HUH? Kazakhstan Is Using Its Oil Diversification Fund To Invest In Oil

Kazakhstan Stock Exchange Camel

Photo: Ken and Nyetta via Flickr

Kazakhstan is gaining a reputation of one of the world’s rising oil exporters, despite the riots that shook the Western, oil-producing region of the countries last year.In a bid to make sure that money gained from oil is used to secure the economy for future generations, the country started an oil fund in 2000 with $45.5 billion of the country’s huge profits.

The idea of course, is to invest in something that isn’t oil in a bid to make sure the country is not too exposed to risk in that sector.

So the news that the fund is investing 9% of its total amount in ventures in domestic fields and another venture in Romania left the FT’s Isabel Gorst a little confused.

“Normally producing countries set up an oil fund in order to weather the inevitable cyclical drop in prices and to invest in diversifying its economy away from oil,” Edward Chow, senior fellow at the centre for Strategic and International Studies told Gorst. “Oil prices are already at a historically high level. So it is unusual to invest money from an oil fund in a risky development project, which further exposes the country to commodity price risk.”

Read more about the investment at the FT’s beyondbrics blog >

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