KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JUNE 10 - 23, 2007

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SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JUNE 10 - 23, 2007

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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.

-- Samgau's Board of Directors is Formed
-- Kazakhstani Banking Sector Attracts Foreign Capital
-- New First Vice President of KazMunayGas Appointed
-- AES Fined For Antimonopoly Law Violation
-- Chevron Interested in Burgas-Alexandroupolis Project
-- Eurasian Bank to Finance Nuclear Plant Construction
-- Oil & Gas Statistics for January-May 2007

Samgau's Board of Directors is Formed
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2. Serik Burkitbaev, assistant to President Nazarbayev, was elected
chairman of the board of the Samgau holding. The National Holding
"Samgau," a joint stock company, was created in April with the
stated goal of fostering a favorable environment for achieving
scientific and technological progress in Kazakhstan. Vice Minister
of Culture and Information Erzhan Babakumarov, Vice Minister of
Economy and Budget Planning Viktor Suprun, Vice Minister of Finance
Bakhyt Sultanov, and Vice Minister of Education and Science Farkhat
Kuanganov were named members of the board. Azamat Abdymomunov,
former Vice Minister of Education, was earlier appointed chairman of
Samgau's managing board. (Press Service of the Government of the
Republic of Kazakhstan, June 17)

Kazakhstani Banking Sector Attracts Foreign Capital
-------------- --------------


3. Alliance Bank, Kazakhstan's leader in retail lending, has
announced its plans to hold a global offering of its common shares
in the form of Global Depository Receipts (GDRs). The bank's press
release states, "this offer is a secondary placement of existing
common shares and represents about 20% of the bank's capital.
Seimar Alliance Financial Corporation (SAFC) is the holder of these
shares." Alliance Bank's GDRs are expected to start trading on the
London Stock Exchange in July. (Interfax-Kazakhstan, June 21)


4. The European Bank for Reconstruction and Development (EBRD)
purchased 25% of shares of KazInvestBank for 2.5 billion tenge
($20.5 million). Citigroup-affiliated CITI Venture Capital
International (CVCI),a leading private equity investor in growth
markets, also acquired a stake in the amount of $20 million.
According to Nurlan Kapparov, Chairman of the Board of
KazInvestBank, this deal will lead to the highest level of foreign
participation in a Kazakhstani bank. (Press Service of
KazInvestBank, June 16)


5. Bank Austria Creditanstalt, part of the European banking group
UniCredit, signed an agreement to purchase a controlling stake in
Kazakhstan's Almaty Merchant Financial Bank (ATF Bank). (Note: Head
of the General Services Department of the Presidential
Administration Bulat Utemuratov and his sons were known to be major
shareholders of the ATF Bank, collectively owning about 33% of the
common stock. End note.) According to ATF Bank's top managers,
UniCredit paid $2.3 billion in this deal. A UniCredit statement
said that, following the transaction, Bank Austria Creditanstalt
expects its stake in the registered capital of the ATF Bank to total
at least 85%. The UniCredit group will use its own internal
resources to finance the purchase, which will be completed in the
second half of 2007. (Vienna, Interfax, June 22, Television Channel
31, June 25)

New First Vice President of KazMunayGas Appointed
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6. Maksat Idenov, 39, has been appointed First Vice President of
the national oil and gas company KazMunayGas (KMG). Prior to this
appointment, Mr. Idenov served as Shell Vice-President for Strategic
and Commercial Development, Middle East, South Asia and Caspian.
Previously, Mr. Idenov worked as Assistant to Kazakhstan's Minister
of Oil and Gas Industry; Deputy Head of the World Bank's Energy
Department, Europe and Central Asia Region; and Presidential Advisor

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on Caspian energy and oil and gas export pipelines. Idenov replaced
Zhaksybek Kulekeyev, who was appointed the Chief Executive Officer
of the state-owned railroad company Kazakhstan Temir Zholy.
(Interfax - Kazakhstan, June 18)

AES Fined For Antimonopoly Law Violation
--------------


7. On June 15, East Kazakhstan court fined AES, a U.S.-based power
generating company, for violations of the antimonopoly law. AES's
Shulbinskaya and Ust-Kamenogorskaya hydroelectric power stations
have been ordered to pay KZT 2.7 billion (approx. $22 million) to
the Kazakhstani budget. According to Industry and Trade Minister
Orazbakov, an Antimonopoly Committee investigation revealed that AES
had exploited its vertical monopoly in East Kazakhstan, selling
electricity through an affiliated company, to derive monopoly
profits. (Interfax - Kazakhstan, June 18)

Chevron Interested in Burgas-Alexandroupolis Project
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8. Chevron is interested in participating in the
Burgas-Alexandroupolis project, together with KazMunayGas (KMG),
Chevron's Executive Vice President George Kirkland said at the 17th
session of the Foreign Investors' Council in Ust-Kamenogorsk on June

15. According to Mr. Kirkland, "We [Chevron] welcome the progress
of Burgas-Alexandroupolis project, which will help ease congestion
through the Bosporus Strait. In step with CPC expansion, Chevron is
interested in participating in this project together with KMG."
(Interfax - Kazakhstan, June 18)

Eurasian Bank to Finance Nuclear Plant Construction
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9. The Eurasian Bank of Development [jointly established by
Kazakhstan and Russia in 2006] is ready to participate in nuclear
power plant construction in Kazakhstan, the Bank's President
Finogenov said. According to Finogenov, the Bank has signed a
corresponding memorandum with national atomic company KazAtomProm
and Russian "Techsnabexport". (Interfax - Kazakhstan, June 19)

Oil & Gas Statistics for January-May 2007
--------------


10. According to the National Statistics Agency, in January-May
Kazakhstan produced 22.9 million tons of crude oil, and 12.4 billion
cubic meters of natural gas, up 5.4% and 19.6%, respectively, from
the same period in 2006. (Interfax - Kazakhstan June 12)


11. In January-April Kazakhstan exported 19.9 million tons of oil
and gas condensate (valued at $7.7 billion),up 15.6% versus 2006.
During the same period the republic exported 1.2 million tons of oil
products (79% higher compared to the same period last year). Oil
products imports came to 0.7 million (up 20.3%). Imports of natural
gas reached 2.6 billion cubic meters (up 68.8%). Kazakhstan
exported 4.4 billion cubic meters of natural gas in the reporting
period (up 90.1%). (Interfax - Kazakhstan, June 12)

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