KAZAKHSTAN: ECONOMIC AND ENERGY UPDATE, JULY 5-18

UNCLAS ASTANA 001205 SIPDIS STATE FOR SCA/CEN, EEB/ESC STATE PLEASE PASS TO USTDA E.O. 12958: N/A TAGS: PGOV ECON EPET ENRG EINV EFIN ELAB KZ SUBJECT: KAZAKHSTAN: ECONOMIC AND ENERGY UPDATE, JULY 5-18 ¶1. SUMMARY: This information is drawn primarily from the Kazakhstani local press and has not been verified for accuracy. -- State Will Fund Shymkent Oil Refinery Modernization -- KazMunaiGas To Acquire Pavlodar Oil Refinery -- Kazakhstan Seeks To Reduce Kashagan Project Costs -- Karachaganak To Provide Expansion Plan -- New Appointments at Kazatomprom -- New Appointment at Rompetrol Group STATE WILL FUND SHYMKENT OIL REFINERY MODERNIZATION ¶2. According to a July 11 news report of the Kazakhstan Television Channel, the government is ready to provide financial assistance to modernize the Shymkent oil refinery. Modernization of the refinery would increase its processing capacity from 5 to 6 million tons of crude oil annually and allow it to launch production of sulfur, polypropylene, and benzyl as well as to produce high-octane petroleum products. KAZMUNAIGAS TO ACQUIRE PAVLODAR OIL REFINERY ¶3. "KazMunaiGas will acquire a 100-percent stake in the Pavlodar oil refinery, without the participation of the Chinese," Kairgeldy Kabyldin, president of national oil and gas company KazMunaiGas (KMG),told reporters on July 10. MangistauMunaiGas (MMG) still owns 58 percent of the shares in the refinery, with the remaining shares belonging to the Committee on State Property and Privatization of the Ministry of Finance. KMG and the China National Petroleum Corporation plan to finalize their deal to acquire 100 percent of the common shares in MMG by the end of July. KAZAKHSTAN SEEKS TO REDUCE KASHAGAN PROJECT COSTS ¶4. On July 10, Kabyldin told reporters that he believes "it is feasible to cut the costs (of Kashagan) by 30 percent." Earlier, the Minister of Energy and Mineral Resources, Sauat Mynbayev, announced that capital expenditures for the Kashagan experimental program would be reduced by $1 billion. KARACHAGANAK TO PROVIDE EXPANSION PLAN ¶5. On July 10, Kabyldin announced that Karachaganak Petroleum Operating B.V. (KPO) would provide a plan for the third stage of the Karachaganak development project in the fall. The plan calls for increases in annual production of liquid hydrocarbons to 15 million tons and natural gas to 38 billion cubic meters. NEW APPOINTMENTS AT KAZATOMPROM ¶6. On July 13, Kazatomprom, Kazakhstan's state-owned nuclear company, announced the appointments of 48-year-old Nurlan Ryspanov as new vice president for production, and 37-year-old Galimzhan Pirmatov as new vice president for economy and finance. Prior to his appointment, Ryspanov was the director of the mining assets department at the Samruk-Kazyna National Welfare Fund. Pirmatov previously served as the deputy chairman of BankTuranAlem. NEW APPOINTMENT AT ROMPETROL GROUP ¶7. On July 8, the former managing director of KMG, Saduokhas Meraliyev, was appointed as the new director general of the KMG-owned Rompetrol Group in Romania. The outgoing director general, Dinu Patrichiu, will continue serving on KMG's board of directors. KMG president Kabyldin called on Rompetrol's new management to improve the company's organizational structure, reduce expenses, and spin off non-core assets. HOAGLAND