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KAZAKSTAN


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 24,205 22,400 18,300 60
         
GNI per capita
 US $ 1,510 1,350 1,250 117
Ranking is given out of 208 nations - (data from the World Bank)

Books on Kazakstan

REPUBLICAN REFERENCE

Area (sq.km) 
2,717,300 

Population
16,763,795

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

  

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: 280 - (29/04/04)

The ruler remains
Public opinion in Kazakstan appears to have by and large accepted the imposition of presidential rule, at least partly because the parliament Nazarbayev had earlier dissolved had focused on its own wages and benefits rather than on solving the nation's problems. In the short run, the imposition of direct presidential rule in the 1990s seemed likely to reduce ethnic tensions within the republic. Indeed, one of Nazarbayev's primary justifications for assuming greater power then was the possibility that bolstered presidential authority could stem the growing ethnic hostility in the republic, including a general rise in anti-Semitism.
The ethnic constituency whose appeasement is most important is, however, the Russians, both within the republic and in Russia proper. Stability in Kazakstan is overwhelmingly shaped by developments in Russia, especially as that country returns its attention to some measure of reintegration of the former Soviet empire. Because of Kazakstan's great vulnerability to Russian political, economic, and military intervention, experts assume that Russian national and ethnic interests play a considerable part in Nazarbayev's political calculations.

Ethnic policy the key
It also seems likely that Nazarbayev would use presidential rule to increase the linguistic and cultural rights of the republic's Russians. Although Nazarbayev had taken a firm stand on the issue of formal dual citizenship, a treaty he and Russia's president, Boris Yeltsin, signed in January 1995 all but obviated the language question by permitting citizens of the respective countries to own property in either republic, to move freely between them, to sign contracts (including contracts for military service) in either country, and to exchange one country's citizenship for the other's. When the Kazak parliament ratified that agreement, that body also voted to extend to the end of 1995 the deadline by which residents must declare either Kazak or Russian citizenship. After the dissolution of that parliament, Kazakstan considered extending the deadline until 2000, as Russia already had done.
In the mid-1990s, Nazarbayev seemed likely to face eventual opposition from Kazak nationalists if he continued making concessions to the republic's Russians. Such opposition would be conditioned, however, by the deep divisions of ethnic Kazaks along clan and family lines, which give some of them more interests in common with the Russians than with their ethnic fellows. The Kazaks also have no institutions that might serve as alternative focuses of political will. Despite a wave of mosque building since independence, Islam is not well established in much of the republic, and there is no national religious-political network through which disaffected Kazaks might be mobilized.

Muted opposition
The lack of an obvious venue for expression of popular dissatisfaction does not mean, however, that none will materialize. Nazarbayev gambled that imposition of presidential rule would permit him to transform the republic's economy and thus placate the opposition through an indisputable and widespread improvement of living standards. Experts agree that the republic has the natural resources and industrial potential to make this a credible wager.
But a number of conditions outside Nazarbayev's control, such as the political climate in Russia and the other Central Asian states, would influence that outcome. By dismissing parliament and taking upon himself the entire burden of government, Nazarbayev made himself the obvious target for the public discontent that radical transformations inevitably produce.

Opening to China
Nazarbayev is doing one clever thing in improving relations with giant China, a better long-term partner than Russia, given its incredible dynamism.
The plan to construct a free-trade zone on their common border is inching closer to reality. A Sino-Kazak world trade centre is now being talked about for 200 hectares (!30 from China and 70 from Kazakstan) between China's Horgos and Kazakstan, the People's Daily reports. Investors world-wide will be pricking up their ears at this. 
The scope for bilateral trade to pick up is vast. At present it is still modest at $2.2bn in the first nine months of 2003, although this was more than in the whole of 2002. The two huge countries have an abundance of resources worth trading. 
Foremost among them is Kazak energy. Nothing is more certain than that Kazakstan will become a major energy supplier of the Chinese colossus over time.

Sino-Kazak pipeline construction to go ahead
China and Kazakstan will step up construction of the Atasu-Alashankou-Dushanzi oil pipeline, a Chinese source said recently. "The construction of the 449km pipeline sector between Atyrau and Keniyak was mostly completed in 2002. The construction of the pipeline's second phase, about 1,300km between Atasu and Alashankou, will start in June 2004. It is planned to reconstruct the 500km section between Kenkiyak and Atasu, which has a low capacity," the source said.
China's CNPC and Kaz-MunaiGaz of Kazakstan are building the pipeline. They have not disclosed how much has been invested in the project. It is only known that the pipeline's second phase will cost US$850m. The source could not confirm if this sum includes the reconstruction of the Kenkiyak-Atasu pipeline.
The pipeline is very important for China, which is in need of crude oil. Up to 10m tonnes of oil will be supplied to China annually through the pipeline, and the pipeline capacity will double in the future, the source said. "Blueprints for the pipeline's second phase will be added to the documents China and Kazakstan are to sign during a visit by Kazak President Nursultan Nazarbayev to China in May 2004. This will give the project an interstate status," the source said.
China expects the construction to proceed quickly. The reconstruction of an oil refinery in Dushanzi, the pipeline's destination point, has already begun.
There have been certain problems in estimating the amount of investments, the source said. "The mechanism is not easy. Experts from the two companies (CNPC and Kaz-MunaiGaz) will estimate the cost of the project phases, and the governments will discuss the size of investments," he added.

