Identifier
Created
Classification
Origin
08ASTANA182
2008-01-31 01:50:00
UNCLASSIFIED
Embassy Astana
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JANUARY 6 - 18,

Tags:  ECON EIND ENRG EPET EFIN KTDB KZ 
pdf how-to read a cable
VZCZCXRO5510
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0182/01 0310150
ZNR UUUUU ZZH
R 310150Z JAN 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 1630
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0376
RUEHAK/AMEMBASSY ANKARA 2124
RUEHBUL/AMEMBASSY KABUL 0371
RUEHNE/AMEMBASSY NEW DELHI 0487
RUEHAST/USOFFICE ALMATY 0188
UNCLAS SECTION 01 OF 03 ASTANA 000182 

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, JANUARY 6 - 18,
2008

ASTANA 00000182 001.2 OF 003


UNCLAS SECTION 01 OF 03 ASTANA 000182

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, JANUARY 6 - 18,
2008

ASTANA 00000182 001.2 OF 003



1. Summary: This information on economic and energy developments
in Kazakhstan is drawn primarily from the local press, and has not
been verified for accuracy.

-- GOK Economic Policy in 2008
-- New Appointments
-- US Bank Provides Loan to Kazakhstani Partner
-- Economic Statistics
-- KazMunayGas Will Explore N Block on the Caspian Shelf
-- KazMunayGas Secures Loan for Rompetrol Acquisition
-- Power Loss Prevention Program to Be Implemented
-- New Shell Country Chairman Assumed Duties on January 1
-- Energy Statistics for 2007

GOK Economic Policy in 2008
--------------


2. The Government of Kazakhstan (GOK),the National Bank of
Kazakhstan (NBK) and the Financial Supervision Agency (FSA) approved
a joint statement on the main directions of the country's economic
policy. According to preliminary estimates, Kazakhstani GDP growth
in 2007 was 8.7 percent. As a result of difficulties attracting
external financing, the GOK is predicting a reduction in credit and
only 5-7 percent GDP growth in 2008. Priority tasks for the NBK and
the FSA will be to maintain inflation at, or below, 10 percent,
strengthen supervision and regulation of private banks, and provide
private banks with short-term liquidity if necessary. The GOK will
continue to provide financing to construction companies through its
development institutions. This step will allow for the completion
of many apartment buildings currently under construction in Astana
and other regions of Kazakhstan. (Kazakhstanskaya Pravda, January
9)

New Appointments
--------------


3. KazakhTelecom announced the appointment of Askar Yesengarayev as
new Chairman of the Board of Directors. Yesengarayev previously held

positions as the Managing Director of the Samruk State Holding and
as Chairman of the Information Agency of the Republic of Kazakhstan.
KazakhTelecom dominates the Kazakhstani telecommunications market.
The government owns approximately 52% of the company, which is
managed by Samruk. (Interfax-Kazakhstan, January 14)


4. Kazyna Sustainable Development Fund Deputy Chairman Maksat
Kabashev has been selected Chairman of the Managing Board of the
National Investment Fund (NIF) of Kazakhstan. (Note. NIF is one of
the development institutions operating under the umbrella of Kazyna.
The Fund fosters the development and direction of industries in
non-extractive sectors through direct investment and co-ownership of
businesses. End Note.) He was replaced at Kazyna by Zeinulla
Kakimzhanov. (Interfax-Kazakhstan, January 15)

US Bank Provides a Loan to Kazakhstani Partner
-------------- -


5. National City Corporation (USA) has authorized a $30 million
loan to Kazakhstan-based TsentrKredit Bank (TKB),according to a
January 8 TKB press release. The loan was granted for seven years
with a two-year grace period and will be spent on the development of
the bank's retail business. According to the press release, the
U.S. Overseas Private Investment Corporation provided a loan
guarantee. (BBC Monitoring Central Asia, January 9)

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


6. In 2007, agricultural output reached 1.07 trillion tenge (about
$8.84 billion),having grown 8.4% in comparison with 2006. The
gross grain harvest rose 22% to 20.1 million tons in 2007.
Production of meat was 1,504 million tons, a 4% increase over the
1,446 million tons produced in 2006. The production of milk
increased by 2.9%, reaching 5,037 million tons. Overall, livestock
production in 2007 grew by 4% to 469.5 billion tenge (approximately
$3.88 billion),and crop output increased by 12.7% to 600.1 billion

