wikileaks ico  Home papers ico  Cables mirror and Afghan War Diary privacy policy Privacy
Identifier
Created
Classification
Origin
06ALMATY1644
2006-05-10 01:10:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
US Office Almaty
Cable title:  

KAZAKHSTAN: A/S BOUCHER MEETS WITH ENERGY MINISTER

Tags:   PREL  ECON  ENRG  ETRD  KZ 
pdf how-to read a cable
VZCZCXRO9010
PP RUEHDBU
DE RUEHTA #1644/01 1300110
ZNR UUUUU ZZH
P 100110Z MAY 06
FM AMEMBASSY ALMATY
TO RUEHC/SECSTATE WASHDC PRIORITY 5216
INFO RUEBAAA/DEPT OF ENERGY WASHDC PRIORITY
RUEHMO/AMEMBASSY MOSCOW PRIORITY 1231
RHEHNSC/NSC WASHDC
RUEHEK/AMEMBASSY BISHKEK 7545
RUEHAH/AMEMBASSY ASHGABAT 6973
RUEHIL/AMEMBASSY ISLAMABAD 2040
RUEHNT/AMEMBASSY TASHKENT 7519
RUEHDBU/AMEMBASSY DUSHANBE 1726
RUEHIT/AMCONSUL ISTANBUL 0727
RUEHBUL/AMEMBASSY KABUL 0196
RUEHSI/AMEMBASSY TBILISI 2203
RUEHKV/AMEMBASSY KIEV 2447
						UNCLAS SECTION 01 OF 03 ALMATY 001644 

SIPDIS

SENSITIVE

SIPDIS

DEPARTMENT FOR EB/ESC; SCA/FO (MANN); SCA/CEN (MUDGE)
DEPARTMENT OF ENERGY FOR GETTO (DOE/SI); BURGESON (DOE/SI);
WILLIAMSON (DOE/SI); HARBERT (DOE/PI); THOMPSON (PI-21)

NSC FOR MILLARD, MERKEL

E.O. 193056: N/A
TAGS: PREL ECON ENRG ETRD KZ
SUBJECT: KAZAKHSTAN: A/S BOUCHER MEETS WITH ENERGY MINISTER
IZMUKHAMBETOV




1. (SBU) Summary: Kazakhstan plans to build a nuclear power
plant in order to address energy deficits in the south and
to expand uranium production, Minister of Energy and Mineral
Resources Izmukhambetov told Assistant Secretary Boucher and
Special Assistant to the President Millard. As oil
production increases, Kazakhstan is working to expand the
capacity of both the Caspian Pipeline Consortium and Atyrau-
Samara pipelines. President Nazarbayev approved plans to
sign the intergovernmental agreement with Azerbaijan on use
of the Baku-Tblisi-Ceyhan pipeline in June. A new pipeline
to China is expected to come on line at the same time.
Izmukhambetov said that Kazakhstan would take Concoco-
Phillips' interest in the N Block into account. He
suggested that WTO members condition Russia's WTO entry on
agreement on a trans-Caspian gas pipeline. Finally,
Izmukhambetov highlighted Kazakhstan's responsible
management of its oil revenues to support economic
diversification. End summary.



2. (U) Assistant Secretary for South and Central Asia
Richard Boucher and Special Assistant to the President
Elisabeth Millard met with Kazakhstani Minister of Energy
and Mineral Resources Batkykoz Izmukhambetov on May 5 in
Astana. The Ambassador, DTRA chief (control officer), and
POEC chief (notetaker) also participated.



3. (SBU) Assistant Secretary Boucher opened the meeting by
noting the importance of energy issues to the bilateral
relationship and the important role played by U.S. firms in
Kazakhstan. The U.S. is interested in building upon
existing cooperation to look at new areas such as the export
of electricity from Kazakhstan to Afghanistan and Pakistan,
he commented.



--------------------------


Plans for Nuclear Power Plant


--------------------------





4. (SBU) Izmukhambetov told Boucher that in addition to oil
and gas, his Ministry was also responsible for electricity
generation, coal, nuclear energy, petrochemicals, minerals,
and other sub-surface resources. Kazakhstan is focused on
ensuring adequate energy supplies throughout the country.
At present there are surpluses in the north and growing
deficits in the south. The Minister told Boucher that
Kazakhstan was planning to build a nuclear power plant in
the near future to address this issue.



5. (SBU) Izmukhambetov said that Kazakhstan needed to use
its uranium reserves, estimated at 20% of total global
reserves, for power generation rather than just exporting
ore. Currently third in terms of production, Kazakhstan
planned to surpass Canada and Australia by increasing
production to 14,000-15,000 tons per year. The Kazakhstani

government is currently examining various types and models
of nuclear power plants, he said. Boucher noted that Amb.
Saudabayev had raised this issue with him; the U.S. would
look for ways to cooperate with Kazakhstan, including
possible Nuclear Regulatory Commission programs on oversight
and safety. Boucher noted that President Bush recently
approved several programs to develop new reactor designs
that would be safer and easier to operate, in order to
expand the use of nuclear energy in the U.S.



