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Update No: 256 - (23/04/02)

The Kazak regime is a tight dictatorship, the norm for Central Asia. But there are cracks opening up for all that, just as in Turkmenistan. An opposition is forming, appalled at the scale of nepotism and corruption around President Nursultan Nazabayev, who rules the country rather like Marcos did the Philippines with shameless rapacity.

Buoyant economy
The regime has several things going for it all the same. The first is a gathering energy boom. The second is a huge mineral wealth generating exports. And a third is a number of low-cost industries capable of being competitive on world markets.
Kazakstan is entering into a gas consortium with Russia, Turkmenistan and Uzbekistan that should transform its chances of marketing its production in both East and West. An oil pipeline is up and running conveying oil from the Caspian to Russia's Black Sea port of Novorossysk. Sales of minerals are on the rise and the economy is picking up by around 10% per annum (13% in 2001). With only 16 million people the prospects for general prosperity are improving.
Nevertheless, 35% still live below the poverty line and a really affluent middle class does not yet exist. The Russia crisis of 1998-99 had a devastating effect on such middle strata as existed.

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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AGRICULTURE

Kazakstan seeks to cut back food import

Kazakstan will develop a programme to increase agricultural production to fill demand currently met by imports, Kazak Deputy Prime Minister and Finance Minister, Aleksandr Pavlov, told a news conference in Astana on 3rd April Interfax News Agency has reported.
He said that the share of imported food products on the republic's market has been increasing in the past few years.
For example, the capacity of the Kazak poultry market is estimated at 68bn tenge (the current exchange rate is 152.3 tenge to the dollar) per annum. Domestic products account for 52 per cent of this market. In the meantime, "five years ago only 6 per cent of poultry was imported," Pavlov said.
Imported sausage products now account for 42 per cent of the market, canned meat and vegetables for 64 per cent and condensed cream and milk for 98 per cent.
The potential of the republic's agriculture is not being fully taken advantage of, while the quality of Kazak food meets high world standards, the prime minister said.

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ENERGY

AES-Ekibastuz gains full control of Maykuben-West

Major Kazak power producer, AES-Ekibastuz, has become the new full owner of the Maykuben-West coal mine, Interfax News Agency reported recently. Since August 2001 AES-Ekibastuz has been handling bankruptcy procedures at the coal mine. In accordance with Kazakstani legislation, once the power company settled all of the mine's debts, it would become the lawful owner of the mining enterprise. 
According to previous reports, Maykuben-West was brought to the verge of bankruptcy last year when its former owner, Kazakstan based BN Consulting, failed to fulfil financial liabilities to creditors. A court ultimately appointed AES-Ekibastuz acting manager of the mine, and the power company pledged to repay all creditors by April 2002 and restore the plant to profitability. According to the court order, If AES-Ekibastuz could fulfil its part of the deal, it would become 100% owner of the mining enterprise.

KazMunaiGaz to develop Caspian oil fields

Kazakstan's national oil and natural gas company KazMunaiGaz intends to develop offshore oil fields in the Caspian Sea. But laws are needed to make this possible, said the company's director for transport infrastructure and service projects, Kairgeldy Kabyldin. As Kazakstan's only national oil and gas company, KazMunaiGaz possesses sufficient material assets, personnel and technology to develop the Caspian shelf, Interfax News Agency reported him as saying. He called the shelf a strategic resource of the country. 
Kabyldin said KazMuniaGaz also plans to take part in building infrastructure on the shelf. He said the company is likely to initially hold stakes of 10-15 per cent in oil and gas projects vital to Kazakstan and would subsequently enlarge its participation.
KazMunaiGaz is still in the process of being established after coming into being this February via a merger of two national companies, oil and gas group KazakOil and pipeline manager Oil and Gas Transport. A government order of February 25th authorises KazMunaiGaz to represent the state in deals that include production-sharing agreements on the northern Caspian and the Karachaganak oil and gas condensate field. KazMunaiGaz's assets are valued at US$2bn.