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ENERGY

Kashagan delay brings US$150m to Kazakstan

The Agip KCO consortium will pay US$150m compensation to Kazakstan for delaying the commercial development of the Kashagan offshore oil field, Kazak Finance Minister, Erbolat Dosayev, said, Interfax News Agency reported recently. Dosayev said the consortium would pay an initial US$100m and another US$50m later. 
A production-sharing agreement for the Kashagan project stipulated that the field must be commercially on stream in 2005. But the Kazak government and the Agip KCO consortium agreed in February this year to put the start back to 2007-2008.
According to the approved plan of work, Agip KCO plans to produce up to 450,000 barrels of oil per day at Kashagan in 2010, or 21m tonnes per year. The company plans to increase production to 900,000 bpd in 2013 by expanding the eastern section of the field. The consortium will reach capacity production by 1.2m barrels per day or 56m tonnes per annum in 2016. It will cost an estimated US$29bn to put the Kashagan field fully on stream.
The partners in Agip KCO are ENI, ExxonMobil, Shell and TotalFinaElf, each with 16.67% interest, and ConocoPhillips and INPEX, each with 8.33%. BG has announced its withdrawal from the project and the other participants will buy its 16.67% share.
The consortium was set up following the signing, in 1997, of a 40-year production-sharing agreement covering four oil structures, namely Kashagan, Kalamkas, Aktoty and Kairan. The structures consist of 11 offshore blocks and cover an area of 6,000 square km.
The consortium announced the commercial discovery of the Kashagan field, containing at least 7.0-9.0bn barrels of recoverable oil, with total geological oil reserves of 38bn barrels, in June 2002. Initially, the consortium plans to produce 22m tonnes of oil annually, rising to 45m tonnes at the second phase and 60m tonnes at the third.

Kazakstan sees booming days in electricity output

Kazakstan believes it can boost electricity output by more than 40% to 86-95bn kWh by 2016, but only if the power sector's infrastructure is modernised, Interfax News Agency reported recently.
Output should grow to 65-67bn kWh in 2015, Energy and Mineral Resources Minister, Vladimir Shkolnik, said following the signing of credit deals to finance the construction of the North-South power line.
To this effect, the European Bank for Reconstruction and Development, a syndicate of foreign banks and the Development Bank of Kazakstan are to provide the national power grid company, Kegoc, with US$81.2m in credits to finance the first line. Kegoc said in a statement that of the total amount the EBRD will provide US$35m. This credit will be provided for 15 years with a three-year grace period. The syndicate of foreign banks will provide US$25m for nine years with a two-year grace period. In turn, the Development Bank of Kazakstan will provide a credit of US$21.2m for 15 years with a three-year grace period.

Mero to transport Kazak oil to Europe via Czech Republic

The Kazak state-owned oil transport firm Mero, which runs the Druzba and IKL oil pipelines, delivered the first supplies of oil from the Caspian sea area to the Czech Republic recently, the weekly Tyden reported. 
Mero's goal is to connect the Ukrainian oil pipeline Odessa-Brody with Druzba and deliver oil with lower sulphur content from Kazakstan to the Czech Republic, lowering Czech dependence on Russian oil, Tyden said. Oil deliveries to the Czech Republic and other European countries could then reach 80,000 barrels a day, or US$1bn a year, in current prices. Tomas Zikmund, spokesman for the petrochemical group Unipetrol, which operates the Kralupy refinery, says an analysis must be carried out to investigate the extent to which Kralupy could process the oil and if it would be advantageous for Unipetrol. The Odessa-Brody pipeline runs outside Russian territory and would give the Czech Republic a second source of oil in addition to the IKL pipeline from Germany's Ingolstadt, which supplies oil primarily from the Mediterranean. The Odessa-Brody could therefore serve as a substitute for Russian oil supplies through the Druzba pipeline.

