Identifier
Created
Classification
Origin
08ASTANA962
2008-05-19 11:02:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Astana
Cable title:
KAZAKHSTAN - OIL EXPORT DUTY GOES INTO EFFECT, BUT
how-toVZCZCXRO7469 OO RUEHLN RUEHVK RUEHYG DE RUEHTA #0962 1401102 ZNR UUUUU ZZH O 191102Z MAY 08 FM AMEMBASSY ASTANA TO RUEHC/SECSTATE WASHDC IMMEDIATE 2451 INFO RUCNCIS/CIS COLLECTIVE 0509 RUEHAK/AMEMBASSY ANKARA 2167 RUEHBJ/AMEMBASSY BEIJING 0048
UNCLAS ASTANA 000962
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET ECON ETRD PGOV KZ
SUBJECT: KAZAKHSTAN - OIL EXPORT DUTY GOES INTO EFFECT, BUT
DOES NOT APPLY TO MAJOR PROJECTS
UNCLAS ASTANA 000962
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET ECON ETRD PGOV KZ
SUBJECT: KAZAKHSTAN - OIL EXPORT DUTY GOES INTO EFFECT, BUT
DOES NOT APPLY TO MAJOR PROJECTS
1. (U) Kazakhstan's recently announced duty on the export of
crude oil and oil products went into effect on May 17. The
duty does not apply to companies whose contracts set fixed
tax regimes, which means that Kazakhstan's three principal
oil and gas projects -- Tengiz, Karachaganak, and Kashagan --
are exempted. (Note: Kashagan, of course, is still in the
pre-production phase. End Note.) Energy Minister Mynbayev
has previously explained that approximately 40 percent of
Kazakhstan's current crude exports will be subject to the
duty.
2. (U) The crude oil duty is to be calculated on the basis of
a sliding scale formula, taking into account the average
market price for crude. The initial duty will be $109.91 per
ton, with a lower $27.43 rate applicable to those companies
which already pay rent tax on crude exports.
3. (SBU) The Ministry of Finance published on May 16 a
preliminary list of 38 companies to which the crude oil duty
will apply. Most are Kazakhstani, including KazMunaiGas
Exploration and Production, a subsidiary of Kazakhstan's
state oil and gas company, KazMunaiGas (KMG). The list
includes at least one U.S.-owned company, Caspi Neft TME, a
subsidiary of Transmeridian Exploration Inc. Caspi Neft TME
is involved in developing the South Alibek oil field in
Aktobe oblast. (Note: Caspi Neft TME told the Ambassador in
a recent meeting that they do not have a tax stabilization
clause in their contract and thus did not expect to be exempt
from the export duty. End Note.)
4. (SBU) Comment: In introducing export duties on crude oil
and oil products, the Kazakhstani government appears to have
principally been motivated by a need to increase budget
revenues. Tax revenues from the non-extractive sector are
lower than originally planned, and expenses are higher, both
as a result of the domestic impact of the global financial
crisis -- which has led to lower economic growth, a sharp
contraction in the construction and real estate sectors, and
a government program to prop up those two sectors. The
government is also considering introducing an export duty on
metals. We had previously been informed of plans for an
export duty on wheat; however, that appears to have fallen by
the wayside for now, with the government instead imposing a
temporary export ban on wheat to ensure adequate domestic
supply and to keep domestic prices down on wheat and bread.
End Comment.
ORDWAY
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: EPET ECON ETRD PGOV KZ
SUBJECT: KAZAKHSTAN - OIL EXPORT DUTY GOES INTO EFFECT, BUT
DOES NOT APPLY TO MAJOR PROJECTS
1. (U) Kazakhstan's recently announced duty on the export of
crude oil and oil products went into effect on May 17. The
duty does not apply to companies whose contracts set fixed
tax regimes, which means that Kazakhstan's three principal
oil and gas projects -- Tengiz, Karachaganak, and Kashagan --
are exempted. (Note: Kashagan, of course, is still in the
pre-production phase. End Note.) Energy Minister Mynbayev
has previously explained that approximately 40 percent of
Kazakhstan's current crude exports will be subject to the
duty.
2. (U) The crude oil duty is to be calculated on the basis of
a sliding scale formula, taking into account the average
market price for crude. The initial duty will be $109.91 per
ton, with a lower $27.43 rate applicable to those companies
which already pay rent tax on crude exports.
3. (SBU) The Ministry of Finance published on May 16 a
preliminary list of 38 companies to which the crude oil duty
will apply. Most are Kazakhstani, including KazMunaiGas
Exploration and Production, a subsidiary of Kazakhstan's
state oil and gas company, KazMunaiGas (KMG). The list
includes at least one U.S.-owned company, Caspi Neft TME, a
subsidiary of Transmeridian Exploration Inc. Caspi Neft TME
is involved in developing the South Alibek oil field in
Aktobe oblast. (Note: Caspi Neft TME told the Ambassador in
a recent meeting that they do not have a tax stabilization
clause in their contract and thus did not expect to be exempt
from the export duty. End Note.)
4. (SBU) Comment: In introducing export duties on crude oil
and oil products, the Kazakhstani government appears to have
principally been motivated by a need to increase budget
revenues. Tax revenues from the non-extractive sector are
lower than originally planned, and expenses are higher, both
as a result of the domestic impact of the global financial
crisis -- which has led to lower economic growth, a sharp
contraction in the construction and real estate sectors, and
a government program to prop up those two sectors. The
government is also considering introducing an export duty on
metals. We had previously been informed of plans for an
export duty on wheat; however, that appears to have fallen by
the wayside for now, with the government instead imposing a
temporary export ban on wheat to ensure adequate domestic
supply and to keep domestic prices down on wheat and bread.
End Comment.
ORDWAY