of this influx, particularly in energy and emerging industries.
The city's pivotal role in Kazakhstan's overall economic strategy, alongside its proximity to energy-rich resources, ensures that it remains a key recipient of FDI, with international energy giants continuing to expand their presence in the region.
Atyrau, as a critical hub for Kazakhstan's oil and gas industry, is a key beneficiary of the country's overall FDI inflows. the development of renewable energy and digital infrastructure has been attracting diverse investment into non-oil sectors across Kazakhstan and Atyrau region.
Atyrau's moniker as the "City of Dreams" is primarily tied to its thriving oil and gas industry. As the hub of Kazakhstan's energy sector, the city attracts people from across the country and beyond who are seeking well-paying jobs and career growth. The abundance of opportunities in the region has made it a destination for ambitious professionals and entrepreneurs looking to capitalize on the area’s economic boom.
The GDP per capita in Atyrau, Kazakhstan, stands significantly higher than the Kazakhstan national average. Atyrau's GDP per capita is approximately KZT 21.4 million tenge (about $46,000 USD), while the national GDP per capita for Kazakhstan is KZT 6.1 million tenge (about $13,000 USD). This makes Atyrau the wealthiest region in Kazakhstan in terms of economic output per person, outpacing other regions such as Almaty and Astana, which rank second and third, respectively
Atyrau's location near the Caspian Sea and along the Ural River made it a crucial settlement for early human populations and nomadic tribes.
It served as a key point along trade routes, especially during the time of the Silk Road, connecting Central Asia with Europe and the Middle East.
In the 17th century, Atyrau (then known as Guryev) was established as a fortified settlement by the Russians, under the reign of Tsar Michael I of Russia, the first Romanov tsar. The fortified settlement was initiated to protect Russian trade routes and fishing operations along the Ural River and the Caspian Sea.
The fortification served as a critical military and trading post, securing Russia's southern borders and enabling the empire to expand its reach into Central Asia. Over time, Guryev grew as a settlement due to its strategic importance for fishing, trade, and later, its proximity to oil resources discovered in the region. These factors laid the foundation for Atyrau's modern-day prominence as an economic hub in Kazakhstan.
1. Strategic Location at the Nexus of Continents
Atyrau sits at the heart of Kazakhstan's oil-rich western region and straddles the Caspian Sea, making it a gateway for trade between Europe and Asia. Its location is integral to Kazakhstan's role in the Belt and Road Initiative, facilitating connections across key global markets. Proximity to the Caspian ports also provides access to maritime trade routes.
2. A Thriving Oil and Gas Sector
Atyrau is often called the "Oil Capital of Kazakhstan." The region is home to some of the country’s largest oil fields, including Tengiz, operated by Tengizchevroil, and Kashagan, one of the largest offshore oil discoveries in recent decades.
Oil Refining Infrastructure: Atyrau hosts Kazakhstan’s largest oil refinery, which is undergoing modernization to meet international standards and environmental regulations.
Attractive Partnerships: International oil giants like Chevron, Shell, and ExxonMobil have a significant presence in the region, reflecting the area's importance to the global energy market.
3. Government Support and Incentives
The Kazakh government actively supports investment in Atyrau through the following:
Tax Incentives: Special Economic Zones (SEZs) offer reduced taxes and simplified procedures for businesses.
Infrastructure Development: Significant investments in transport and utility networks bolster Atyrau’s business environment.
Investment-Friendly Policies: Legal protections for foreign investors and streamlined processes for permits and licenses make Kazakhstan a top destination in Central Asia.
4. Diversification Beyond Energy
While oil and gas dominate, Atyrau is diversifying its economy:
Petrochemical Industry: The region is building facilities for the production of plastics, fertilizers, and other chemicals, aiming to add value to its natural resources.
Agribusiness: With fertile land near the Ural River, agriculture and aquaculture offer untapped potential.
Tourism: The city’s unique location and cultural heritage are attracting government and private initiatives in tourism development.
5. Expanding Infrastructure and Connectivity
Modern infrastructure is a cornerstone of Atyrau’s investment appeal:
Transport Links: The city is connected by rail, road, and air to major domestic and international markets.
Digital Infrastructure: Efforts to modernize telecommunications and foster a digital economy are underway.
Urban Development: Projects to enhance living standards, such as housing, healthcare, and education, aim to support a growing workforce.
6. Skilled Workforce
Kazakhstan boasts a highly educated and skilled workforce, especially in engineering and technical disciplines, thanks to its historical emphasis on science and technology. The government’s emphasis on vocational training further ensures a talent pool ready to support industrial and service sectors.
Atyrau stands as a beacon of opportunity for global investors. Its resource wealth, coupled with government support and strategic positioning, makes it an attractive investment destination. Furthermore, efforts to diversify the economy and improve infrastructure ensure sustainable growth for decades to come.
For investors seeking a foothold in Central Asia with access to global markets, Atyrau offers a dynamic, resource-rich, and investment-friendly environment. Whether in energy, manufacturing, or emerging sectors, the city is poised to deliver robust returns on investment.
For investors seeking a foothold in Central Asia with access to global markets, Atyrau offers a dynamic, resource-rich, and investment-friendly environment. Whether in energy, manufacturing, or emerging sectors, the city is poised to deliver robust returns on investment.
Investing in Atyrau, Kazakhstan like anywhere in the world , presents unique opportunities but also comes with some inherent risks. Potential investors should carefully consider the following factors:
Economic Dependence on Oil and Gas: Atyrau's economy is heavily reliant on the oil and gas sector. Fluctuations in global oil prices, shifts in energy policy, or technological advancements in alternative energy sources may significantly impact the region's economic stability.
Regulatory Environment: While Kazakhstan offers incentives for foreign investors, changes in regulations or enforcement practices may affect business operations. Investors should stay informed about local laws and ensure compliance to avoid potential challenges.
Infrastructure and Logistics Risks: Although Atyrau has a developed infrastructure, logistical challenges such as transportation bottlenecks or dependency on key export routes could pose risks, particularly for export-oriented businesses.
Currency and Financial Risks: The Kazakhstani tenge is subject to exchange rate fluctuations, which could impact the profitability of investments, particularly those with foreign currency exposure.
Environmental and Social Concerns: The energy sector in Atyrau faces scrutiny over environmental sustainability. Investors in extractive industries must account for potential costs related to environmental compliance and community relations.
Geopolitical Risks: As part of Central Asia, Kazakhstan operates in a complex geopolitical environment. Regional instability or shifts in international relations could influence investment conditions and investment outcomes.
Limited Economic Diversification: Although there are efforts to diversify, Atyrau's economy remains concentrated in a few industries. This lack of diversification can increase vulnerability to sector-specific shocks.
While Atyrau has significant economic potential, all investments are inherently uncertain.
Investors are strongly advised to conduct thorough due diligence, seek local expertise, and consult with financial and legal professionals to understand and mitigate any investment risks. Past performance is not indicative of future results, and investments in Atyrau may not be suitable for all investors.
Rainer Michael Preiss, Partner & Portfolio Strategist at Das Family Office in Singapore.
