KAZAKHSTAN ECONOMIC AND ENERGY UPDATE

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E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ ECONOMIC
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE
November 13 - November 26, 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.

-- Early Repayment of Foreign Loans in 2005
-- WTO Protocol with Japan Signed
-- ADB and Kazakhstan: New Forms of Cooperation
-- New Owner of Karaganda Airport
-- Economic Statistics
-- Kazakhstan-China Pipeline Completed
-- Plans of the International Consortium Agip KCO
-- TCO to Export Tengiz Oil by the Southern Route
-- EBRD and DBK to Finance North-South Power Line

Early Repayment of Foreign Loans in 2005
--------------


2. "Taking into account current conditions in the
international loan market and in order to sterilize the
excessive money supply, the Finance Ministry took a decision
to repay ahead of schedule those foreign loans of the
government that are most expensive to service. The amount
of money to be paid is $849 million, which is equal to KZT
111 billion," Finance Minister Dunayev announced at a
government meeting on November 21. (Interfax-Kazakhstan,
November 21)

WTO Protocol with Japan Signed
--------------


3. Kazakhstan completed bilateral talks with Japan on the
conditions for the access of goods and services to its
market. A protocol to this effect was signed in Astana on
November 23. Japan is one of the G-8 countries with which
Kazakhstan concluded the negotiations. As Industry and
Trade Minister Sauat Mynbayev said, "we have not completed
negotiations with the USA and the European Union. There will
be difficult negotiations with Canada and Australia because
these countries are very interested in our agricultural
sector being more open." (Interfax-Kazakhstan, November 23)

ADB and Kazakhstan: New Forms of Cooperation
--------------


4. The Asian Development Bank signed a memorandum of
understanding on its first public-private investment in
Kazakhstan. ADB President Haruhiko Kuroda said in a meeting
with President Nazarbayev that the coming project with
Almaty Power Consolidated (a regional energy supplier) would
help upgrade APC power transmission and distribution lines
and would be a new form of partnership based on investments
without sovereign guarantees. Also, the ADB is consulting
with the GoK on a possible Tenge bond issue directed at
developing the national stock market. (Central Asian
Newswire, November 15)

New Owner of Karaganda Airport
--------------


5. Sky Service airline from Almaty is a new possessor of
Sary Arka airport in Karaganda. According to the
Karagandinskaya Oblast Finance Department, the company
acquired the airport by tender for KZT 650,352 million
(approximately $4.8 million). Under the agreement signed
with the new owner, the Karagandinskaya oblast government
holds a "golden share," which allows it to interfere in
affairs of the airport at any time. Sky Service is expected
to invest in official uniforms and professional training of
airport personnel. Karagandinskaya oblast is one of the
industrially advanced regions of Kazakhstan, with 1.3
million habitants. (Interfax-Kazakhstan, November 16)

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


6. According to the National Statistics Agency, the gross
domestic product (GDP) of Kazakhstan totaled KZT 5,169.3
billion (approximately $38.3 billion) in January-September

2005. Real GDP was 108.9% of Real GDP in the same period of

2004. The 8.9% GDP growth was attributed to growth of real
volumes in all sectors of the economy: industry - up 4.2%,
agriculture - up 7.4%, construction - up 8.8%,
transportation and communication services - up 9.5%, trade -
up 9%. (Interfax-Kazakhstan, November 11)


7. Kazakhstan's external trade surplus totaled $7,916.6
million in January-September 2005 versus $4,977.3 million
during the same period of 2004, a 59% increase. As the
National Statistics Agency reports, Kazakhstan's foreign
trade turnover was $33,004.6 million in this period
(excluding unauthorized trade),up by 42.2% compared to the
same period of last year, with exports of $20,460.6 million
(up by 45.2%) and $12,544 million of imports, including
transportation and insurance expenses (up by 37.6%).
(Interfax-Kazakhstan, November 14)

Kazakhstan - China Pipeline Completed
--------------


8. According to Xinhua News Agency, the 1,000-kilometer
(625-mile) pipeline is designed to carry 20 million tons
(140 million barrels) of oil annually from Kazakhstan to
China. Alatau Pass, where the final link in the pipeline
was welded on November 14, is expected to become a hub for
railway, road and pipeline networks for the remote region in
China's northwest. The pipeline was build by state-owned
China National Petroleum Corporation and KazMunaiGas
(Kazakhstan's national oil and gas company). (Associated
Press Newswires, November 15)

Plans of the International Consortium Agip KCO
-------------- -


9. Agip KCO plans to start commercial extraction at
Kashagan deposit at the end of 2008. "We work within the
program, according to which oil production is scheduled at
the end of 2008," Agip KCO regional director for Kazakhstan
Luciano Vasques said on November 14 in Atyrau (Kazakhstan's
"oil capital" on the Caspian Sea). (Interfax-Kazakhstan,
November 15)


10. Agip KCO intends to construct an oil and gas refinery
complex near Atyrau within its North Caspian Project by June

2008. As Agip KCO surface facilities manager Daniele Nazzani
announced, "we plan to complete building and assembly works
by this time, i.e. the plant will be ready for launching."
The project capacity of the oil treatment system would be
450,000 barrels a day or 22.5 million tons a year, and gas
treatment system up to 6.2 billion cubic meters a year.
(Interfax-Kazakhstan, November 16)

TCO to Export Tengiz Oil by the Southern Route
-------------- -


11. Tengizchevroil (TCO) signed commercial contracts to
export crude oil by the "Southern Route." TCO did not
specify the names of the signatory companies and the oil
volumes to be exported. As TCO press release reports,
".the Southern Route will allow us to export crude from
Tengiz through Aktau across the Caspian Sea to Baku,
Azerbaijan, and further on to Batumi, Georgia, to the Black
Sea for further deliveries to international markets."
(Interfax-Kazakhstan, November 23)

EBRD and DBK to Finance North-South Power Line
-------------- -


12. The Kazakhstan Electricity Grid Operating Company JSC
(KEGOC) signed loan agreements with the EBRD and state-owned
Development Bank of Kazakhstan (DBK) to implement the
construction of North-South power transmission line. KEGOC
will receive $87.8 million in loans: the EBRD will provide
$52.8 million for 12 years; and Raiffeisen Zentralbank
sterreich, Bayerische Landesbank, Calion and Citibank will
syndicate $35 million for 9-12 years under EBRD auspices.
Additionally, the DBK will loan KEGOC KZT 6.97 billion
(about $51.8 million) for 15 years. (Interfax-Kazakhstan,
November 25)

Ordway