Identifier
Created
Classification
Origin
05ALMATY1927
2005-05-20 11:11:00
UNCLASSIFIED
US Office Almaty
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE

Tags:  ECON EIND ENRG EPET EFIN KZ ECONOMIC 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS ALMATY 001927 

SIPDIS


DEPT FOR EUR/CACEN MUDGE
DEPT PASS TO OPIC - BALLINGER
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
DEPT PASS TO AID - EE-PHILLIPS/RUSHING
TREASURY FOR OASIA/VELTRI
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS
USDOC FOR 6110/ITA/TD/BI/RHALPERN
ANKARA FOR CFC

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ ECONOMIC
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE
May 1-14, 2005


UNCLAS ALMATY 001927

SIPDIS


DEPT FOR EUR/CACEN MUDGE
DEPT PASS TO OPIC - BALLINGER
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
DEPT PASS TO AID - EE-PHILLIPS/RUSHING
TREASURY FOR OASIA/VELTRI
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS
USDOC FOR 6110/ITA/TD/BI/RHALPERN
ANKARA FOR CFC

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ ECONOMIC
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE
May 1-14, 2005



1. Summary: This information is drawn primarily from the
Kazakhstani local press, and has not been checked for
accuracy. The opinions and policies expressed in this report
are those of the authors, not the U.S. government.

-- Mazhilis Committee Suggests Foreign Borrowing Limits
-- Pipe Plant Launched in Aktobe
-- Latvia Opens Trade Mission in Kazakhstan
-- Economic Statistics
-- KazMunayGaz Acquires 50% of BG's Kashagan Share
-- GoK Outlines Caspian Port Development
-- First Kazakhstani Tanker to Arrive at Aktau Port
-- Kazakhstan Restricts Turgai Petroleum Oil Production
-- Atyrau Oblast Administration Criticizes Foreign
Companies


Mazhilis Committee Suggests Foreign Borrowing Limits
-------------- --------------


2. "Inflation is being pushed in Kazakhstan by a huge amount
of external borrowing by commercial banks, and almost
uncontrollable foreign borrowing by the national private
sector. Therefore, it would be effective to introduce a
parliamentary approval system over ceilings for corporate
foreign borrowing," Chairman of the Committee on Finance and
Budgeting Kenzhegali Sagadiev said during a joint session of
Parliament. According to him, "as of September 30, 2004,
inter-company debt grew two-fold over the past four years,
from $6.9 billion in 2000 to $13.6 billion in 2004."
Sagadiev defined it as a threat to national economic
security. (Interfax-Kazakhstan, May 06)

Pipe Plant Launched in Aktobe
--------------


3. On May 12, Kazakhstani President Nursultan Nazarbayev
participated in the opening ceremony of a plant producing
pipes and fittings using glass fiber-fortified polyester.
This project was implemented by Hobas Pipes Kazakhstan Ltd.
and financed by a 14.7 million Euro loan from the state-owned
Development Bank of Kazakhstan. The design capacity of the

plant is 190,000 meters of pipe with diameters ranging from
200 mm-1.4 m per annum. The estimated useful life of the
pipes is 80-100 years. These products are intended for the
domestic market to provide the population with high-quality
potable water. (Interfax-Kazakhstan, May 12)

Latvia Opens Trade Mission in Kazakhstan
--------------


4. The Latvian Investment and Development Agency opened its
representative office in Kazakhstan in 2002; however, now
Latvia has decided to open its trade mission in the republic
in order to expand commercial bilateral ties. The trade
mission's head, Andrejs Pumpurs, reports that trade turnover
between Latvia and Kazakhstan was $11.5 million last year,
which is up 85.9% compared to 2003. The key objective of the
mission will to provide Kazakhstani businessmen with
information about Latvian business opportunities, its
national laws and tax system. (Interfax-Kazakhstan, May 12)

Economic Statistics
--------------


5. The net profit of the republican state enterprise Aktau
International Trade Seaport on the Caspian Sea was KZT
344,347,000 (approximately $2.7 million) in the first quarter
of 2005, according to the company's financial statements
published in the official press. The seaport's net profit in
Q1 2004 was KZT 530,710,000 (about $4.1 million). As
reported elsewhere, Aktau seaport transshipped a total of 2.7
ml tons of freight in January-March 2005. (Interfax-
Kazakhstan, May 06)


6. Kazakhstan Temir Zholy (KTZ),the national rail company
of Kazakhstan, closed the first quarter of 2005 with a net
loss exceeding KZT 1.427 billion (approximately $11 million.)
The company drew a net profit of KZT 915.3 ml (approximately
$7 million) in January-March 2004. Currently, the company
accounts for more than 68% of the total cargo turnover and

over 57% of passenger turnover in the country. More than
125,000 people are employed in Kazakhstan's railway industry.
(Interfax-Kazakhstan, May 11)

KazMunayGaz Acquires 50% of BG's Kashagan Share
-------------- --


7. On May 4, Agip KCO and the GoK finalized Kazakhstan's 50%
purchase of British Gas's (BG) share (16.67%) in the North
Caspian project for $913 million. Approximately $300 million
of the sales price went for cash calls made since the initial
sale was announced in 2003. At present, ENI, ExxonMobil,
Shell and Total each control 18.52%, up from 16.67% while
ConocoPhillips has 9.26% versus 8.33% before the purchase.
INPEX and state producer KazMunayGaz (KMG) each have 8.33%.


8. KazMunayGas (KMG) President Uzakbay Karabalin announced
that Kazakhstan self-financed the purchase, thanks in part to
internal company restructuring. Kazakhstani Energy Minister
Vladimir Shkolnik reported that during the life of the 40-
year PSA, Kazakhstan will earn $60 billion, and the
consortium will gross $85 billion, though $57 billion of that
is cost oil. (Interfax - Kazakhstan, May 09)

GoK Outlines Caspian Port Development
--------------


9. The GOK announced that Kazakhstani oil transport across
the Caspian will increase from 4.8 million tons in 2004 to 38
million tons per annum in 2016. The government plans to
conduct a feasibility study of Kuryk, a new port south of
Aktau, as well as to increase Aktau's capacity. There are
also plans to construct a railway and highway from Kuryk to
Atyrau, and to build a shipyard. (Interfax - Kazakhstan, May
09)

First Kazakhstani Tanker to Arrive at Aktau Port
-------------- ---


10. KazMorTransFlot (KMTF) announced the arrival in Aktau of
the first Kazakhstani tanker, "Astana," on May 22. The
12,000 ton tanker was built at Russia's Vyborg ship yard.
(Interfax - Kazakhstan, May 09)

Kazakhstan Restricts Turgai Petroleum Oil Production
-------------- --------------


11. Kazakhstan's Energy Ministry limited oil production at
Turgai Petroleum, a Lukoil/PetroKazakhstan joint venture,
because of excessive flaring. Daily oil production was
restricted by 24,800 barrels in response to alleged
environmental damage caused by gas flaring at the Kumkol
field. The reduction is one one-third of planned production
for 2005. The production limits will remain in force during
2005 until the company adheres to a December 2004 law on
"full gas utilization." (Interfax - Kazakhstan, May 02)

Atyrau Oblast Administration Criticizes Foreign Companies
-------------- --------------


12. On April 25, the appointed governor of Atyrau Oblast
charged foreign companies with discriminating against local
employees. He singled out ChevronTexaco's TCO, Agip KCO, and
the state owned Atyrau refinery. The same day, the Oblast
Administration and 136 foreign companies signed a bilateral
labor agreement. (Interfax - Kazakhstan, May 02)

ASQUINO


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