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Update No: 258 - (27/06/02)

The Kazaks are doing very well, according to their figures. GDP is soaring, having grown by 9.6% in 2000, 13.2% in 2001 and a prospective 7.6% in 2002. GDP will be doubling every decade at this rate. In fact, of course, growth is likely to slow down after this initial spurt, which owes a great deal to oil and gas, now being exported in volumes.

Oil and gas boom
The flow of oil from three fields in the Caspian region across Russia to Western markets is the mainspring of the economic boom. Foreign direct investment (FDI) has been flooding in, some US$1.45bn in 2000, US$2.7bn in 2001 and a likely US$2.5bn this year. The FDI is concentrated heavily in the energy sector, especially to the three world class projects of Tengiz, Karachagank and the offshore Kashagan. Production of oil is set to double to 1.3m barrels per day by 2005. Other estimates put oil output at nearly 3m barrels per day by 2015.
The Tengiz field alone has 6-9bn barrels in reserves. It is being developed by Chevron, Texaco, ExxonMobil and Lukarco. They plan an output of 19.7m tonnes of oil per year by 2005.
Output is also to be doubled from Karachagnak in the next four yers, a huge oil and gas condensate field. But the big one, perhaps the largest find in 20 years is Kashagan in the Caspian, whose reserves are reckoned to be in the 15-30bn barrels league.
Exports from all three fields are going via a pipeline to Novorossysk on Russia's Black Sea coast; constructed by the Caspian Pipeline Consortium for US$2.16bn. The world's energy map is being transformed with Central Asia beckoning as another North Sea, if not another Texas. The Persian Gulf, however, will continue to remain on top.
The 15m population are hoping for spin-offs from the boom in energy. Minerals production is also rapidly on the rise.

Government crackdown
The government under hard-line dictator Nursultan Nazarbayev is cracking down on dissent and the media, imprisoning opposition figures. There is not likely to be any change of regime soon. Most officials want to be around as the revenues from energy start to flow.
A series of strange incidents recently has afflicted the media. They include a petrol bombing at the offices of a business newspaper, threats against editors and the beating up of journalists. President Nazarbayev has denounced them as "acts of wild vandalism."
But the obvious suspects would be officials of his regime. In Moscow a group of Kazak journalists has alleged that the president ordered the closure of 22 private newspapers and TV stations reporting on the US$20bn from oil deals that have been put in Swiss bank accounts. The figure seems absurdly high. But then the Shah of Iran did something of the kind. There may be a nemesis in store for Nazarbayev one day. But of Islamic extremism or a Kazak equivalent of Khomeini there is as yet no sign. 

New premier
The government has a new premier in Imangaliy Tasinagambetov, who has a vision for the next decade. He thinks GDP growth of 5-7% possible. He also wants to diversify the domestic economy, even while the trade sector is likely to become more concentrated upon energy and minerals than today, which are 60% at present of total exports. The small-to-medium business sector needs to be encouraged and franchising to spread.
The republic receives cooperation from international banks, confident in its ability to repay. While its economic prospects look rosy, it will not be easy to reduce the figure of those below the poverty line from 35% to 20% of the population in ten years, as the new premier wants. But he is the head of a government presiding over the most dynamic economy in the CIS. That is some consolation for now.

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AVIATION

Air Astana flies to new sites

The official ceremony of opening for the Air Astana flights took place in Astana with the participation of Kazak Vice Premier, Karim Masimov, and President of Air-Astana, Lloyd Paxton. 
"We inaugurated the flights to Almaty, Astana, Aktau, Aktobe with the new Boeings 737-700/800, equipped in accordance with the latest aviation technologies. At the moment a couple of Boeings 737-700/800 in our hanger make up the fleet of the new airline. It is the first Boeings of new generation Kazakstan. In the future we plan to expand the fleet," Paxton said at the opening ceremony. 
Air Astana is currently in the process of working out of the other direction of flights, with the aim to enclose the whole territory of Kazakstan, New Europe reported.