LUKoil invests US$500m for Kazak oil sector development

Russian oil major, LUKoil, has invested about US$500m into oil projects in Kazakstan over the last six and a half years, Interfax News Agency reported, the company head, Vagit Alekperov, told reporters after a meeting with Kazak President, Nursultan Nazarbayev.
The meeting focused on new oil and gas sector projects involving LUKoil, Alekperov said. "We consider several offshore areas in Kazak waters to be viable," he said. They include the Karanzhabas oil and gas structure and some adjacent sites.
Nazarbayev invited LUKoil to enter into talks on new oil and gas projects with the Kazak government. The company already possesses offshore and onshore infrastructure in Kazakstan. This includes a jack-up rig, service vessels and other equipment.
LUKoil is also interested in developing the Kurmangazy offshore oil field. Alekperov said LUKoil had discussed this in the context of talks between the Russian and Kazak governments on jurisdiction over this site.
LUKoil is providing just over one million tonnes of oil per year in Kazakstan but intends to raise that to 3.5-4million tonnes annually, not including possible new projects. This will be achieved by completing a pipeline from the Karachaganak field in West Kazakstan and achieving full capacity at the Tenghiz field, which is in the Atyraau region, the news agency quoted Alekperov as saying.
Alekperov said future LUKoil investments in Kazakstan would depend on what projects the company would have the opportunity to participate in. It would take three to four years before any of the new deposits come on stream.
LUKoil has a five per cent interest, via the LUKArco joint venture, in the Tenghiz deposit, 50 per cent in the Kumkol deposit, 15 per cent in the Karachanganak oil and gas condensate field and 12.5 per cent, again via LUKArco, in the Caspian Pipeline Consortium.
Meanwhile, Russia and Kazakstan are close to signing an intergovernmental protocol that will officially document the jurisdiction of the oilfields in the north Caspian.
Kazak Foreign Minister, Kasymzhomart Tokayev, said in Kazakstan that work on the draft protocol will continue in Almaty, during the visit of a Russian government delegation led by Deputy Prime Minister, Viktor Khristenko.
"If the government delegation reaches agreement on the text of the protocol, the document will be generally ready for signing," he said. "The principles of developing these fields will still need to be checked," he added.
Kazak-Russian joint ventures are most likely to be set up, he said. Tokayev noted that during the latest talks, the parties reached a fundamental agreement that Kazakstan would keep its jurisdiction over the Kurmangazy field, and Russia over Khvalynskoye and Tsentralnoye. The exact reserves of the fields are unknown, but it is believed that the reserves of Kurmangazy are approximately the same as the reserves of Khvalynskoye and Tsentralnoye, he said. Kurmangazy is estimated to contain 10 per cent of the oil reserves of the Kazak part of the Caspian Sea, he said.
Tokayev said that Iran's position on developing Caspian oil resources amounts to dividing all reserves there equally between the littoral countries, that is 20 per cent each. However, the four other Caspian nations are opposed to this suggestion, he said.
In this context, he stressed the importance of agreeing on the principles of drawing a median line in the Caspian and the Caspian Sea's status.
These subjects will be discussed during the summit of the five littoral countries - Russia, Kazakstan, Azerbaijan, Iran and Turkmenistan. 

Kazakstan says Afghan oil export route unrealistic

Kazakstan does not consider the Afghan route of transporting its oil to the world market as realistic. The Kazak Foreign Minister, Kasymzhomart Tokayev, said on April 8th that the question involves plenty of geopolitical and economic factors that have to be taken into account, New Europe has reported.
Firstly, lasting peace must be restored in Afghanistan for the transportation of Kazak oil across its territory, Interfax quoted him as telling a news conference in Almaty.
"This is a difficult task because Afghanistan is only at the first stage of its advancement to peace," he said, adding that he regards Afghanistan as a very difficult state.
He expressed confidence in the efforts of the provisional administration to restore calm in that country which deserve support from the international community.
Tokayev pointed to the commercial expedience of building oil and gas pipelines across Afghanistan, given the markets in Pakistan and India. At the same time, the quite tense relations between the two countries should be taken into account, Tokayev said.

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FOREIGN ECONOMIC RELATIONS

Kazak-US energy cooperation becomes a top priority

Foreign Minister of Kazakstan, Kasymzhomart Tokayev, received the US State Secretary's advisor on Caspian energy policy, Ambassador Steven Mann, who was on a working visit in Kazakstan recently, reports New Europe. 
The press service of the Kazak Foreign Ministry informed CNA that the two officials discussed in detail a wide range of bilateral issues and agreed on the necessity to expand mutually advantageous trade and economic and investment relations between Kazakstan and the US. The officials also discussed details of implementation of the declaration on energy partnership between both countries, which was signed during Kazak President Nursultan Nazarbayev's visit to the United States late last year.

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TELECOMMUNICATIONS

Thuraya offers new telecom services for Kazakstan

During a recent press conference, Thuraya announced its intention to offer total mobile solutions, convenient, affordable advanced satellite telecommunications specially adapted for Kazakstan. "Kazakstan is one of the most ideal places for Thuraya systems," Chairman of Thuraya, Mohammad Omran, stated, the 'Almaty Herald' reported.
In spite of the fact that Kazakstan's telecommunications system is developed, there are areas where there is no network or communications coverage. Several satellite telecommunications systems provide total global coverage, of which Thuraya's system is one of the most modern. Its superior mobile satellite system covers almost 40 per cent of the world, including its most populated regions. And it extends its telecommunications services to a territory inhabited by 2.5bn people.
Thuraya began operating in August last year through Orbita Plus company and currently has a subscription base in Kazakstan of over 1,000. The first operational satellite was launched at the end of 2000, with full commercial service starting in 2001. The Thuraya GEO satellite is operated and managed by a sophisticated and integrated ground network that controls the satellite's movement, ensuring overall and ongoing maintenance of satellites in a geo-synchronous orbit. Thuraya is a different kind of satellite company. It is generally considered to be one of the world's longest tested and most reliable satellite technologies. This superior technology is reflected in the Thuraya phone. A "Primary Gateway" located in the United Arab Emirates centralises Thuraya network operations and serves as a major digital exchange. This project opens a new page in the field of satellite communications. Thuraya is in partnership with national and regional telecom providers who offer Thuraya services in their home markets.

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