Identifier
Created
Classification
Origin
07ASTANA3177
2007-11-23 07:52:00
UNCLASSIFIED
Embassy Astana
Cable title:
KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, NOVEMBER 5 - 18,
how-toVZCZCXRO4848 RR RUEHDBU RUEHLN RUEHVK RUEHYG DE RUEHTA #3177/01 3270752 ZNR UUUUU ZZH R 230752Z NOV 07 ZDK CITING RUEHNT #8033 3280830 FM AMEMBASSY ASTANA TO RUEHC/SECSTATE WASHDC 1235 INFO RUCPCIM/CIMS NTDB WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC RUEATRS/DEPT OF TREASURY WASHDC RUCNCIS/CIS COLLECTIVE 0309 RUEHAK/AMEMBASSY ANKARA 2109 RUEHBUL/AMEMBASSY KABUL 0367 RUEHNE/AMEMBASSY NEW DELHI 0481 RUEHAST/USOFFICE ALMATY 0009
UNCLAS SECTION 01 OF 03 ASTANA 003177
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 KTDB KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, NOVEMBER 5 - 18,
2007
ASTANA 00003177 001.8 OF 003
UNCLAS SECTION 01 OF 03 ASTANA 003177
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 KTDB KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, NOVEMBER 5 - 18,
2007
ASTANA 00003177 001.8 OF 003
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.
-- UniCredit Group Finalizes Purchase of ATF Bank
-- British Companies Expanding in Kazakhstan
-- SCO Members to Enhance Customs Cooperation
-- China's Ex-Im Bank to Finance Telecom Investment in Kazakhstan
-- Economic Statistics
-- Economy Ministry Suggests an End to the Use of PSAs
-- TengizChevrOil Pays $309M Fine
-- KazMunayGas Purchases 50% of Former Nations Energy
-- KazMunayGas, CNPC Agree on New Gas Pipeline
-- Oil & Gas Statistics for January-October 2007
UniCredit Group Finalizes Purchase of ATF Bank
-------------- -
2. Bank Austria Creditanstalt AG (BA-CA),the division responsible
within the UniCredit Group for commercial banking activities in
Central and Eastern Europe, finalized the acquisition of 91.8% of
the total issued share capital of Kazakhstan-based ATF Bank (Almaty
Merchant Financial Bank) for approximately $2.1 billion.
Specifically, BA-CA acquired 95.6% of total issued common shares for
$1.66 billion and 85.0% of total issued preferred shares for $456
million. Through the acquisition of ATF Bank, the UniCredit Group
is establishing a major presence in Kazakhstan and expanding its
operations in Kyrgyzstan, Tajikistan and Russia. (Press-Service of
ATF bank, November 14)
British Companies Expanding in Kazakhstan
--------------
3. U.K. Ambassador to Kazakhstan Paul Brummell said in an interview
to Interfax-Kazakhstan that the number of British financial
companies interested in operating in Kazakhstan is increasing. This
provides a great opportunity for cooperation with Kazakhstani
companies listed on London Stock Exchange. Ambassador Brummell also
noted that Great Britain remains one of the key investors in
Kazakhstan, with a total of over $5 billion invested in the
country's economy over the past 15 years. In Ambassador Brummell's
opinion, the trend of increasing British investment in Kazakhstan
will continue for the foreseeable future. (Interfax - Kazakhstan,
November 12)
SCO Members to Enhance Customs Cooperation
--------------
4. Shanghai Cooperation Organization (SCO) member-states signed an
intergovernmental agreement on customs cooperation and mutual
assistance. Russian Prime-Minister Zubkov called the agreement "an
important tool for creating a comprehensive security system within
the SCO." The parties also agreed to review the SCO's basic
economic documents, particularly long-term programs for multilateral
trade and economic cooperation. (Interfax - Kazakhstan, November
5)
China's Ex-Im Bank to Finance Telecom Investment in Kazakhstan
-------------- --------------
5. Kazakhstan-based KazKommertsBank (KKB) signed a $34 million
credit agreement with China's Export-Import Bank to finance the
import of telecommunications equipment from Huwai Technologies Co.,
a leading Chinese producer. The credit, to be provided with a
flexible repayment schedule over the course of seven years, will be
used to develop a cellular network in cooperation with KazTelecom.