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ENERGY

Kazakstan interested in the Persian Gulf Pipeline 

Iran has said it is ready to enter into talks on a giant project to construct an oil pipeline from Kazakstan to the Persian Gulf via Turkmenistan. The announcement was made by the Iranian Ambassador to Astana, Morteza Safari, in talks with Kazak Prime Minister, Imangali Tasmagambetov, IranMania News has reported.
According to the Kazak government, the French company, TotalFinaElf, is planning to carry out feasibility studies on the proposed oil pipeline from Kazakstan to Iran through Turkmenistan and onto the Persian Gulf. The Kazak leadership has repeatedly expressed its interest in the construction of the pipeline. In April, Kazak President, Nursultan Nazarbayev, said that his country considers Iran as a promising export route for its oil. Iran has been competing to have Caspian energy pipelines pass through its land but has faced fierce US opposition. The United States is pushing for a route that would bypass Iran. 
Iran, while obviously the most expedient transportation route for Caspian oil and gas, has already been left out in negotiations to develop the sea's resources. Turkey and some US oil companies have come up with another Caspian oil pipeline project from the Azerbaijani capital Baku to the Turkish Mediterranean port of Ceyhan.
Turkmenistan, however, has exported several billion cubic metres of gas to Iran in recent years, much to Washington's dismay. A Deputy Head of the Uzbek national oil and gas company, Asrar Abedov, said in December that Iran and Uzbekistan were negotiating on a long-term project for the delivery of Uzbek natural gas to Iran.
Iran is considered a major market for Uzbek natural gas, he said, giving the assurance that gas deliveries to Iran will continue on a regular basis once a deal is struck. Iran, a major gas producer itself, uses gas it receives from the Caspian Sea states domestically and sells the equivalent amount of its own gas to European or other countries in the Persian Gulf in swap deals.

India to partake in Kazak oil and gas projects

Kazak Energy and Mineral Resources Minister, Vladimir Shkolnik, said India is interested in taking part in oil and gas projects in his country, New Europe reported recently. He told the press in Almaty that Kazakstan and India exchanged proposals concerning the possible involvement of oil and gas fields in Kazakstan. Indian investors must take part in tenders to participate in new oil and gas projects in Kazakstan, the minister added. 
Indian companies are ready to set up pharmaceutical joint ventures in Kazakstan and they have started to supply equipment.

Russia, Kazakstan sign oil transit deal 

Russia and Kazakstan have signed long-term agreements on the transit of Kazak oil and natural gas via Russian territory to Western European importers, greeted by both nations' presidents as a critical step of increased cooperation, the Russia Journal has reported.
The countries' natural gas monopolies, Gazprom and KazMunaiGaz, have created a joint venture, KazRosGaz, which will start by transporting 3.5 billion cubic metres (124 billion cubic feet) of gas through Russian pipelines in the first few years and increase it to up to 50 billion cubic metres (1,765 billion cubic feet) in the future, Russian President Vladimir Putin said. 
"The agreements fully serve the interests of Kazakstan and Russia," Putin said on the sidelines of an Asian security summit in St. Petersburg. "They insure a guaranteed route for Kazak oil exports and also help Russia strengthen its status as a transit country." 
He also said Russia will now take Kazakstan's oil production plans into consideration when developing its pipelines. 
"Kazakstan is becoming our priority partner while we develop our own Russian structure," Putin said. 
Kazakstan plans to boost its gas production more than fivefold to 50 billion cubic metres a year by 2005 when it starts developing the giant Kashagan offshore Caspian gas field. 
The oil transit agreement will be valid for 15 years and can be extended. 
"Kazakstan will benefit by getting access to global markets and Russia will reap the transit dividends," Kazakstan President Nursultan Nazarbayev said. "This agreement brings relations between Kazakstan and Russia to a new level." 
The agreements follow the division of three disputed Caspian oil fields in May and tighten the cooperation of the two countries in the energy sector. 
The United States has tried to develop alternative routes that would bypass Russia to bring Central Asia and the Caspian region's energy resources to world markets. Throughout the 1990s, Russia has tried to gain control of transport routes in the former Soviet republics.

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TRANSPORT

Kazakstan keen to take part in new North-South transport corridor 

Kazakstan is adapting fairly actively to the conditions of new transit corridors, and that also applies in full to the new North-South international transport corridor, founded by Russia, Iran and India, Kazak First Deputy Transport and Communications Minister, Vladimir Shneydmyuller, said in a conversation with ITAR-TASS News Agency. He is heading Kazakstan's delegation at an international conference on transport and transit issues, currently taking place in the Iranian capital.
By decree of the Kazak president, a free economic zone is being set up in the port of Aktau on the shores of the Caspian Sea, he continued. In the opinion of Shneydmyuller, it is pleasing to note that the heads of Russia's and Iran's transport ministries have confirmed their readiness to support Kazakstan in its desire to take part in the implementation of this huge project, by using the maritime component of the transit. In addition, Kazakstan has a wide network of extensive railway communications on the so-called Silk Road, the deputy minister added.
The conference in the Iranian capital attracts many of the region's countries not only because of the grandiose plans to create transit corridors, but also because of the opportunity to express one's position, the head of the Kazak delegation noted. In his opinion, the North-South international transport corridor is very promising, since transit goods will pass along a shorter and less expensive route, something that is, without doubt, also of benefit to the countries of the Persian Gulf and South Asia, and for the states of the Eurasian continent.

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