KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, AUGUST 17 - AUGUST

UNCLAS SECTION 01 OF 02 ASTANA 001701

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 EAGR EPET ENRG EFIN KZ
SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, AUGUST 17 - AUGUST
30, 2008

ASTANA 00001701 001.2 OF 002



1. Summary: This information is drawn primarily from the
Kazakhstani local press, and has not been verified for accuracy.

-- Kazakhstani Wheat Exports
-- Regional Economic Integration: Latest Developments
-- Banker Mukhtar Ablyazov Looking for IPO
-- Economic Statistics
-- ONGC To Buy Imperial Energy Corp.
-- ENRC Increases Investments in Kazakhstan
-- Energy Statistics

Kazakhstani Wheat Exports
--------------


2. Iran's state procurement agency will purchase 150,000-200,000
tons of milling wheat from Kazakhstan. Shipment is planned for
October and November. Iran's grain harvest this summer was
seriously damaged by drought and other unfavorable weather, the
media reports.


3. Kazakhstan will triple its supply of wheat to Egypt. President
Nazarbayev told visiting Egyptian Minister of Industry and Trade
Rasheed Mohamed Rasheed on August 29 that in 2008, Kazakhstan
intends to export approximately one million tons of wheat to his
country. In 2007, Kazakhstan exported to Egypt 329,600 tons of
wheat.

Regional Economic Integration: Latest Developments
-------------- --------------


4. In a meeting with President Nazarbayev, Tair Mansurov, Secretary
General of the Eurasian Economic Community, said that the customs
union between Russia, Belorussia and Kazakstan should be set up by

2010. Eurasian Economic Community member states intend to adopt 26
out of 69 fundamental documents this year.


5. The Inter-Bank Alliance of the Shanghai Cooperation Organization
(SCO) and the Eurasian Development Bank (EDB) signed a partnership
memorandum on August 28 in Dushanbe. According to the Development
Bank of Kazakhstan, which currently chairs the Inter-Bank Alliance,
the memorandum is aimed at the development of mutual cooperation.
The sides will focus on funding investment projects and conducting
joint activities, such as seminars, conferences, and business
forums. The Inter-Bank Alliance includes the Development Bank of
Kazakhstan, the China Development Bank, Russia's VneshEconomBank,
the Settlement and Savings Company of Kyrgyzstan, Tajikistan's State
Savings Bank AmonatBank, and the National Bank for External Economic
Activity of Uzbekistan.


6. Russia's Vneshtorgbank (VTB) received permission from the
Financial Supervision Agency to open a subsidiary in Kazakhstan.
VTB opened a representative office in Almaty in February this year.


Banker Mukhtar Ablyazov Looking for IPO
-------------- --------------


7. BTA Bank Chairman Mukhtar Ablyazov has decided to consolidate
his development businesses in Russia by merging the assets of two
companies, Eurasia Logistics and Eurasia City. Russian newspaper
Kommersant reported that his decision was taken in view of a
possible IPO on the London Stock Exchange in 2009. According to
Kommersant, the newly created company may become the most valuable
development company in Russia, with a capitalization reaching $23
billion.

Economic Statistics
--------------


8. Gross agricultural production in Kazakhstan was 363.5 billion
tenge (approximately $3 billion) during January-July 2008, which
reflects 0.9% year-on-year growth. Meat production increased by
3.5% during that period, while the production of milk and eggs grew
by 3.9% and 8.6% respectively.


ASTANA 00001701 002.2 OF 002



9. For the first half of 2008, Kazakhstan's external trade turnover
was $52.14 billion, a 42.5% increase over the same period for the
previous year. Exports increased by 60.7% to total $35.05 billion;
imports grew by 15.5% to total $17.1 billion. Price increases for
oil and gas were responsible for much of the increase in exports.
The physical volume of oil and gas exports actually declined by 2.4%
during the first half of 2008, while the value of oil and gas
exports grew by 66.9% to reach $21.2 billion.

ONGC To Buy Imperial Energy Corp.
--------------


10. India's Oil and Natural Gas Corporation (ONGC) is in the final
stages of negotiations to buy British Imperial Energy Corp. for 1.8
billion pounds. Imperial Energy owns a license to explore the
Severniy Tourgay oil field in Kostanay oblast.

ENRC Increases Investments in Kazakhstan
-------------- --------------


11. The Board of Directors of the Eurasian Natural Resources
Corporation (ENRC) voted to increase investments in Kazakhstan from
$3.6 billion to $6.9 billion, in order to build a second pellet
plant, a caustic soda plant with a designed capacity of 400,000 tons
a year, and an anode production plant, and to complete the second
phase of an electrolysis plant as well as other projects that will
come on-stream during 2010-2012.

Energy Statistics
--------------


12. According to the National Statistics Agency, Kazakhstan
produced 33.78 million tons of crude oil during January to July
2008, up 6.4% compared to the same period in 2007, and 19.88 billion
cubic meters of natural gas, an increase of 14%. Coal production
was up 18.4% to 62.92 million tons.

ORDWAY
1


4