(Central Asia General Newswire, November 14)
Economic Statistics
--------------
6. "As of November 1, 2007 the assets of the National Oil Fund were
valued at $20.2 billion. By the end of 2007, we expect them to grow
to $25-26 billion dollars," the then-Finance Minister Korzhova
ASTANA 00003177 002.2 OF 003
reported to the Mazhilis on November 12. The assets of the National
Oil Fund stood at just $14.0 billion at the end of 2006. (Interfax
- Kazakhstan, November 12)
7. The average (mean) nominal monthly salary in September was KZT
53,005 (approx. $438),a 28.9% increase (16% in real terms) over
September 2006. Kazakhstan's official living monthly salary (as of
October 2007) was KZT 11,079 ($91.50). (Kazakhstani Statistics
Agency, November 13)
Economy Ministry Suggests an End to the Use of PSAs
-------------- --------------
8. Kazakhstan's Ministry of Economy and Budget Planning has
submitted a proposal to the GOK to stop using Production Sharing
Agreements (PSAs) with subsoil users in the future, abolish VAT
privileges for geological prospecting activities and increase
existing rates of royalties, Galymzhan Zhakupov, Head of the
Ministry's Tax Policy and Forecasting Department, said at a
KazEnergy association meeting on November 5. "In the future
contracts should be concluded on a concession basis. The earlier
concluded PSAs will be effective until they expire," he said.
According to Zhakupov, currently PSA taxation is extremely
complicated and non-transparent. Moreover, tax inspections and
audits are made more difficult because of differences between terms
set in PSAs and current legislative norms. (Reuters - Astana,
November 5)
TengizChevrOil Pays $309 Million Fine
--------------
9. An Atyrau regional court upheld the decision of a regional
economic court to levy a fine of KZT 37.4 billion (approx. $309
million) against TengizChevrOil (TCO) for illegal storage of 2.8
million tons of solid sulfur in 2003-06. The court rejected TCO's
appeal TCO made earlier. It also rejected a notice of protest filed
by the Atyrau regional environmental office which demanded that TCO
pay a large sum -- KZT 74.4 billion (approx. $615 million) -- for
its alleged violations. (Interfax - Kazakhstan, November 2)
KazMunayGas Purchases 50% of Former Nations Energy
-------------- --------------
10. Exploration & Production KazMunayGas (E&P KMG, an oil producing
subsidiary of KazMunayGas) and China's CITIC Canada signed an
agreement for E&P KMG to buy a 50% stake in CITIC Canada Petroleum
(the former Nations Energy Company, whose main asset is the
Karazhanbas field in Mangystau region). The document was signed
during the 4th meeting of the Kazakh-Chinese Cooperation Committee
on November 8. The E&P KMG board of directors approved the
$930-million acquisition in early October. CITIC Group reached an
agreement to purchase Nations Energy Company for $1.91 billion on
October 25, 2006. Later Nations Energy was renamed CITIC Canada
Petroleum. Having received approval for the deal, on December 28,
2006 CITIC granted KMG a one-year option to purchase a 50% stake in
CITIC Canada Petroleum. (Interfax - Kazakhstan, November 12)
KazMunayGas, CNPC Agree on New Gas Pipeline
--------------
11. On November 8, on the sidelines of the official visit of
Chinese Vice-Premier Wu Yi to Kazakhstan, KazMunayGas and China
National Petroleum Company (CNPC) signed an agreement spelling out
the fundamentals of the construction and operation of a gas pipeline
between Kazakhstan and China. The sides agreed to set up a
jointly-owned company which will own the gas pipeline.
