KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, February 25 - March

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TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, February 25 - March
10, 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.

-- Kazakhstani-Israeli WTO Protocol Signed
-- New Deputy CEO in Nurbank
-- New Independent Director of Kazpost JSC
-- Agricultural Statistics
-- KTG Invests in Georgia; Eyes European Market
-- Kazakhstan to Build Refinery in Georgia
-- KMG Sells KazGerMunay's 50% Share to Its Subsidiary
-- Oil, Gas, Coal Production in Jan-Feb 2007
Kazakhstani-Israeli WTO Protocol Signed
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2. According to the Government's press service, a bilateral
protocol on accession of Kazakhstan to the WTO was signed on
February 27 by Israel's Deputy Prime Minister - Minister of
Industry, Trade, and Labor Eliyahu Yishai and Kazakhstan's Vice
Minister of Industry and Trade Zhanar Aitzhanova. Prior to signing,
the two sides discussed access to the Kazakhstani market for Israeli
producers of high-tech equipment, chemicals, and processed foods as
well as investment policy toward computer service providers. (Press
Service of the Government of Kazakhstan, February 28)

New Deputy CEO in Nurbank
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3. Nurali Aliyev was appointed the First Deputy Chief Executive
Officer of Kazakhstan-based commercial Nurbank JSC, the bank's press
service reported on February 27. An early January shareholder
meeting had elected Aliyev to the Board of Directors. The
22-year-old Nurali is a son of Presidential daughter and Mazhilis
deputy Dariga Nazarbayeva and Kazakhstani Ambassador to Austria and
former Deputy Minister of Foreign Affairs Rakhat Aliyev. According
to the Interfax-1000 Ranking of CIS Banks, Nurbank was as of June
2006 the 60th largest bank in the CIS and the 8th largest in
Kazakhstan by assets. (Interfax - Kazakhstan, February 28)

New Independent Director of Kazpost JSC
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4. Kalle Tarien, Director for development of postal communication
of Finland PostGroup, was appointed an independent director of
Kazpost JSC. Kazpost is a state-owned company, which became part of
the Samruk State Holding in early 2006. According to Samruk's
Deputy Executive Director Ulf Wakurka, "the work of Kalle Tarien
will raise corporate management of the Kazakhstani postal service to
the world standards." (Interfax - Kazakhstan, March 5)

Agricultural Statistics
--------------


5. Kazakhstan completed the first nationwide farm census, reports
the National Statistics Agency. The agricultural census covered
2,500 districts, 7,500 villages and towns; more than 9,500
agricultural enterprises; about 194,000 farm units; and over 535,700
dachas on a total area of 81.1 million hectares. The following
results were reported: more than 5.7 million heads of cattle, 12.9
million heads of sheep, 1.3 million heads of swine, 1.2 million
heads of horse, 140,000 heads of camel, and 28.3 million heads of
poultry. (Interfax - Kazakhstan, March 5)


6. Kazakhstani farm exports for the first time reached $1.3 billion
in 2006. According to Minister of Agriculture Akhmetzhan Yesimov,
"grain and flour constitute the largest portion of Kazakhstan's
agricultural exports." Kazakhstan is now the world's 7th largest
exporter of grain and 3rd largest exporter of flour. In 2006, the
country's gross agricultural output amounted to KZT 838 billion
(approx. $6.7 billion),a 7% increase from 2005. (Interfax -
Kazakhstan, March 5)

KTG in Georgia; Eyes European Market
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7. KazTransGas (KTG),a subsidiary of national oil and gas company
KazMunayGas (KMG),has invested $50 million in the Tblisi
gas-distribution system, according to KTG Director General Serik
Sultangaliyev. (KTG bought the Georgian company "Tbilgas" in 2006.)
In total, KTG plans to invest over $80 million in Tbilisi over the
next four years. The company also plans to enter the European UCTE
energy market (Union of the Coordination of Transmission of
Electricity) through joint energy projects with Bosnia and
Herzegovina. According to Sultangaliyev, Kazakhstan is planning to
begin selling its natural gas to European countries and Georgia in
the near future. "Kazakhstan is currently carrying out work to
develop the appropriate infrastructure -- the construction of gas
refining enterprises without which it would be impossible to carry
out this task," he said. (Interfax - Kazakhstan, March 5)

Kazakhstan to Build Refinery in Georgia
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8. Kazakhstan is considering building an oil refinery in Georgia's
Black Sea port of Batumi, President Nazarbayev announced after a
meeting with Georgian President Saakashvili in Astana on March 5.
"The Caucasian corridor that provides an outlet to Europe (and) the
Mediterranean Sea is becoming important for us," Nazarbayev said.
"Georgia is our active partner in that area." KazMunayGas is in a
process of buying a controlling stake in the Batumi port, the
President added. According to President Saakashvili, the
construction of an oil refinery in Batumi, a "huge project worth
about $1 billion" is very important, "not only for Georgia's
economy, but for the entire (Caspian) region." (Kazakhstan
Newsline, March 11)

KMG Sells KazGerMunay's 50% Share to Its Subsidiary
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9. On March 5, KazMunayGas subsidiary "KMG Exploration and
Production" (KMG E&P),announced an agreement to purchase 50% of
KazGerMunay from its parent company for KZT 133.3 billion (approx.
$1.1 billion). The deal is KMG E&P's first significant step in
implementing the growth strategy which was announced during the
company's IPO in 2006. The transaction will make KMG E&P the second
largest oil producer in Kazakhstan. The deal, which will be
financed from the company's own sources, will be voted upon at an
April 12 shareholder meeting. KazGerMunay is a joint venture
between KMG and PetroKazakhstan. (KMG press-center, Kazakhstan,
March 5)

Oil, Gas, Coal Production in Jan-Feb 2007
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10. In January-February 2007, oil and gas condensate production in
Kazakhstan reached 10.8 million tons, 12.4% higher than during the
same period in 2006.


11. In January-February 2007, gas production in Kazakhstan totaled
4.56 billion cubic meters, 15.7% higher compared to the same period
in 2006, including 2.68 billion cubic meters of natural gas, up
25.7% year-on-year.


12. In January-February 2007, Kazakhstan produced 15.8 million tons
of coal, 4.8% less compared to the same period the previous year.
(Interfax - Kazakhstan, March 6)

ORDWAY