KAZAKHSTAN: KAZENERGY VERSUS KIOGE

UNCLAS SECTION 01 OF 02 ASTANA 001904 SENSITIVE SIPDIS STATE FOR SCA/CEN, EEB/ESC, S/EEE, S/CIEA STATE PLEASE PASS TO USTDA E.O. 12958: N/A TAGS: PGOV PREL ECON EINV EPET KZ SUBJECT: KAZAKHSTAN: KAZENERGY VERSUS KIOGE ASTANA 00001904 001.3 OF 002 ¶1. (U) Sensitive but unclassified. Not for public Internet. ¶2. (SBU) SUMMARY: This fall, two major energy conferences in Kazakhstan clashed head-on. On September 24-25, the KazEnergy business association, chaired by Timur Kulibayev, President Nursultan Nazarbayev's son-in-law, held its fourth annual Eurasian Energy Forum in Astana. Just two weeks later, on October 7-8, the London-based ITECA Corporation held the 17th annual Kazakhstan International Oil and Gas Conference and Exhibition (KIOGE) in Almaty. The close proximity of the two events forced frustrated energy executives to choose between a more elite, policy-oriented conference in the capital and the larger, more technical conference and exhibition in the former capital. In the end, both conferences drew large crowds. Though attendance declined from past years, the business community attended the KIOGE event in Almaty, but most government officials and senior executives chose to attend the KazEnergy conference in Astana, perhaps signaling the growing influence of Kulibayev. END SUMMARY. PUTTING ON THE RITZ ¶3. (SBU) This year's KazEnergy Forum was headlined by Prime Minister Karim Masimov, Minister of Energy and Mineral Resources Sauat Mynbayev, Kulibayev, and keynote speaker and former Chancellor of Germany Gerhard Schroeder. Other notable participants included Rovnag Abdullayev, President of the State Oil Company of the Azerbaijan Republic (SOCAR),Columbia University professor Robert Legvold, and Martha Brill Olcott of the Carnegie Endowment for International Peace. (NOTE: Former Vice President Richard Cheney was expected to attend as well, but canceled at the last minute for personal reasons, sorely disappointing the conference organizers. END NOTE). ¶4. (SBU) More than 600 people paid $1,500 each to attend the two-day conference, and Tengizchevroil paid $200,000 for the privilege of sponsoring the event, which was held in the huge Palace of Independence conference center. This year, for the first time, the KazEnergy conference also included an exhibition by international oil companies and oil service companies, which many participants saw as a shot across the bow at KIOGE. KazEnergy week officially ended on Saturday, September 26, with an annual golf tournament sponsored by ExxonMobil, which Mynbayev and Kulibayev attended. THE KAZENERGY CHALLENGE ¶5. (SBU) Richard Fritz, Public Relations Manager for Agip Kazakhstan North Caspian Operating Company, told Energy Officer on September 24 that he expects the KazEnergy Forum to become more popular than KIOGE, because it has the ability to attract high-level political and business leaders. "KIOGE is still an important venue for the oil service companies," he said, "but it's become more technical, and is less relevant" to the international oil companies (IOCs). Carlos Lozano, Financial Director of Spain's Repsol, confided to Energy Officer that the representatives of many IOCs have become increasingly critical of KIOGE in recent years. "They don't draw the big names anymore," he said, "and the focus is more technical. Plus, the hotels in Almaty require 100% prepayment and a three- to four-night minimum stay at 'special' KIOGE rates. It's a racket!" Lozano also noted that KIOGE is managed by London-based ITECA Corporation, while KazEnergy is organized by a local company, Expo.kz, which responds to the government's call for increasing local content in goods and services. KIOGE ATTENDANCE DOWN ¶6. (SBU) With the notable exception of Deputy Secretary of Energy Daniel Poneman, the KIOGE conference did not draw as many headliners as KazEnergy, due in part to the arrival in Astana on October 6 of French President Nicolas Sarkozy. The government was represented at KIOGE by Vice Minister of Energy and Mineral Resources Lyazzat ASTANA 00001904 002.3 OF 002 Kiinov and President of KazMunaiGas Kairgeldy Kabyldin. Attendance at the KIOGE conference was comparable to last year (approximately 800 people),but U.S. companies with booths at the exhibition told the DCM on October 7 that attendance was noticeably down from previous years, and that business was not as brisk. ¶7. (SBU) COMMENT: This year, assisted by French President Nicholas Sarkozy's trip to Astana on the eve of KIOGE, might mark the turning point in the KazEnergy Forum's efforts to replace KIOGE as Kazakhstan's premiere energy event. Whether or not Sarkozy's visit simply provided an excuse for government officials to tarnish the luster of KIOGE in favor of rising-star Kulibayev's event, most observers see the KazEnergy/KIOGE evolution as a continuation of the relocation of power to Astana -- following in the long line of energy companies who have moved their base of operations out of Almaty. END COMMENT. HOAGLAND