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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: 254
The Kazaks are involved in a series of important energy deals with Russia, which should see them flank their giant neighbour as the second swing producer in
the world's oil industry. Kazak resources are hard to estimate. Conservative estimates put oil reserves at 15bn barrels, but possible ones at 65bn barrels.
The most important factor here is the discovery of a vast field at Kashagan recently in the Caspian, the largest find in thirty years in the world's oil
industry. It is put at anywhere from 10bn barrels to 40bn.
Kazakstan also has formidable gas resources. Its proven reserves of two trillion cubic metres (cu. m.) actually equal those of Turkmenistan, which is usually
deemed to have the fourth largest reserves in the world. They are a long way behind those of Russia of course on 48 trillion cu. m. or Iran on 23 trillion.
But they are substantial all the same.
Russia has recently proposed progress on several fronts. One is the setting up of a sort of OPEC for all the FSU states which are oil exporters, Azerbaijan,
and potentially Turkmenistan, as well as Russia and Kazakstan. This makes sense and could be called ARK, as an acronym for the three that really matter,
Azerbaijan and Russia in addition to Kazakstan.
The Russians are constantly in negotiations with OPEC about oil exports levels and prices, but it would make a lot of sense to bring the other two into the
frame. OPEC itself and what we can call ARK have a common interest to make the most out of their oil exports.
At the moment the Russians are taking a free side on the discipline extended by OPEC states in restraining output. The Kazaks are doing the same.
They both have an interest in cooperating with the OPEC states, not to screw the price of oil up as far as it could go, but to keep it to a competitively,
yet rewardingly priced cost.
The Kazaks pitched in with the Russians when they opted for the Russian route for their oil via Novorossysk, a pipeline that started operating in October,
the Caspian Pipeline Consortium (CPC).
In addition Oil and Gas Transport President, Timur Kulibayev, said 10.5m tonnes of oil will be exported via the Atyrau-Samara pipeline to non-Commonwealth of
Independent States countries in 2002 and 4.5m tonnes will be shipped to the CIS countries. Also two to 2.5m tonnes will be delivered via the
Atyrau-Makhachkala-Novorossiysk export route. Therefore, the country's hydrocarbon export potential will come to 17-17.5m tonnes the next year. Export
potential of the CPC with the initial flow rate of 28m tonnes should also be added.
The Kazaks are evidently going along with ideas that Russia has been ventilating for some time concerning gas exports. Kazak gas exports could even reach
world market in 2002. This involves Kazakstan joining in the new proposed idea of an "Eurasian gas alliance" or gas OPEC. It would comprise Russia,
Turkmenistan, Kazakstan and Uzbekistan. They would form the core of a gas club to satisfy the gas needs of Eurasia, from China to the Atlantic. But it is
early days yet.
Air Kazakstan relies on creditor for lifeline
Kazak Minister of Transport and Communications, Ablai Myrzakhmetov, announced at an Astana video-press conference that Air Kazakstan may be declared bankrupt
unless it settles debt problems within the next few months. This matter is largely dependent on the position of the national airline's major creditor,
Kazkommerzbank, which owns a 50% stake in it and manages the remaining 50%. "It would be unwise to just bankrupt the airline," as Air Kazakstan boasts
well-trained personnel and a technical centre servicing western aircraft, the minister stated, New Europe has reported.
To escape bankruptcy, the bank-held shares should be transferred to the management of the state, which would in turn come up with a programme to extract Air
Kazakstan from the crisis, Interfax-Kazakstan reported. The Transportation Ministry is currently negotiating with the bank for the deferral of debts and
restoration of full state control of the airline.
