Identifier
Created
Classification
Origin
08ASTANA1699
2008-09-08 08:21:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Astana
Cable title:
KAZAKHSTAN - MASIMOV AND MYNBAYEV STRESS IMPORTANCE OF
how-toVZCZCXRO7451 OO RUEHAST RUEHBI RUEHCI RUEHLH RUEHLN RUEHPW RUEHVK RUEHYG DE RUEHTA #1699 2520821 ZNR UUUUU ZZH O 080821Z SEP 08 FM AMEMBASSY ASTANA TO RUEHC/SECSTATE WASHDC IMMEDIATE 3218 INFO RUCNCIS/CIS COLLECTIVE 0625 RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
UNCLAS ASTANA 001699
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET EINV PGOV KZ
SUBJECT: KAZAKHSTAN - MASIMOV AND MYNBAYEV STRESS IMPORTANCE OF
DIVERSE ENERGY ROUTES AT KAZENERGY FORUM
UNCLAS ASTANA 001699
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET EINV PGOV KZ
SUBJECT: KAZAKHSTAN - MASIMOV AND MYNBAYEV STRESS IMPORTANCE OF
DIVERSE ENERGY ROUTES AT KAZENERGY FORUM
1. (U) The 3rd annual KazEnergy Eurasian Energy Forum was held in
Astana during September 4-5. In opening remarks, Prime Minister
Masimov promised that Kazakhstan "will always be a reliable and
dependable international partner," stressing that Kazakhstan's
"principled stand" is "to ensure stability of supplies and contracts
[and] provide a predictable and consistent basis for international
partners operating in our country." He stressed that Kazakhstan
remains committed to diversification of export routes for energy,
while adding that the selection of any specific project will be
based on an assessment of its economic viability. Masimov said
that Kazakhstan would participate in all major Eurasian transport
projects, including the Caspian Pipeline Consortium (CPC) pipeline,
Baku-Tbilisi-Ceyhan (BTC),the Atasu-Alashkankou (Kazakhstan-China)
oil pipeline, Burgas-Alexandroupolis, and the Prikaspiskiy gas
pipeline. Masimov explained that Kazakhstan's new tax code will
streamline methods for calculating rent taxes and excess profit
taxes and said that royalty payments will be replaced by a tax on
extraction. He added that Kazakhstan will "speed up the
modernization of its domestic oil processing and energy generating
infrastructure."
2. (SBU) Minister of Energy and Mineral Resources Sauat Mynbayev
followed Masimov's speech with a detailed overview of the energy
sector. On transportation, he noted that expansion of the
Atyrau-Samara oil pipeline to Russia is underway; construction of
the Beyneu-Akbulak gas pipeline to China has started; and Transneft,
KazMunaiGaz, and other CPC partners have reached agreement in
principle to expand the CPC pipeline by 2012, with only a few
"procedural questions" remaining to be resolved. (Note: In a
September 8 meeting with the Ambassador, Mynbaev was more frank. He
complained that BP -- which owns 12.5% of the CPC through a joint
venture with Lukoil called LUKARCO -- is holding up CPC expansion.
"Little BP could ruin everything," he maintained. Mynbaev argued
that as the largest stakeholder in Tengizchevroil, Chevron should
buy LUKARCO's stake in CPC. He then suggested that "if the price is
right," KazMunaiGaz would buy LUKARCO's share to break the impasse.
End Note).
3. (U) In his speech, Mynbayev particularly stressed the importance
of the gas pipeline to China, noting that Kazakhstan currently
exports gas to Russia only. He argued that Kazakhstan must expand
its oil refining capacity through the modernization of its three
existing refineries in Shymkent, Aktau, and Pavlodar, as well as the
construction of new refineries. Mynbaev also briefly discussed the
state of Kazakhstan's electricity sector. He acknowledged that the
price of electricity in Kazakhstan is very low (3 to 4 cents per
kilowatt hour) compared to global averages and tariff setting is not
transparent, which Mynbaev said has discouraged much-needed private
investment. "We have subsidized the price of electricity for too
long," he said. "The most important thing," according to Mynbaev,
"is long-term tariff stability." On nuclear power, Mynbaev stated
that Kazakhstan aspires to become the world's second biggest uranium
producer and has set a goal of producing 400,000 tons per year. He
also noted that KazAtomProm plans to construct a nuclear power plant
in Aktau by 2012.