--------------------------


Oil Production and Pipelines


--------------------------





6. (SBU) At present, 80% of heating is generated using coal,
according to Izmukhambetov. Kazakhstan has over 35 billion
tons of coal reserves, over three trillion cubic meters of
natural gas, and over 30 billion barrels of proven oil

ALMATY 00001644 002 OF 003


reserves. Izmukhambetov said that total oil reserves are
estimated at over 100 billion barrels. Each year Kazakhstan
extracts 60 million tons of oil; that figure will rise to 90
million tons by 2010, according to the Minister.



7. (SBU) Right now oil is exported through two pipelines,
the Caspian Pipeline Consortium (CPC) pipeline and the
Atyrau-Samara pipeline. Izmukhambetov explained that in the
long term, Kazakhstan plans to expand the capacity of the
Caspian Pipeline Consortium route to 60-70 million tons per
year, and the capacity of the Atyrau-Samara route to 25
million tons per year. The Atasu-Alashankou oil pipeline to
China will come on line in late May or early June,
Izmukhambetov said; initial capacity will be 10 million tons
per year, rising to 20 million in the future. The Minister
informed Boucher that on May 4, President Nazarbayev had
approved his proposal to finalize the Baku-Tblisi-Ceyhan
(BTC) intergovernmental agreement with Azerbaijan in May and
to sign it in mid-June.



8. (SBU) Boucher asked whether agreement had been reached on
CPC expansion. Izmukhambetov explained that the main issues
had been resolved, but Russia was conditioning final
agreement on Kazakhstani support for the Burgas-
Alexandroupolis Bosphorus bypass pipeline. Kazakhstan was
still waiting for specifics on what the terms of
participation in the project would be. Izmukhambetov
emphasized that Kazakhstan would continue to pursue
agreement on expansion of capacity of the Caspian Pipeline
Consortium route, as it was in the interest of both
Kazakhstan and Russia. Nazarbayev had told Putin in Moscow,
however, that if the Russian government would not agree to
expansion, Kazakhstan would shift the bulk of its oil
exports to the Baku-Tblisi-Ceyhan and Atasu-Alashankou
pipelines. This would leave no room for the volumes that
Russia wanted to send through the Atasu-Alashankou pipeline.



9. (SBU) Boucher asked about Kazakhstan's plans for new
exploration and development of oil resources. He noted that
Conoco-Phillips is interested in participating in the N
block. Izmukhambetov said that there were no plans for new
tenders in 2006. Kazakhstan would take Conoco-Phillips'
interest in participating in the N block into consideration.



--------------------------


Trans-Caspian Gas Pipeline


--------------------------





10. (SBU) Izmukhambetov said that Kazakhstan supported the
idea of a trans-Caspian natural gas pipeline, as it
presently is forced to sell its gas to Russia "for close to
nothing." He noted that he had discussed this idea with
Secretary of Energy Bodman during the recent World Energy

SIPDIS
Forum in Qatar. Izmukhambetov explained that the agreement
of all Caspian states would be necessary for such a project
to begin; he suggested that WTO members obtain Russia's
commitment not to impede the project before signing
bilateral agreements on WTO accession. Izmukhambetov said
that Kazakhstan could export significant quantities of
natural gas to Europe through such a pipeline. Boucher
noted that the U.S. is funding a feasibility study for the
project.



11. (SBU) Izmukhambetov said that during their recent
meeting in Moscow, President Nazarbayev had asked President
Putin for a proposal within one month regarding the natural
gas that is expected to be produced in Karachaganak
beginning in 2012. The Minister said that he would go to
Moscow a few days before Nazarbayev's scheduled May 20
meeting with Putin to discuss the Russian offer.



12. (SBU) Boucher asked Izmukhambetov whether the proposed

ALMATY 00001644 003 OF 003


trans-Afghan gas pipeline, which would bring Turkmen gas to
Pakistan, was commercially feasible. Izmukhambetov replied
that the idea made sense from a commercial point of view.
Kazakhstan was concerned, however, because Turkmenbashi had
promised to sell the same gas to Russia, China, and now
Pakistan.



--------------------------


Management of Oil Revenues


--------------------------





13. (SBU) Boucher told Izmukhambetov that the U.S. regarded
Kazakhstan as a model not only for how it had developed its
oil sector, but also for the way it managed the oil revenues
through the National Fund. Izmukhambetov said that the
government was proud of having assured the complete
stability and transparency of all contracts. He noted that
Kazakhstan had been among the first to support Prime
Minister Blair's Extractive Industry Transparency Initiative
(EITI). Unlike neighboring countries, Izmukhambetov said,
Kazakhstan was investing its oil revenues to diversify the
economy, introduce new technology, and train young people.

ORDWAY