Implementation of the project is contingent upon approval of a
feasibility study. The project is designed to be implemented in two
phases. Initially, a pipeline would be laid from the borders of
Uzbekistan and Kazakhstan to China via Shymkent (south Kazakhstan),
with an annual capacity of 40 billion cubic meters. Later, the
pipeline would be extended between Beyneu, Bozoi (west Kazakhstan),
Kyzyl Orda (south Kazakhstan) and Shymkent, with an annual capacity
of 10 billion cubic meters. (Interfax - Kazakhstan, November 12)
ASTANA 00003177 003.2 OF 003
Oil & Gas Statistics for January-October 2007
--------------
12. According to the National Statistics Agency, from January to
October 2007, Kazakhstan produced 46 million tons of crude oil, 2.1%
more than in the same period in 2006, and 10 million of gas
condensate, 17.9% more year-on-year. During the first ten months of
2007 Kazakhstan produced 24 billion cubic meters of natural gas, a
14.1% increase from the January-October 2006 period. (Interfax -
Kazakhstan, November 12)
ORDWAY
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 KTDB KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, NOVEMBER 5 - 18,
2007
ASTANA 00003177 001.8 OF 003
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.
-- UniCredit Group Finalizes Purchase of ATF Bank
-- British Companies Expanding in Kazakhstan
-- SCO Members to Enhance Customs Cooperation
-- China's Ex-Im Bank to Finance Telecom Investment in Kazakhstan
-- Economic Statistics
-- Economy Ministry Suggests an End to the Use of PSAs
-- TengizChevrOil Pays $309M Fine
-- KazMunayGas Purchases 50% of Former Nations Energy
-- KazMunayGas, CNPC Agree on New Gas Pipeline
-- Oil & Gas Statistics for January-October 2007
UniCredit Group Finalizes Purchase of ATF Bank
-------------- -
2. Bank Austria Creditanstalt AG (BA-CA),the division responsible
within the UniCredit Group for commercial banking activities in
Central and Eastern Europe, finalized the acquisition of 91.8% of
the total issued share capital of Kazakhstan-based ATF Bank (Almaty
Merchant Financial Bank) for approximately $2.1 billion.
Specifically, BA-CA acquired 95.6% of total issued common shares for
$1.66 billion and 85.0% of total issued preferred shares for $456
million. Through the acquisition of ATF Bank, the UniCredit Group
is establishing a major presence in Kazakhstan and expanding its
operations in Kyrgyzstan, Tajikistan and Russia. (Press-Service of
ATF bank, November 14)
British Companies Expanding in Kazakhstan
--------------
3. U.K. Ambassador to Kazakhstan Paul Brummell said in an interview
to Interfax-Kazakhstan that the number of British financial
companies interested in operating in Kazakhstan is increasing. This
provides a great opportunity for cooperation with Kazakhstani
companies listed on London Stock Exchange. Ambassador Brummell also
noted that Great Britain remains one of the key investors in
Kazakhstan, with a total of over $5 billion invested in the
country's economy over the past 15 years. In Ambassador Brummell's
opinion, the trend of increasing British investment in Kazakhstan
will continue for the foreseeable future. (Interfax - Kazakhstan,
November 12)
SCO Members to Enhance Customs Cooperation
--------------
4. Shanghai Cooperation Organization (SCO) member-states signed an
intergovernmental agreement on customs cooperation and mutual
assistance. Russian Prime-Minister Zubkov called the agreement "an
important tool for creating a comprehensive security system within
the SCO." The parties also agreed to review the SCO's basic
economic documents, particularly long-term programs for multilateral
trade and economic cooperation. (Interfax - Kazakhstan, November
5)
China's Ex-Im Bank to Finance Telecom Investment in Kazakhstan
-------------- --------------
5. Kazakhstan-based KazKommertsBank (KKB) signed a $34 million
credit agreement with China's Export-Import Bank to finance the
import of telecommunications equipment from Huwai Technologies Co.,
a leading Chinese producer. The credit, to be provided with a
flexible repayment schedule over the course of seven years, will be
used to develop a cellular network in cooperation with KazTelecom.
