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kazakhstan

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  KAZAKSTAN

REPUBLICAN REFERENCE

Area (sq.km)
2,717,300

Population
16,731,303

Principal
ethnic groups

Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

Capital
Astana
(formerly Akmola)

Currency
Tenge

President
Nursultan Nazarbayev

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Background:
Native Kazaks, a mix of Turkic and Mongol nomadic tribes who migrated into the region in the 13th century, were rarely united as a single nation. The area was conquered by Russia in the 18th century and Kazakstan became a Soviet Republic in 1936. During the 1950s and 1960s agricultural "Virgin Lands" program, Soviet citizens were encouraged to help cultivate Kazakstan's northern pastures. This influx of immigrants (mostly Russians, but also some other deported nationalities) skewed the ethnic mixture and enabled non-Kazaks to outnumber natives. Independence has caused many of these newcomers to emigrate. Current issues include: developing a cohesive national identity; expanding the development of the country's vast energy resources and exporting them to world markets; and continuing to strengthen relations with neighbouring states and other foreign powers.

Update No: 255

The Kazaks are entering into a gas consortium with Russia, Turkmenistan and Uzbekistan, which should enable them to export their natural gas to Europe. They hope to get such good terms that they would export as much as they could and import neighbouring Turkmenistan's gas for domestic use.
KazTransGaz is poised to make investments of US$500m to implement this vision. It is planning to import as much as 80bn cubic metres of Turkmen gas per year. OPEC experts are convinced that there are far higher reserves of both oil and gas in Kazakstan than have been realised. When people say that it is usually from the country in question. This is from a rival source. The OPEC experts think that Kazak oil reserves could rival those of Saudi Arabia and its gas ones are among the top ten in the world.
At present proven oil reserves are put at 15bn barrels and possible ones at 65bn, which is way short of Saudi ones of over 250bn barrels of proven reserves. Proven gas reserves are a far more modest at two trillion cubic metres, while possible reserves are 50% more at three trillion.
The optimism of the OPEC experts is almost certainly due to the discovery of a huge field last year at Kashagan in the Caspian Sea, the largest in the last thirty years in the world's oil industry. Reserves there are put at 15-40bn barrels.
With cheap energy and labour and foreign capital bringing in new technology, Kazakstan is becoming a good place to make steel. Sheet steel can be produced there for US$300 per tonne, compared with US$350 per tonne in South Korea and US$475 in the US. The levy of 30% per tonne imposed by the US in March for obvious political reasons ahead of congressional elections should hit Kazak exporters hard.
Curiously one of the main tycoons lobbying in favour of the levy in the US was Lakshmi Mittal, who owns the Ispat Karmet steelworks in Kazakstan. But then he also has huge interests in the US itself. Clearly, a conflict of interest. Mittal has steelworks all over the place, including Romania, where he won a contract recently with Tony Blair's support.
He was special guest at a party, hosted by Keith Vaz, the former minister for Europe, in London recently for President Nursultan Nazarbayev.
Vaz has a special interest in Kazakstan, which he visited in 2000. He believes that the oil-rich and mineral-rich republic could attract a great deal of UK investment, if only its laws became more friendly to foreigners. That is something Nazarbayev is always being told. But he has yet properly to heed it, as also the need to combat widespread corruption.
The domestic economy is doing well, GDP growing by over 10% in 2001, the highest figure in the CIS. There are political rumblings, with a fledgling opposition in formation. But Nazarbayev's regime, a typical Central Asian despotism, looks pretty secure for all that.

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BONDS

Kazak national oil company to issue eurobonds

Kazakstan's oil and gas company KazakhOil, which has been incorporated into the national company KazMunayGaz, has announced it will go ahead with a plan to issue US$125m in Eurobonds, the company's press service has stated, Interfax News Agency hreported.
The date of the first sale has been put off until 12th March 2002 so as to make additions to the announcement of the emission reflecting the consolidation of the company's assets, the service reports.