If the parties are unable to reach agreement on this issue, "the airline will be declared bankrupt within the next few months," Myrzakhmetov informed. He
further noted that in the event Air Kazakstan is not kept alive, the government will have to set up another national airline. The minister did not rule out
that Air Astana, an airline set up in 2001 together with Britain's BAE Systems, which intends to start making domestic flights, might become the national
airline. The airline's credit debts currently amount to a total of US$50m, most of which are debts to the state, the Kazaeronavigation company, and several
national companies. The remaining part of the debt falls on Kazkommerzbank. The 50% stake in Air Kazakstan was given over to Kazkommerzbank in the autumn
of 2000 for US$22m in debts to the bank accumulated since 1997. The stake was estimated at US$10m under the contract. The bank wrote off another US$1m and
planned to restructure the remaining US$11m over five years.
India may join project to build trans-Asian oil pipeline from Kazakstan
India may join the construction of a trans-Asian oil pipeline from Kazakstan. India's Reliance Group enterprise has announced its readiness to join the
building of the Kazakstan-Uzbekistan-Pakistan-India oil pipeline, Kazak Commercial Television has reported.
India may become a major consumer of hydrocarbons in southeast Asia by 2005 and it is noteworthy that the project to build the oil pipeline from Kazakstan to
the Atlantic Ocean shores may also involve such countries as Bangladesh and Burma. Thus, the Kazak oil pipeline project can be called a project of the
Kazak oil company plans eurobond issue
Kazak national oil and gas company Kazakoil began a road show for a eurobond issue of US$100m, company President Nurlan Balgimbayev told journalists, Interfax
News Agency has reported.
He said that the road show would be in London on 4th February, in Milan on 5th February and in Frankfurt on 6th February. He hoped that the eurobond issue
will take place in the near future.
"We want cheap bonds: 8.5 per cent to 9.5 per cent. We would like to place the bonds for seven years but at the moment we are talking about five-year
maturity," Balgimbayev said. ABN-Amro bank is organising the issue.
Kazakoil subsidiaries produced 6.57m tonnes of oil and gas condensate in 2001 - up 10.7 per cent year-on-year, in addition to 1,388m bcm of gas (down 1.1 per
More Kazak oil to go via Russia this year
Transit of Kazak oil through Russia will amount to 35-36m tonnes (including oil transported through the Caspian Pipeline Consortium pipeline) in 2002,
Kazakoil President Nurlan Balgimbayev told Interfax News Agency.
He said that last year Kazakstan transported about 30m tonnes of oil through Russia. Oil production in Kazakstan for the year amounted to 40m tonnes. About
10m tonnes go to the domestic market and 1-2m tonnes is exported.
Russian, Ukrainian and Kazak oil companies to operate refinery jointly
Rosneft, Alliance Group and the Kazak national oil and gas company, Kazakoil, signed an agreement on 4th February for the joint operation of the Kherson oil
refinery, an Interfax News Agency correspondent reported.
This document was signed by Rosneft president, Sergey Bogdanchikov, Alliance Group president, Musa Bazhayev and Kazakoil president, Nurlan Balgimbayev.
The agreement involves joint involvement by the parties in the implementation of major programmes and projects to develop the refinery. In particular, the
agreement includes an increase of oil to the refinery, the development of production, financial-economic and investment activity, an improvement in
management, the establishment of stable competitive positions on the national and international markets and the organization of efficient sales of the
The refinery's supply programme will be fully guaranteed by Kazakoil and Rosneft resources. Kazakoil will annually supply 1.8m tonnes of oil under a
Kazak-Ukrainian intergovernmental agreement and Rosneft will supply not less than 600,000 tonnes per annum.
Kazakstan, France to set up joint oil research and training centre
A Kazak-French oil centre is to be set up in Kazakstan, an ITAR-TASS News Agency correspondent was told at the press service of the Ministry of Energy and
One of those behind the adoption of the decision is the French Oil Institute, supported by TotalFinaElf. The decision was taken jointly with the Ministry of
Energy and Natural Resources on the grounds that in the next few years the oil and gas sector will play a determining role in the development of the Kazak
economy. The country's leadership has already announced plans to raise the annual oil-extraction volume to 100m tonnes by 2015.
