KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, March 18 - 31,

UNCLAS SECTION 01 OF 02 ASTANA 000861

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DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER
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E.O. 12958: N/A
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, March 18 - 31,
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.

-- Kazakhtelecom Sells Shares to Pension Funds
-- GOK to Sell Share in Eurasian Natural Resources Co.
-- Russia, Kazakhstan Sign Economic Cooperation Agreements
-- Property Legalization Extended Again
-- Kazakhstan's President Favors Odessa-Brody's Extension
-- Trans-Caspian Pipeline Construction under Discussion
-- TCO, Environmental Ministry Reach Agreement on Spending

Kazakhtelecom Sells Shares to Pension Funds
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2. On March 21, the "Samruk" state holding company sold a block of
state-owned ordinary shares of JSC "Kazakhtelecom" to Kazakhstani
saving pension funds. A total of 98,410 shares were sold under bid,
raising a total of KZT 4.9 billion (approx. $40 million). The
average sale price was KZT 50,238 ($405) per share. As the result
of the transactions, the State's share of "Kazakhtelecom" has been
reduced to 51%. (Kazakhtelecom press-release, March 26)

GOK to Sell Share in Eurasian Natural Resources Co.
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3. On March 31, Prime Minister Karim Masimov requested that Finance
Minister Nataliya Korzhova oversee the sale of a .8% share of the
Eurasian Natural Resources Corporation Plc (ENRC) to the public.
(The total share of ENRC owned by the GOK is 24.8%.) Masimov also
directed the heads of the state holding companies to consider
selling part of their stock to the public. The final decision on
those issues will be made on April 10. (Interfax - Kazakhstan,
April 2)

Russia, Kazakhstan Sign Economic Cooperation Agreements
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4. On March 30, three documents on economic cooperation were signed
in Astana during the visit of Russian Premier Mikhail Fradkov to
Kazakhstan. Kazakhstani Energy Minister Baktykozha Izmukhambetov
and Russian Deputy Minister of Industry and Energy Andrey Reus
signed a protocol of amendments to the 2002 Intergovernmental Treaty
on Oil Transit. Both the President of Kazakhstan's Development
Bank, Askar Sembin, and the CEO of the Eurasian Development Bank,
Igor Fingovenov, signed cooperation agreements with the Chairman of
Russia's Vnesheconombank, Vladimir Dmitriyev. (Interfax -
Kazakhstan, March 31)

Property Legalization Extended Again
--------------


5. On March 26, President Nursultan Nazarbayev signed a law
prolonging the deadline for property legalization until August 1,

2007. Kazakhstan started the legalization process in July 2006. As
of now, over 920,000 real estate entities, with a total value of
about $1.55 billion, have been legalized. (Kazakhstan Today, March
26)

Kazakhstan's President Favors Odessa-Brody's Extension
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6. Kazakhstan would like to see the Odessa-Brody pipeline extended
to Gdansk, Poland, and wants Russia to be involved in talks on the
project, President Nursultan Nazarbayev said at a joint news
conference in Astana on March 29 after discussions with Polish
President Lech Kaczynski. According to President Nazarbayev, "the
projected twofold increase in oil extraction by 2012-2015 is making
us seek new ways [of transporting it]. An Odessa-Brody-Gdansk
project would be a good alternative for us...I would like to
emphasize our interest in this [project] and Russian organizations
ought to be invited to participate," he said. "It's not a
political, but an economic issue, because excess oil would be
transported from Kazakhstan through Russia." Nazarbayev added that

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"Kazakhstani companies would like to buy oil refineries in Poland
and to build a pipeline jointly." (Interfax - Kazakhstan, March
30)

Trans-Caspian Pipeline Construction under Discussion
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7. A Trans-Caspian pipeline can only be constructed after the three
primary issues are resolved, Kazakhstan's Foreign Minister Marat
Tazhin said at a press conference in Astana on March 28. Firstly,
Tazhin said, the Caspian countries should decide on the legal status
of the Caspian Sea. Second, there are technical issues: "We cannot
say now that we have documentation or some ready-to-go design in
place," he continued. Third, "the project needs an economic
assessment. Without a reliable sense of supplies, it is hard to say
(about project expediency)," Tazhin emphasized. (Interfax -
Kazakhstan, March 28)

TCO, Environmental Ministry Reach Agreement on Spending
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8. Environmental Minister Nurlan Iskakov announced that his
Ministry had reached agreement with TengizChevrOil (TCO) on a
three-year plan for TCO environmental activities. The plan entails
TCO spending about KZT 40 billion ($323 million) per year. The
money will be allocated for resolving issues with sulfur, gas
flaring, wastes recycling and technological process improvement.
(Express-K newspaper, March 29)

ORDWAY