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tenge (about $4.96 billion). (Interfax-Kazakhstan, January 15)


7. According to the National Statistics Agency, Kazakhstan's
foreign trade surplus shrank by 5.6%, from $13.531 billion in
January-November 2006 to $12.809 billion for the same period in

2007. Foreign trade grew 28.9% during that 11-month period to
$72.349 billion, including a 22.3% growth in exports to $42.579
billion, and a 39.8% growth in imports to $29.77 billion. The top
ten export destinations were Italy (16.3% of total exports),
Switzerland (15.6%),China (12%),Russia (10%),France (8.4%),
Ukraine (2.4%),UK (2.1%),Turkey (2%) Uzbekistan (1.8%),and the
U.S. (1%). The top ten import sources were Russia (35.4% of total
imports),China (10.7%),Germany (8%),the United States (5%),
Ukraine (4.7%),Japan (4.3%),Italy (3.6%),Turkey (3%),the UK
(2.3%),and France (2.2%). (Interfax-Kazakhstan, January 15)

KazMunayGas Will Explore N Block on the Caspian Shelf
-------------- --------------


8. Kazakhstan's Ministry of Energy and Natural Resources signed a
Production Sharing Agreement (PSA) with Kazakhstan's national oil
and gas company, KazMunayGas (KMG),to explore the promising N (or
"Nursultan") Block on the Caspian shelf. The N Block was discovered
in the mid-1990's. Its reserves are estimated at 600-700 million
tons of hydrocarbons. KMG experts believe that this block has more
gas than oil. The major complication in its exploration is its deep
location below the sea (40 to 230 meters),which is expected to
result in high extraction expenses. Exploration work will start in
the second half of 2008. (Express-K newspaper, January 12)

KazMunayGas Secures a Loan for Rompetrol Acquisition
-------------- --------------


9. KazMunayGas (KMG) has concluded a deal for a one-year $3.1
billion syndicated loan from ABN Amro, Credit Suisse, and Calyon.
The annual interest rate is LIBOR plus 0.9%. The loan will be used
to fund the acquisition of a 75% stake in Romania's Rompetrol Group
N.V. The acquisition will double KMG's refining capacity by
providing access to two Rompetrol refineries in Romania and
significantly increase its retail infrastructure by providing access
to 630 filling stations in seven European countries. (Interfax -
Kazakhstan, January 10)

Power Loss Prevention Program to be Implemented
-------------- --


10. The State Agency for the Regulation of Natural Monopolies
(AREM) has proposed that power companies seeking tariff increases
submit a three-to-five-year power loss prevention plan. According
to AREM, today standard "technical losses" are 60% for water, 22%
for electricity, and 33% for heat. Compensation for standard
technical losses consumes as much as 50% of tariffs, and therefore
the implementation of power loss prevention programs should result
in significant tariff reductions. (Interfax - Kazakhstan, January
16)

New Shell Country Chairman Assumed Duties on January 1
-------------- --------------


11. Royal Dutch Shell Plc has appointed Campbell Keir as General
Manager and Country Chairman for Shell Kazakhstan Development B.V.
Keir was previously Managing Director for Shell Syria Petroleum
Development, General Manager of the Al Furat Petroleum Company, and
Country Chairman of Shell Syria. Between 1999 and 2003, he worked
as Managing Director for Shell Exploration and Production in
Thailand. Upon appointment, Keir established his priorities as
working closely with KazMunayGas, continuing to expand Shell's
program of local content development and social investment, and
moving Shell's main office from Almaty to Astana by mid 2008.
(Interfax - Kazakhstan, January 17)

Energy Statistics for 2007
--------------


12. According to the National Statistics Agency, in 2007,

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Kazakhstan produced 55.5 million tons of crude oil (2.2% more than
in 2006) and 11.9 million tons of gas condensate (11.6% more
year-on-year.) Natural gas production rose 15.7% to 16.6 billion
cubic meters. coal production fell 1.9% to 94.4 million tons.
Electricity production grew 6.2% to 76.15 billion kilowatt-hours.
(Interfax - Kazakhstan, January 15)


13. Kazakhstan produced 6,637 tons of uranium in 2007, 25.7% more
than in 2006. In 2008, the country plans to increase its production
to around 9,600 tons of uranium. (Press service of Kazatomprom,
January 15)

ORDWAY