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ENERGY

Kazakstan to lead way in crude oil reserves - OPEC

OPEC experts believe that in terms of potential crude oil reserves, Kazakstan may in time rank first in the world overtaking Saudi Arabia, Russia and Norway.
Additionally, OPEC does not rule out that in terms of natural gas reserves Kazakstan may be among the world's top 10.
Kazakstan is going to play a key role in the region in extraction and transportation of natural gas, the Vienna-based headquarters of the Organisation of Petroleum Exporting Countries (OPEC) reported recently, Interfax News Agency quoted sources in Astana as saying.
Deputy head of the KazTransGaz concern, Daniyar Berlibayev, stated: "The future of all gas projects is currently closely connected with the gas pipeline crossing the territory of Kazakstan," whilst adding: "Astana is closely watching the process of liberalisation of the gas industry in Europe and we are not going to miss a chance of starting direct negotiating contracts with European consumers."
KazTransGaz is poised to invest US$500m in this project before 2005 and to purchase 80 billion cubic metres of Turkmen gas. 
Berlibayev believes that the project may be implemented only together with the Russian side, which disposes of large capacities both in terms of natural gas extraction and its transportation. 
According to estimates by OPEC analysts, Astana hopes that when Russia buy gas in great volumes from Turkmenistan, the third major gas producer in the world, this gas will flow to consumers along the Central Asian line: Turkmenistan - Uzbekistan - Kazakstan. Currently, Turkmenistan supplies 40 billion cubic metres of natural gas to Ukraine through Russia and 10 billion cubic metres directly to Russia.

Kazak government to control all new oil, gas projects

Kazakstan's government will hold controlling stakes in all new oil and gas projects in the former Soviet republic, KazMunaiGAz head, Lyazzat Kiinov, said. The new Kazak National oil and gas company will own 51 per cent stakes on the government's behalf in all new prospects and companies set up to develop oil and gas fields, Kiinov said. He emphasised that properties would be allocated to investors by tender, New Europe has reported.
Foreign companies will work at prospects at their own expense. Contracts signed in the past between foreign investors and national companies KazkkhOil and Transport nefti i gaza (Oil and Gas Transport, TNG), which KazMunaiGasz has absorbed, will not be reviewed. Government-owned stakes that KazakhOil held in joint ventures will automatically be transferred to the ownership or management of KazMunaiGaz.
Asked why a new national oil and gas company was set up, Kiinov said that the Kazakh president deemed this necessary in view of the forthcoming development of offshore fields in the Caspian.
Kiinov said he though KazMunaiGaz would be able to compete with the world's biggest petroleum companies.
Agip KCO, or Agip Kazakstan North Caspian Operation company, is conducting exploration drilling at the major offshore Kashaga field. The consortium includes ENI, which is the project operator, and BG, ExxonMobil, Inpex, Phillips Petroleum, Shell and TotalFinaElf.

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ENVIRONMENT

Development projects push Aral Sea one step forward

Development projects to improve the Northern Aral Sea in Kazakstan have moved one step forward. In particular, the implementation of a relevant project, which will be funded by the World Bank, was ratified by one of the country's two chambers of parliament in late February.
"This project is not effective yet, because it still needs to be ratified by the other chamber of parliament," head of the World Bank office in Kazakstan, Elena Karaban, told IRIN. Ratified by the Majlis, the lower house of parliament, it now has to be sent to the Senate.
The US64.5m loan was approved by the World Bank in June 2001 to help sustain and increase agriculture, livestock and fish production in the Syr Darya basin and secure the existence of the Aral Sea, which, since the Soviets began diverting the rivers flowing into it for irrigation in the 1950s, has shrunk to a third of its original size.
The sea, which is also an important source of drinking water, has become a health hazard with increased salt and pollutant content in the air and soil.
As a result, Kazak doctors say there have been increased incidences of tuberculosis, anaemia, cancer and birth defects.
Other Central Asian countries, including Uzbekistan and Turkmenistan dependent on the Aral Sea have also been affected by this problem.
Environmentalists in the region say there also needs to be a stronger commitment from the Kazak government. "Management of the Sea has not been very good in the past," sustainable development policy specialist, UNDP, Kazakstan, Zhara Takenov in Almaty told IRIN. "It is crucial to restore this part of the river," he added, saying that there was an immediate need for a dam to be built between the north and south of the sea to ensure a higher level of water in the northern part, which is currently very low.
Takenov also spoke about other problems created by low water levels such as the movement of sand dunes into cities surrounding the sea. "If the water level is raised it will cover these sand dunes," he explained. At least an estimated 73 cubic km of water would have to be discharged into the Aral Sea each year for a period of at least 20 years in order to restore the 1960 level, according to a report by the UN's Food and Agriculture Organisation (FAO).
The project is to be implemented by the Kazak government, which, in addition to providing technical assistance, would also finance overall project management.

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