Azerbaijan, Kazakstan to sign BTC pipeline deal

Azerbaijan and Kazakstan will sign an intergovernmental agreement for the transportation of Kazak oil through the Baku-Tbilisi-Ceyhan pipeline in 2004, Azeri state oil company SOCAR President Natik Aliyev told journalists. "Talks on this issue, which began two years ago, are nearing completion and we will sign it. There is no reason for us to rush because the Baku-Tbilisi-Ceyhan has not yet been launched and Kazakstan has not yet got the volume of oil to transport through the Baku-Tbilisi-Ceyhan pipeline. We are trying to resolve all issues that may arise in the future," Aliyev said, Interfax News Agency reported.
He said that to fully regulate all issues it would be necessary to resolve a number of disputed areas. "Kazakstan does not want to ratify the agreement in parliament. Investors are demanding ratification, so that this law does not change in the future, even if there are changes in legislation and new regulatory acts are passed for customs and taxes," he said. "I think that this issue can also be resolved. Investors will agree to an additional document, if the intergovernmental agreement is not ratified," Aliyev said. He said that the working group for the preparation of the intergovernmental agreement would be meeting shortly.
The future pipeline will stretch 1,767km (4438km through Azerbaijan, 248km through Georgia and 1,076km through Turkey) and will have a capacity of 50m tonnes of oil per year. The project will cost US$3.6bn, of which US$2.95m will be in construction costs.

Kazakstan plans to up oil output 19%

Kazakstan plans to produce 54m tonnes of oil in 2004, up 19% from 45.31m tonnes, the Energy and Mineral Resources Ministry announced in Astana recently. The country's oil refineries are to receive 9m tonnes of crude. In 2003, the refineries processed 8.77m tonnes, up 12.4%. The ministry said priority tasks for 2004 included the implementation of government programmes to develop the Kazak sector of the Caspian Sea, including continuing work at the Kashagan deposit. Gas industry development will include work at the Amangeldy gas deposit (Zhambyl region in the south), implementation of a project to transfer the Kyzylordy housing sector and thermal and energy sources to petroleum gas, and continued upgrading of the Central Asia-Centre gas pipeline system. Kazakstan produced 14bn cubic metres of gas in 2003, up 22.6%, and 63.67bn kWh of electricity, up 9%, New Europe reported recently.

China and Kazakstan to intensify pipeline construction

China and Kazakstan will step up construction of the Atasu-Alashankou-Dushanzi oil pipeline, a Chinese source said recently. "The construction of the 449km pipeline sector between Atyrau and Keniyak was mostly completed in 2002. The construction of the pipeline's second phase, about 1,300km between Atasu and Alashankou, will start in June 2004. It is planned to reconstruct the 500km section between Kenkiyak and Atasu, which has a low capacity," the source said.
China's CNPC and Kaz-MunaiGaz of Kazakstan are building the pipeline. They have not disclosed how much has been invested in the project. It is only known that the pipeline's second phase will cost US$850m. The source could not confirm if this sum includes the reconstruction of the Kenkiyak-Atasu pipeline.
The pipeline is very important for China, which is in need of crude oil. Up to 10m tonnes of oil will be supplied to China annually through the pipeline, and the pipeline capacity will double in the future, the source said. "Blueprints for the pipeline's second phase will be added to the documents China and Kazakstan are to sign during a visit by Kazak President Nursultan Nazarbayev to China in May 2004. This will give the project an interstate status," the source said.
China expects the construction to proceed quickly. The reconstruction of an oil refinery in Dushanzi, the pipeline's destination point, has already begun.
There have been certain problems in estimating the amount of investments, the source said. "The mechanism is not easy. Experts from the two companies (CNPC and Kaz-MunaiGaz) will estimate the cost of the project phases, and the governments will discuss the size of investments," he added, New Europe reported recently.

Turgai Petroleum to up oil production in Kazakstan

The joint venture ZAO Turgai-Petroleum, owned equally by Russia's LUKoil Overseas and Canada's PetroKazakstan Inc, plans to increase oil production 20% in 2004, LUKoil Overseas Service Kazakstan Director, Boris Zilbermints, said recently, New Europe reported. 
The joint venture is developing the Kumkol field in southern Kazakstan. Oil production at the field in 2003 amounted to 2.8m tonnes, which is 33% more than in 2002.
The company plans to increase production to 3.4m tonnes this year, Zilbermints said.
He said that LUKoil has been participating in the development of the Kumkol field since 1995, through Turgai Petroleum. "This was the company's first project in Kazakstan and it has developed actively over the past years. Tens of new wells have been drilled and equipped and a lot of infrastructure has been built," the regional director said.
In 2003 Turgai Petroleum launched the 177km Kumkol-Jusaly pipeline, making it possible to significantly reduce transportation costs from the field. The company started to supply oil through this pipeline into the Caspian Pipeline Consortium system in October last year. Zilbermints said that in January-February this year about 100,000 tonnes of Kumkol oil was pumped into the CPC system per month.
He said that testing of an associated gas processing plant is underway at the field. The full launch of the plant will "significantly increase the level of use of associated gas and supply the field's electricity requirements in full." However, Zilbermints said that plans to increase production at the Kumkol field might be threatened. He said that LUKoil's partner in the project - Petro Kazakstan - "for unclear reasons, is delaying the signing of a preliminary agreed budget, thereby preventing the company from fully functioning and meeting its obligations." LUKoil Overseas Holding Ltd is the operator of LUKoil's international projects. PetroKazakstan, with headquarters in Canada, produces oil at 11 fields in Kazakstan.

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