KAZAKHSTAN ECONOMIC AND ENERGY UPDATE

UNCLAS ALMATY 003476

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E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ ECONOMIC
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE
September 4 - September 17, 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.

-- WTO Protocol with China Signed
-- E-Government Contract with Alcatel
-- Changes in Air Astana Management
-- Transfer of International Flights to Astana
-- Economic Statistics
-- Kazakhstan to Order Construction of 60,000 Ton Tankers
-- Aktau Port Expansion Project
-- Ukraine, Kazakhstan to Expand Black Sea Terminal
-- Oil & Gas Statistics

WTO Protocol with China Signed
--------------


2. Kazakhstan and China completed bilateral talks on market
access for goods and services, a necessary step in the WTO
accession process. The agreement was signed in Beijing on
August 31. According to a press release from the Ministry
of Industry and Trade, "the sides agreed on the level of
import duties on commodities of mutual interest and the
commitments of Kazakhstan regarding access to its services
market". (Interfax-Kazakhstan, September 3)

E-Government Contract with Alcatel
--------------


3. The French company Alcatel and the Kazakh Agency of
Informatization and Communication (AIC) signed a memorandum
of understanding (MoU) to provide Kazakhstan with an e-
government solution. According to the MoU, Alcatel will be
the systems integrator for conceptual elaboration and
implementation of the pilot e-government program in Astana
and Almaty. The MoU also states that after successful
completion of the pilot projects in 2006-2007, Alcatel will
deliver the solution nationwide. (Global Insight Daily
Analysis, September 8)

Changes in Air Astana Management
--------------


4. The senior Management of JSC "Air Astana" will change
before the end of September 2005. A source inside the
company reported that, as part of a planned staff rotation
the current head of Royal Brunei Airlines (RBA) Pengiran
Dato Abdul Hamid will replace the current President of "Air
Astana" Lloyd Paxton. (Kazakhstan Today, September 8)

Transfer of International Flights to Astana
--------------


5. Agreements on the transfer of international flights from
Almaty to Astana were reached with Turkey and Austria, the
Director of the Committee for Civil Aviation, Almatbek
Mambetov reported. According to him, "Turkish Airlines will
begin flights from Istanbul to Astana two times per week at
the end of September 2005; and Austrian authorities plan to
launch direct flights from Vienna to Astana in March 2006."
Mambetov added that the Committee is conducting similar
negotiations with Great Britain and The Netherlands.
(Golden Eagle Service, September 9)

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


6. Gold and currency reserves (GCR) of Kazakhstan,
including National Bank gross reserves and reserves
accumulated at the National Fund, increased by 1.7% in
August making $13,209.3 million. As the National Bank of
Kazakhstan (NBK) informed, in August the assets of the
National Fund made $5,393.3 million; the NBK net GCR rose by
0.7% making $7,807.8 million. (Interfax-Kazakhstan,
September 7)


7. The volume of the money supply in Kazakhstan increased
by 1.8% in July 2005, to KZT 1,866.1 billion (approximately
$13.8 billion). According to a press release of the
National Bank of Kazakhstan, "cash in circulation rose by
2.6% during July make KZT 399.5 billion (about $3 billion),
whereas deposits made with banks and credit cooperatives
increased by 1.6% to KZT 1,466.5 billion (about $10.8
billion)". (Interfax-Kazakhstan, September 8)

Kazakhstan to Order Construction of 60,000 Ton Tankers
-------------- --------------


8. The state merchant marine company KazMorTransFlot (KMTF)
plans to order 60,000 ton tankers at Astrakhan shipyards
(Russia),KMTF's First Deputy Director General Kozhamkulov
reported on September 14. Within the GoK program for the
construction of the Kazakhstani tanker fleet, the company
has ordered three 12,000 ton tankers at the Vyborg shipyard
(Russia). Two of the three have already delivered to the
Aktau port (Caspian Sea). (Interfax - Kazakhstan, September
19)

Aktau Port Expansion Project
--------------


9. The three-year Aktau port expansion will require about
KZT 33 billion (approximately $246 million) with a payback
term of about 17 years, Corporate Development Department
Director of Aktau port Kutpanbaev reported on September 16.
The state's participation will be over KZT 11 billion (about
$82 million). According to the official, "it will likely be
(funded by) the state development bank." The first tranche
of about $25 million of state funds will be used by the end
of 2005 or the beginning of 2006 for water-development works
to secure safe and stable operations inside a new harbor.
(Interfax - Kazakhstan, September 19)

Ukraine, Kazakhstan to Expand Black Sea Terminal
-------------- ---


10. Ukrtransnafta, Ukrainian pipelines national operator,
and KazMunayGaz Trade House, a subsidiary of the national
oil producer KazMunayGaz, signed documents to set up a joint
venture (JV) to expand the Yuzhny oil terminal (North-east
of Odessa) infrastructure and construct a 52-kilometer
section of oil pipeline to link the terminal with the
Dniester trunk pipeline system, according to Ukrtransnafta
reports on September 15. The JV was established based on a
mutual desire of Ukraine and Kazakhstan to increase oil
transportation through the Odessa-Brody pipeline system.
The cost of the project is about $150 million. (Interfax -
Kazakhstan, September 19)

Oil & Gas Statistics
--------------


11. In 2005 Kazakhstan will produce 61 million tons of oil
and gas condensate and 28.7 billion cubic meters of gas,
Kazakhstan Energy Minister Shkolnik said during
international conference in San Diego last week. In 2004
Kazakhstan produced over 59 million tons of oil and gas
condensate. In January-August 2005, oil production in
Kazakhstan was 40.8 tons of oil and gas condensate, 5.5%
higher than during to the same period in 2004, the National
Statistics Agency reported. During the same period, 10.3
billion cubic meters of natural gas, up 43% year-on-year,
were produced. (Interfax - Kazakhstan, September 19)

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