Identifier
Created
Classification
Origin
08ASTANA971
2008-05-22 07:33:00
UNCLASSIFIED
Embassy Astana
Cable title:  

KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, APRIL 19 - MAY 3,

Tags:  ECON EIND ENRG EPET EFIN KTDB KZ 
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RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0971/01 1430733
ZNR UUUUU ZZH
R 220733Z MAY 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2464
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0513
RUEHAK/AMEMBASSY ANKARA 2168
RUEHBUL/AMEMBASSY KABUL 0399
RUEHNE/AMEMBASSY NEW DELHI 0505
RUEHAST/USOFFICE ALMATY 0442
UNCLAS SECTION 01 OF 02 ASTANA 000971 

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, APRIL 19 - MAY 3,
2008

ASTANA 00000971 001.2 OF 002


UNCLAS SECTION 01 OF 02 ASTANA 000971

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, APRIL 19 - MAY 3,
2008

ASTANA 00000971 001.2 OF 002



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

-- Kazakhstan-Uzbekistan Commercial Ties
-- Trade Increases within Eurasian Economic Community
-- Astana Finance Enters Russian Market
-- Return of Ex-Finance Minister
-- First Drilling in Atash
-- Court Rules in Favor of Karachaganak Petroleum Operating B.V.
-- Zhambyl Hydropower Plant To Be Privatized
-- 70% of Equipment in Mittal Mines is in Disrepair
-- Samruk to Buy A 50% Stake in Two Open-Pit Coal Mines
-- Kazakhstan Seeks More Oil Transit via Georgia

Kazakhstan-Uzbekistan Commercial Ties
--------------


2. "We are close to reaching a consensus on creating a free trade
zone between our countries," said President Nazarbayev at a press
conference following talks with Uzbekistan's President Islam Karimov
on April 22 in Astana. Nazarbaev announced plans to open chambers
of commerce in both Uzbekistan's and Kazakhstan's capitals.
Kazakhstan-Uzbekistan trade doubled in 2007 compared to the previous
year totaling $1.4 billion: $871.8 million in exports from
Kazakhstan to Uzbekistan and $538.5 million in exports from
Uzbekistan to Kazazhstan. (Interfax-Kazakhstan, April 23)

Trade Increases within Eurasian Economic Community
-------------- --------------


3. According to Tair Mansurov, Secretary General of the Eurasian
Economic Community (EEC),trade between members states has tripled
over the past seven years: from $27 billion in 2000 to $97 billion
in 2007. Mansurov noted that these encouraging statistics will
encourage EEC countries to think more concretely about a future
customs union. (Interfax, April 28)

Astana Finance Enters Russian Market
--------------


4. Russia's Alfa Bank sold a 100% stake in its subsidiary Alfa Bank
Bashkortostan for $16.88 million to Kazakhstan's Astana Finance.
Astana Finance provides a number of investment-banking services,
including long-term project finance, leasing, and mortgage services.
The government holds a 25.5% stake in Astana Finance. (Interfax,
April 30)

Return of Ex-Finance Minister
--------------


5. Natalia Korzhova, former Minister of Finance, has been appointed
the Executive Secretary of the Ministry of Finance. The positive of
executive secretary for all government agencies was introduced by
President Nazarbayev in August 2007. Executive secretaries are
equal in rank to first vice ministers. (Interfax-Kazakhstan, April
29)

First Drilling in Atash
--------------


6. Atash Co., owned by KazMunaiTeniz and Russia's Lukoil Overseas
Shelf B.V., started its first drilling operations in the Atash
section of the Caspian Sea using floating drilling facilities. The
estimated reserves at Atash are 141.7 million tons of crude.
(Delovoi Kazakhstan newspaper, May 1)

Court Rules in Favor of Karachaganak Petroleum Operating B.V.
-------------- --------------


7. The West Kazakhstan regional court has ruled unlawful the
refusal of the regional environmental office to review environmental
payments made by Karachaganak Petroleum Operating B.V. (KPO) in the
3rd and 4th quarters of 2007. Because the regional environmental
office refused to review its submissions, KPO did not submit a tax
report, and in turn the West Kazakhstan Tax Committee has blocked

ASTANA 00000971 002.2 OF 002


its bank accounts since December 2007. KPO expects that the tax
authorities will unblock its accounts after verifying its
environmental payments. (Press release of KPO, April 22)

Zhambyl Hydropower Plant To Be Privatized
--------------


8. Energy Minister Sauat Mynbayev has suggested that Kazakhstan
sell a 50% state stake in the Zhambyl Hydropower Plant (Zhambyl
GRES),which supplies electricity to South Kazakhstan. Zhambyl
GRES operates only in wintertime, and it is the only power plant in
the country that has no reserve capacity in case of an emergency.
(Interfax-Kazakhstan, April 22)

70% of Equipment in Mittal Mines is in Disrepair
-------------- --------------


9. After an inspection of eight coal mines belonging to the
ArcelorMittal Temirtau steel company, the prosecutor's office
alleged that 70% of equipment used in the mines is in disrepair,
equipment being installed is obsolete, and labor safety standards
are not being met. The prosecutor's office gave ArcelorMittal one
month to correct the violations discovered. (Kazakhstan TV channel,
April 24)

Samruk to Buy A 50% Stake in Two Open-Pit Coal Mines
-------------- --------------


10. The Samruk state asset management holding company will pay
United Company Rusal $345 million for a 50% stake in the Bogatyr and
Severniy open-pit coal mines. Access Industries Inc. is the
operator of the mines. (Panorama newspaper, April 25)

Kazakhstan Seeks More Oil Transit via Georgia
-------------- --------------


11. Energy Minister Sauat Mynbayev and Samruk Chairman Kanat
Bozumbayev held talks in Astana with Georgia's Minister of Economic
Development, Ekaterina Sharashidze. Kazakhstan is interested in
increasing to 10 million tons per year the volume of its crude oil
which is exported via Georgia's railroad and oil pipelines. (Astana
TV channel, April 25)

ORDWAY