Identifier
Created
Classification
Origin
07ASTANA1074
2007-04-26 03:19:00
UNCLASSIFIED
Embassy Astana
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE,

Tags:  ECON EIND ENRG EPET EFIN KZ 
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RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #1074/01 1160319
ZNR UUUUU ZZH
R 260319Z APR 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 9217
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0138
RUEHAK/AMEMBASSY ANKARA 2042
RUEHBUL/AMEMBASSY KABUL 0317
RUEHNE/AMEMBASSY NEW DELHI 0447
RUEHAST/USOFFICE ALMATY
UNCLAS SECTION 01 OF 02 ASTANA 001074 

SIPDIS

DEPT FOR SCA/CEN (O'MARA)
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

SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE,
April 1 - 14, 2007


ASTANA 00001074 001.2 OF 002


UNCLAS SECTION 01 OF 02 ASTANA 001074

SIPDIS

DEPT FOR SCA/CEN (O'MARA)
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

SIPDIS

E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE,
April 1 - 14, 2007


ASTANA 00001074 001.2 OF 002



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.

-- Nazarbayev Meets Lord Mayor of London
-- 30 Leading Corporations to Modernize Economy
-- Finance Ministry's Press Release on
Negotiations with IRS
-- Economic Statistics
-- KMG Sells 50% of KazGerMunay to Subsidiary
-- Kazakhstan Eyes Stake in Burgas-Alexandroupolis Project
-- Kazakhstan to Increase Uranium Supplies to Japan
-- Oil & Gas Production, Q1 2007



Nazarbayev Meets Lord Mayor of London
--------------


2. On March 30, President Nazarbayev met in Astana with Lord Mayor
of the City of London John Stuttard. According to Stuttard, the two
countries' comparative advantages --Kazakhstan's natural resources
and Great Britain's experience in developing financial markets,
services, and education -- should be pooled to bring about fruitful
partnership and cooperation. Currently, seven Kazakhstani companies
are listed on the London Stock Exchange (LSE),and nine others trade
their securities on the LSE's Alternative Investment Market (AIM).
(Interfax-Kazakhstan, April 2)

30 Leading Corporations to Modernize Economy
--------------


3. In an April 9 interview, President Nazarbayev said that in order
to diversify the economy, the Government of Kazakhstan will choose
the 30 best Kazakhstan-based companies. These corporate leaders are
expected to develop new industries, making the economy more
competitive and globally integrated. The recently created
Commission on Economic Modernization would facilitate these
companies' efforts. (President's Press-Service, April 10)


Finance Ministry's Press Release on Negotiations with IRS
-------------- --------------

4. The Finance Ministry issued on April 4 a press release about the
late-March negotiations between the Ministry's Tax Committee and a
high-level IRS delegation. The press release notes that the
meetings were the first mutual agreement process negotiations in the
history of Kazakhstan. The press release further states that the
talks focused on the issue of double-taxation of the U.S.-based
Parker Drilling Company. According to the press release, the
Kazakhstani side declared at the meetings' conclusion that its
position -- that the income in question was earned and subject to
tax in Kazakhstan -- remains unchanged. (Interfax-Kazakhstan, April
5)



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


5. According to a statement released by the National Bank,
Kazakhstan's 2006 current account deficit was $1.797 billion, up
from $1.056 billion in 2005, a 70% increase. According to the
National Bank Chairman Anvar Saidenov, the large increase is a
result of the foreign worker legalization campaign: starting in
2006, wages paid to illegal migrants were included in the current
account. (Interfax-Kazakhstan, April 3)


6. In January-March 2007, the total trade volume at Kazakhstan's
financial exchanges, the Kazakhstani Stock Exchange (KSE) and the
special trading floor of the Regional Financial Center of Almaty
(RFCA),amounted to 8,342.3 trillion tenge (about $66.8 billion),a
140% increase over the same period of 2006. While most of the trade
volume was in the currency market, trade in securities has increased
significantly. Over the same period last year, trade in stocks (at

ASTANA 00001074 002.2 OF 002


$793.5 million) increased 180%; in corporate bonds (at $1.1 billion)
25%; and in government debt (at $2.0 billion) 100%.
(Interfax-Kazakhstan, April 5)

KMG Sells 50% of KazGerMunay to Subsidiary
--------------


7. On April 12, the shareholders of national oil and gas company
KazMunayGas (KMG) subsidiary KMG Exploration & Production (KMG E&P)
have approved the purchase of a 50% share in KazGerMunay, owned by
the parent company, for KZT 133.3 billion (about $1.1 billion). The
purchase will be paid from the company's own funds. After the
purchase, KMG E&P will become Kazakhstan's second largest oil
producer (behind TengizChevrOil). In late July last year KMG
acquired a 50% share in KazGerMunay from RWE Dea AG, EEG - Erdgas
Erdol GmbH and the International Financial Corporation. KMG E&P's
partner in the joint venture is PetroKazakhstan. (Interfax -
Kazakhstan, April 12)

Kazakhstan Eyes Stake in Burgas-Alexandroupolis Project
-------------- --------------


8. Kazakhstan seeks a stake in the Burgas-Alexandroupolis oil
pipeline project, Kazakhstani Energy Minister Izmukhambetov told the
press in Baku on April 4. According to the Minister, a tentative
understanding has been reached in which Kazakhstan will get part of
Greece and Bulgaria's combined 49% stake in the project.
Izmukhambetov added that, given the launch of the
Burgas-Alexandroupolis project, it is necessary to speed up a
decision on expansion of the Caspian Pipeline Consortium pipeline.
(Interfax - Kazakhstan, April 9)

Kazakhstan to Increase Uranium Supplies to Japan
-------------- ---


9. Kazakhstan's national atomic company KazAtomProm (KAP) will
capture over 40% of Japan's nuclear fuel market by 2010, with plans
to deliver approximately 4,000 tons of uranium per annum, KAP
President Dzhakishev said at a briefing on April 14 in Almaty.
Currently KAP supplies 3-4% of Japan's uranium needs. According to
the KAP President, these plans will become possible after the
company signs a series of documents during a visit of Japanese
officials and companies to Astana on April 29-30. Some
Kazakhstani-Russian joint ventures, specifically one for uranium
enrichment, would be involved in supplying Japan's market, Mr.
Dzhakishev revealed. (Interfax - Kazakhstan, April 16)

Oil & Gas Production, Q1 2007
--------------


10. In January-March Kazakhstan produced 16.6 million tons of oil
and gas condensate, 10.8% higher than during the same period in
2006, according to the GOK reports. Of the 16.6 million tons,
national oil and gas company KazMunayGas (KMG) produced 2.3 million
tons of oil and gas condensate, while other companies with KMG
participation produced 6.3 million tons of oil. The TengizChevrOil
joint venture was the largest producer, with 3.6 million tons during
the period. (Interfax - Kazakhstan, April 9)


11. In January-March Kazakhstan produced 7.3 billion cubic meters
of gas, 17.8% higher than the first quarter of 2006, the GOK
reported. (Interfax - Kazakhstan, April 9)

ORDWAY