(Central Asia General Newswire, November 14)
Economic Statistics
--------------
6. "As of November 1, 2007 the assets of the National Oil Fund were
valued at $20.2 billion. By the end of 2007, we expect them to grow
to $25-26 billion dollars," the then-Finance Minister Korzhova
ASTANA 00003177 002.2 OF 003
reported to the Mazhilis on November 12. The assets of the National
Oil Fund stood at just $14.0 billion at the end of 2006. (Interfax
- Kazakhstan, November 12)
7. The average (mean) nominal monthly salary in September was KZT
53,005 (approx. $438),a 28.9% increase (16% in real terms) over
September 2006. Kazakhstan's official living monthly salary (as of
October 2007) was KZT 11,079 ($91.50). (Kazakhstani Statistics
Agency, November 13)
Economy Ministry Suggests an End to the Use of PSAs
-------------- --------------
8. Kazakhstan's Ministry of Economy and Budget Planning has
submitted a proposal to the GOK to stop using Production Sharing
Agreements (PSAs) with subsoil users in the future, abolish VAT
privileges for geological prospecting activities and increase
existing rates of royalties, Galymzhan Zhakupov, Head of the
Ministry's Tax Policy and Forecasting Department, said at a
KazEnergy association meeting on November 5. "In the future
contracts should be concluded on a concession basis. The earlier
concluded PSAs will be effective until they expire," he said.
According to Zhakupov, currently PSA taxation is extremely
complicated and non-transparent. Moreover, tax inspections and
audits are made more difficult because of differences between terms
set in PSAs and current legislative norms. (Reuters - Astana,
November 5)
TengizChevrOil Pays $309 Million Fine
--------------
9. An Atyrau regional court upheld the decision of a regional
economic court to levy a fine of KZT 37.4 billion (approx. $309
million) against TengizChevrOil (TCO) for illegal storage of 2.8
million tons of solid sulfur in 2003-06. The court rejected TCO's
appeal TCO made earlier. It also rejected a notice of protest filed
by the Atyrau regional environmental office which demanded that TCO
pay a large sum -- KZT 74.4 billion (approx. $615 million) -- for
its alleged violations. (Interfax - Kazakhstan, November 2)
KazMunayGas Purchases 50% of Former Nations Energy
-------------- --------------
10. Exploration & Production KazMunayGas (E&P KMG, an oil producing
subsidiary of KazMunayGas) and China's CITIC Canada signed an
agreement for E&P KMG to buy a 50% stake in CITIC Canada Petroleum
(the former Nations Energy Company, whose main asset is the
Karazhanbas field in Mangystau region). The document was signed
during the 4th meeting of the Kazakh-Chinese Cooperation Committee
on November 8. The E&P KMG board of directors approved the
$930-million acquisition in early October. CITIC Group reached an
agreement to purchase Nations Energy Company for $1.91 billion on
October 25, 2006. Later Nations Energy was renamed CITIC Canada
Petroleum. Having received approval for the deal, on December 28,
2006 CITIC granted KMG a one-year option to purchase a 50% stake in
CITIC Canada Petroleum. (Interfax - Kazakhstan, November 12)
KazMunayGas, CNPC Agree on New Gas Pipeline
--------------
11. On November 8, on the sidelines of the official visit of
Chinese Vice-Premier Wu Yi to Kazakhstan, KazMunayGas and China
National Petroleum Company (CNPC) signed an agreement spelling out
the fundamentals of the construction and operation of a gas pipeline
between Kazakhstan and China. The sides agreed to set up a
jointly-owned company which will own the gas pipeline.
Implementation of the project is contingent upon approval of a
feasibility study. The project is designed to be implemented in two
phases. Initially, a pipeline would be laid from the borders of
Uzbekistan and Kazakhstan to China via Shymkent (south Kazakhstan),
with an annual capacity of 40 billion cubic meters. Later, the
pipeline would be extended between Beyneu, Bozoi (west Kazakhstan),
Kyzyl Orda (south Kazakhstan) and Shymkent, with an annual capacity
of 10 billion cubic meters. (Interfax - Kazakhstan, November 12)
ASTANA 00003177 003.2 OF 003
Oil & Gas Statistics for January-October 2007
--------------
12. According to the National Statistics Agency, from January to
October 2007, Kazakhstan produced 46 million tons of crude oil, 2.1%
more than in the same period in 2006, and 10 million of gas
condensate, 17.9% more year-on-year. During the first ten months of
2007 Kazakhstan produced 24 billion cubic meters of natural gas, a
14.1% increase from the January-October 2006 period. (Interfax -
Kazakhstan, November 12)
ORDWAY