4. (SBU) Presidential Energy Advisor Nurlan Balgimbayev proudly
cited Kazakhstan's success in attracting foreign direct investment
in its oil and gas sector, noting that exports continue to climb in
both volume and value. Balgimbayev said that the government
welcomed new private investment, including in oil refineries, oil
and gas transportation infrastructure, and the petrochemical
industry. He pointedly maintained, however, that "the time has come
to balance the interests of the oil companies with those of the
Government of Kazakhstan," especially with regard to the new tax
law. The government must increase both production and revenue, he
stressed. (Note: These comments were singled out by Steve Rose,
ExxonMobil General Manager for Kazakhstan, as among the most
significant statements of the day. End Note.)
ORDWAY
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET EINV PGOV KZ
SUBJECT: KAZAKHSTAN - MASIMOV AND MYNBAYEV STRESS IMPORTANCE OF
DIVERSE ENERGY ROUTES AT KAZENERGY FORUM
1. (U) The 3rd annual KazEnergy Eurasian Energy Forum was held in
Astana during September 4-5. In opening remarks, Prime Minister
Masimov promised that Kazakhstan "will always be a reliable and
dependable international partner," stressing that Kazakhstan's
"principled stand" is "to ensure stability of supplies and contracts
[and] provide a predictable and consistent basis for international
partners operating in our country." He stressed that Kazakhstan
remains committed to diversification of export routes for energy,
while adding that the selection of any specific project will be
based on an assessment of its economic viability. Masimov said
that Kazakhstan would participate in all major Eurasian transport
projects, including the Caspian Pipeline Consortium (CPC) pipeline,
Baku-Tbilisi-Ceyhan (BTC),the Atasu-Alashkankou (Kazakhstan-China)
oil pipeline, Burgas-Alexandroupolis, and the Prikaspiskiy gas
pipeline. Masimov explained that Kazakhstan's new tax code will
streamline methods for calculating rent taxes and excess profit
taxes and said that royalty payments will be replaced by a tax on
extraction. He added that Kazakhstan will "speed up the
modernization of its domestic oil processing and energy generating
infrastructure."
2. (SBU) Minister of Energy and Mineral Resources Sauat Mynbayev
followed Masimov's speech with a detailed overview of the energy
sector. On transportation, he noted that expansion of the
Atyrau-Samara oil pipeline to Russia is underway; construction of
the Beyneu-Akbulak gas pipeline to China has started; and Transneft,
KazMunaiGaz, and other CPC partners have reached agreement in
principle to expand the CPC pipeline by 2012, with only a few
"procedural questions" remaining to be resolved. (Note: In a
September 8 meeting with the Ambassador, Mynbaev was more frank. He
complained that BP -- which owns 12.5% of the CPC through a joint
venture with Lukoil called LUKARCO -- is holding up CPC expansion.
"Little BP could ruin everything," he maintained. Mynbaev argued
that as the largest stakeholder in Tengizchevroil, Chevron should
buy LUKARCO's stake in CPC. He then suggested that "if the price is
right," KazMunaiGaz would buy LUKARCO's share to break the impasse.
End Note).
3. (U) In his speech, Mynbayev particularly stressed the importance
of the gas pipeline to China, noting that Kazakhstan currently
exports gas to Russia only. He argued that Kazakhstan must expand
its oil refining capacity through the modernization of its three
existing refineries in Shymkent, Aktau, and Pavlodar, as well as the
construction of new refineries. Mynbaev also briefly discussed the
state of Kazakhstan's electricity sector. He acknowledged that the
price of electricity in Kazakhstan is very low (3 to 4 cents per
kilowatt hour) compared to global averages and tariff setting is not
transparent, which Mynbaev said has discouraged much-needed private
investment. "We have subsidized the price of electricity for too
long," he said. "The most important thing," according to Mynbaev,
"is long-term tariff stability." On nuclear power, Mynbaev stated
that Kazakhstan aspires to become the world's second biggest uranium
producer and has set a goal of producing 400,000 tons per year. He
also noted that KazAtomProm plans to construct a nuclear power plant
in Aktau by 2012.
4. (SBU) Presidential Energy Advisor Nurlan Balgimbayev proudly
cited Kazakhstan's success in attracting foreign direct investment
in its oil and gas sector, noting that exports continue to climb in
both volume and value. Balgimbayev said that the government
welcomed new private investment, including in oil refineries, oil
and gas transportation infrastructure, and the petrochemical
industry. He pointedly maintained, however, that "the time has come
to balance the interests of the oil companies with those of the
Government of Kazakhstan," especially with regard to the new tax
law. The government must increase both production and revenue, he
stressed. (Note: These comments were singled out by Steve Rose,
ExxonMobil General Manager for Kazakhstan, as among the most
significant statements of the day. End Note.)
ORDWAY