KAZAKHSTAN: SECOND ANNUAL EITI CONFERENCE

UNCLAS SECTION 01 OF 02 ASTANA 000948

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SUBJECT: KAZAKHSTAN: SECOND ANNUAL EITI CONFERENCE

REF: ASTANA 0211

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1. (U) Sensitive but unclassified. Not for public Internet.


2. (U) SUMMARY: On June 3, Minister of Energy Sauat Mynbayev
opened the second national conference on the Extractive Industries
Transparency Initiative (EITI) in Astana. Mynbayev announced that
Kazakhstan will complete the process of EITI validation by the end
of 2009, thanked the World Bank and the international oil companies
(IOCs) for their support of the initiative, and stressed the role
that local NGOs have played to increase transparency,
accountability, and public awareness. He said that 110 companies in
Kazakhstan have signed onto EITI, including 66 from the oil and gas
sector and 44 from the mining sector. Sam Bartlett of the
International EITI Secretariat praised Kazakhstan's progress to
date, particularly its community outreach and communications
efforts. NGO representatives advocated for greater transparency in
decisions by regional governments to allocate oil revenue for social
projects. END SUMMARY.

KAZAKHSTAN TO COMPLETE VALIDATION IN 2009


3. (SBU) Minister of Energy Sauat Mynbayev opened the second
national EITI conference in Astana on June 3. Mynbayev announced
that Kazakhstan will complete the process of EITI validation by the
end of 2009, well ahead of the March 2010 deadline. (NOTE:
Assemgul Khamzina, MEMR's EITI Senior Advisor, told Energy Officer
that the government must complete validation by the end of 2009,
because their funding will expire at the end of the calendar year
and it is uncertain whether or not additional funds will be
available for EITI activities in 2010. END NOTE). Mynbayev
graciously thanked the World Bank and the IOCs for their support of
the initiative, and stressed the role that local NGOs have played to
increase transparency, accountability, and public awareness. He
said that Kazakhstan has made progress toward international
standards for transparency in accounting, reporting, and disclosure,
and will continue to move forward in these areas. Mynbayev said
that 110 companies in Kazakhstan have signed on to EITI to date,
including 66 from the oil and gas sector and 44 from the mining
sector. He observed that few coal mining companies have signed on
to EITI so far, and said that MEMR will make a special effort to
increase the number of coal mining companies participating in the
initiative in 2010.

LOW TURNOUT AT CONFERENCE


4. (SBU) Several Western Ambassadors turned up expecting to hear
Prime Minister Karim Masimov, but he did not attend. Conference
organizers were disappointed in the overall attendance of
approximately 50 people, which included more than two dozen local
and national NGOs and official representatives from Azerbaijan,
Canada, The Netherlands, Spain, the United Kingdom, and the United
States. However, the low turnout may have been due to the fact that
the Ministry of Energy and Mineral Resources (MEMR) and the World
Bank have held three other EITI events in Kazakhstan in the past 12
months.

KAZAKHSTAN EXCELS IN COMMUNICATIONS


5. (U) Sam Bartlett, Regional Director for Europe and Asia of the
International EITI Secretariat, praised Kazakhstan's progress toward
validation, particularly its community outreach and communications
efforts. Bartlett said that Kazakhstan is "leading the EITI
community" in terms of regional communications, and announced that
Kazakhstan was given an award in recognition of these efforts at an
international EITI conference in Doha this February. He encouraged
Kazakhstan not to view validation as a "test," but rather to treat
it as an opportunity to assess the quality and effectiveness of its
disclosure and reporting activities, and to correct any weaknesses
in the process. Bartlett, who participated in a two-day internal
EITI working group meeting in Astana preceding the national
conference, said he was "very impressed with the open, informed

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debate" to improve the quality of reporting and the number of
companies participating in EITI in Kazakhstan.

NGOS PRESS FOR GREATER ACCOUNTABILITY AT REGIONAL LEVEL


6. (SBU) The majority of those attending the conference were from
small, local NGOs, such as the Civic Alliance of Mangistau Oblast
(Aktau),the Youth Information Service of Kazakhstan (Aktobe),the
Organization of Soldiers' Mothers (Ridder),the Center for the
Promotion of Democracy (Taldykurgan),and the Center for the
Development of Local Self-Government (Ust-Kamenogorsk). Most
advocated strongly for greater transparency at the regional
government level. Pavel Lobachev, president of the NGO Echo in
Almaty, and a founder of the NGO coalition called Oil Revenues Under
Public Oversight, told Energy Officer on June 2, that regional
governors (Akims) have personal control over millions of dollars
earmarked by IOCs for social development projects, and he said the
NGOs would like better information on how the local government
selects projects, awards contracts, and accounts for those funds
(reftel). (NOTE: IOCs have spent hundreds of millions of dollars
on social development projects in Kazakhstan, and the regional
governor typically has direct control over the disbursement of
funds. Tengizchevroil senior public relations manager Mariya
Karzhigitova reported on May 20 that the company has allocated $450
million for social improvement investments in the last 15 years,
including investments in hospitals, universities, schools, gas and
power lines, water supply systems, roads, and building restoration.
END NOTE).

EXXONMOBIL PLAYS A LEADING ROLE


7. (SBU) Patty Graham, Director for Government Relations and Public
Affairs for ExxonMobil Kazakhstan, has long played a leading role on
Kazakhstan's EITI National Steering Committee. During the second
national conference, she moderated a panel discussion on ways to
ensure that Kazakhstan's EITI reports are both comprehensive and
comprehensible. Several NGO representatives said the technical
jargon and complex procedures for auditing, accounting, and
accountability reporting prevent common citizens from understanding
the purpose and progress of EITI -- which renders them incapable of
assessing its effectiveness. Yuri Krivodanov, leader of the NGO
Blago in Karaganda, was not convinced, however, that the Committee
should spend time making its reports more intelligible. "No one in
their right mind will read a government report about accounting and
transparency," he said. "People have other things to worry about.
The most important thing -- for them and for us -- is establishing
and following a process that leads to our common objective of
greater transparency."

HOAGLAND