KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JANUARY 4 - JANUARY

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SUBJECT: KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JANUARY 4 - JANUARY
17, 2009

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

-- New Refinancing Rate
-- Update from Samruk-Kazyna
-- Humanitarian Aid for Tajikistan
-- Arcelor Mittal To Modernize Coal Mines
-- China To Build A Gas-Fired Power Plant In Aktobe
-- Sunkar Resources To Buy Tengiz Sulfur
-- KazMunayGas Buys MangistauMunayGas
-- ONGC To Develop Satpayev Block
-- Railway To Be Built In Kuryk Sea Port
-- Preliminary 2008 Energy Statistics

NEW REFINANCING RATE


2. On January 1, 2009, the National Bank of Kazakhstan (NBK)
lowered the refinancing rate from 10.5% to 10% per annum. According
to the NBK's press release, this decision was driven by the
deceleration of inflation in 2008-2009 and the necessity to support
the banking sector with short-term liquidity. The lower refinancing
rate will help the NBK to maintain stability in the banking sector.

UPDATE FROM SAMRUK-KAZYNA


3. According to Kayrat Kelimbetov, CEO of the Samruk-Kazyna
National Welfare Fund, the first auctions to purchase distressed
bank loans will be held in February. He said that the management of
the Distressed Assets Fund has already started negotiations with
commercial banks to sell these loans, which will be categorized as
mortgages, credits for small and medium business, or corporate
loans. The government plans to capitalize the Distressed Assets
Fund with $1 billion from the national budget.


4. On January 17, 2009, Kayrat Kelimbetov and German Gref,
President of Russia's Sberbank, met in Astana to discuss the
anti-crisis measures taken by both countries. They agreed that
Samruk-Kazyna and Sberbank should synchronize their actions and keep
each other informed on the implementation of their respective
anti-crisis programs.


5. The monthly salaries of Samruk-Kazyna's Kelimbetov and his
deputies Timur Kulibayev and Arman Dunayev do not exceed 1.3 million
tenge (approximately $10,731),the fund's managing director Kayrat
Aitekenov said. Given the current crisis conditions in Kazakhstan,
Samruk-Kazyna's top managers received no annual bonuses at the end
of 2008, and fund employees will receive no raises in 2009.

HUMANITARIAN AID FOR TAJIKISTAN


6. Kazakhstan will pay off its $12-million state debt to Tajikistan
in-kind by supplying it with wheat worth $5 million, diesel oil
worth $4 million, and fuel oil worth $3 million. The debt was
originally corporate debt which the Government of Kazakhstan took
over. In December, Kazakhstan decided to redeem it in the form of
official humanitarian aid.

ARCELORMITTAL TO MODERNIZE COAL MINES


7. On January 8, ArcelorMittal Temirtau announced plans to invest
$300 million in 2009 to modernize its coal mines.

CHINA TO BUILD A GAS-FIRED POWER PLANT IN AKTOBE


8. "Khabar" television reported on January 6 that the Northern
China Company (NCC) signed a memorandum of understanding with the
Aktobe Regional Administration to build a 120-MW gas-turbine power
plant in Aktobe Oblast. The NCC would invest $140 million to
complete the $200-million project by 2011.

SUNKAR RESOURCES TO BUY TENGIZ SULFUR


9. On January 13, Tengizchevroil signed a protocol of intentions

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with Sunkar Resources Plc, a British-owned phosphate fertilizer
producer, to supply Sunkar's sulfuric acid plant with sulfur
starting in 2011.

KAZMUNAYGAS BUYS MANGISTAUMUNAYGAS


10. On January 12, Kazakhstan's state oil and gas company
KazMunayGas (KMG) signed a contract to buy a 50% stake plus two
voting shares in MangistauMunayGas (MMG) from the Indonesian-based
Central Asia Petroleum Ltd. MMG has recoverable reserves of 194
million tons of crude oil. With the deal KMG also gains control
over the Pavlodar Petrochemical Plant. China's national oil company
is widely expected to be awarded the remaining minority stake in
MMG.

ONGC TO DEVELOP SATPAYEV BLOCK


11. During President Nazarbayev's January state visit to India,
Minister of Energy Mynbayev signed a contract with India's Oil and
Natural Gas Corporation Videsh (ONGC) to award the oil company a
30-40% stake in the Satpayev offshore block. KazMunayGas and ONGC
Videsh signed a memorandum of understanding to develop the oil field
jointly in February 2005. The block holds an estimated 253 million
tons of recoverable reserves of crude oil.

RAILWAY TO BE BUILT IN KURYK SEA PORT


12. On January 13, "Khabar" television reported that at the end of
2008, a group of private investors signed a contract with the
Ministry of Transport and Communications to build a 14-km railway at
the Kuryk seaport to transport crude oil. The construction of the
railway, with a projected throughput capacity of 5.5 million tons of
crude a year, is expected to be completed in 2011 in order to ship
crude from the Kashagan oil field when it comes on-stream.

APPOINTMENTS IN KAZMUNAYGAS


13. The Board of Directors of KazMunayGas named Nurbol Sultan
Director General of KMG subsidiary KazTransOil; Bolat Nazarov the
Director General of KMG subsidiary KazTransGas; and Ardak Kassymbek
the Managing Director of KMG. Prior to the appointments, Sultan
supervised the Corporate Finance Department of KMG, Nazarov was the
Deputy Director General of KazRosGas, and Kassymbek held the post of
the Executive Director of KMG.

PRELIMINARY 2008 ENERGY STATISTICS


14. According to preliminary government estimates posted on January
12, Kazakhstan produced 70.6 million tons of crude oil and gas
condensate in 2008, an increase of 4.8% over 2007. Kazakhstan
exported 62.3 million tons of crude oil, 2.8% more than in 2007.
Kazakhstan produced 105 million metric tons of coal, an 11.2%
increase compared to the previous year. National nuclear company
Kazatomprom produced 8,500.5 tons of uranium, an increase of 28%
over 2007.

HOAGLAND