The Franco-Kazak centre will conduct various types of research and carry out professional training of staff for the oil sector. Ministry staff believe that
creation of the centre will be of great importance for Kazakstan's economic development: creation of a science-intensive, hi-tech oil and gas complex, geared
Kazakstan, Japan sign contract on oil refinery reconstruction project
Kazakstan's national oil and gas company Kazakoil and the Japanese Marubeni Corporation have signed a credit agreement to rebuild the Atyrau oil refinery
worth US$35.25m, which is 15 per cent of the total cost of the project, the oil refinery said in a press release circulated on 6th January, Interfax News
Agency has reported.
It said this US-dollar medium-term credit has been extended for five years, with a three-year grace period and at a LIBOR [London Interbank Offered Rate]
plus 4.5 per cent interest rate, and is not state guaranteed. It also said that the creditors are the Marubeni Europe plc, and the banks BNP Parisbas and HSVC
The cost of the project is estimated at US$308m, of which US$235m is to be provided by the Japanese side, including US$200m by the Japanese Bank for
International Cooperation (JBIC) and US$35m by Marubeni. The remaining sum is to be provided by Kazakoil.
Kazakoil and Marubeni signed a turn-key contract worth US$235m to rebuild the Atyrau oil refinery on 4 December 2001. A credit agreement with JBIC was signed
on 20th December 2001. On 8th February a stone-laying ceremony marking the beginning of reconstruction was held in Atyrau.
Kazakoil holds an 86 per cent stake in the oil refinery. In 2000 the oil refinery handled 2.191m tonnes of oil as compared to 1.79m in 1999. In 2001 it is
planned to process 2.1m tonnes of oil.
FOREIGN ECONOMIC RELATIONS
Kazakstan ready to help Afghan reconstruction
Kazakstan confirmed that it is ready to make a practical contribution to the reconstruction of Afghanistan. A Kazak foreign ministry press release stated
that deputy Foreign Minister, Kairat Abuseitov, had made a corresponding statement in Tokyo at the international conference on financial assistance to
To date, Kazakstan has signed contracts with the UN World Food Programme for the delivery of some 70,000 tonnes of wheat to Afghanistan, already having
delivered 25,000 tonnes of that amount, Interfax-Kazakstan News Agency reported. Abuseitov noted that the country's import potential totals eight million
tonnes of grain, thus allowing for Kazakstan to be considered "a potential exporter ready to deliver up to 850,000 tonnes of grain on a commercial basis as
well as other types of food."
Kazakstan plans to deliver 3,000 tonnes of wheat to Afghanistan free of charge as part of a humanitarian aid package.
MINERALS & METALS
Kazakstan, USA to sign accord on uranium processing
Kazakstan and the USA are to sign the biggest contract in the history of the independent republic [of Kazakstan] on uranium processing in order to receive
nuclear fuel, Kazak Commercial Television has reported.
Global Nuclear Fuel, LLC (GNF) joint-venture will be supplying uranium concentrate for processing at Ulba Metallurgical Plant in Ust-Kamenogorsk [in East
Kazakstan Region]. The production will involve 50 Kazak nuclear scientists. The project will attract over US$4m in investments.
The contract between Kazakstan and the USA was to be signed at the Kazak embassy in Washington by Kazak ambassador, Kanat Saudabayev and the US Secretary of
Energy, Spencer Abraham.
Kazak rail operator to issue eurobonds this month
Kazakstan Temir Zholy, Kazakstan's national railway company, planned to issue US$150m in eurobonds in February, the company's general director, Baurzhan
Baymukhanov, said at a press conference, Interfax News Agency has reported.
Kazakstan Temir Zholy held a roadshow to promote the bonds in 2001. Yield was planned at 8.5-9 per cent. However because of Kazakstan's proximity to
Afghanistan investors insisted that yield be raised to 11.5 per cent in light of the events of 11 September...
Kazakstan Temir Zholy posted net profit of 18bn tenge (151.6 tenge to the dollar) in 2001, against 8.7bn tenge in 2000.
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