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Books on Kazakstan
REPUBLICAN REFERENCE
Area (sq.km)
2,717,300
Population
15,143,704
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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Update No: 296 - (26/08/05)
Perhaps the most stable state in Central Asia is Kazakstan.
The oil-rich country of 17 million has seen blistering economic growth under
long-time President Nursultan Nazarbayev.
But the opposition, which accuses Mr. Nazarbayev of cronyism, corruption, and
rigging last year's parliamentary elections, has pledged to unseat him in
presidential polls that could happen as early as this December. The Nazarbayev-controlled
Mazhilis, the lower house of parliament, has passed tough new laws to ban
demonstrations during elections, crack down on foreign-funded NGOs, and toughen
media controls.
"For all its economic success, Kazakstan is taking strong measures,"
says Andrei Grozin, a Central Asia expert with the official Institute of
Commonwealth of Independent States in Moscow. "Kazak interior troops have
been seen practicing putting down mass disorders. The country's political
development is suffering."
Kazak chief on a roll
Economic success is the background to understanding Kazak politics. With the
presidential election due in December, the Washington-based International
Republican Institute has commissioned a poll that found, to no one's surprise,
that despite gripes about corruption, the citizens of this booming former Soviet
republic were optimistic about the future and supported President Nazarbayev.
Kazakstan's gross domestic product (GDP) is projected to grow 9 percent in the
first half of this year, the first deputy chief of the country's national
statistics agency, Yury Shokamanov, has told Interfax. Industrial output will
increase 7.2 percent over the half and inflation is projected at 4.1 percent,
Shokamanov said. According to him, the agency predicted that GDP growth for this
year as a whole at 9.5 percent and industrial output will increase 7.5-8
percent.
Shokamanov believed that the Kazak government will hopefully be able to keep
average annual inflation at 7 percent; but consumer prices might end the year up
8 percent.
By inviting Western oil companies to invest billions in huge but hard-to-reach
oil deposits that the Soviets had ignored, Nazarbayev, a former steel engineer
who has ruled Kazakstan for 15 years, has created one of the most vibrant
economies in the former Soviet Union. "The poll demonstrated that
Kazakstanis feel the president is leading the country in the right
direction," Stephen Nix, director of the institute's Eurasia division,
said. The institute is the international arm of the Republican Party.
Nazarbayev's policy is in stark contrast to that of Putin in Russia, which is
barring foreign firms from future bids for energy and mineral resources.
Kazakstan is the new frontier for them now.
Not much has changed since then. Nazarbayev, who is 65, is expected to handily
win re-election to another term in elections due in December. So why is the
Parliament he fully controls churning out repressive laws that will make
election monitoring harder, restrict religious freedom, and put nongovernmental
organizations, like the Republican Institute's Almaty office, virtually out of
business?
The answer lies outside Kazakstan's borders - in Kyrgyzstan, Ukraine and
Georgia, where entrenched, far less popular leaders presiding over corrupt
regimes were ousted after being accused of rigging elections. In all three
cases, nongovernmental organizations were instrumental, in varying degrees, in
countering the effects of a muzzled press and denouncing election fraud and
corruption.
Time and again, Nazarbayev, whose popularity has never been low, has
demonstrated that where power is concerned, he takes no chances and does what it
takes to achieve eyebrow-raising results - like the election in 1991 when, after
two years in power, he officially received 98.7 per cent of the votes. Last
autumn, parliamentary elections widely condemned as rigged yielded the
opposition one seat out of 77.
Recently, amendments to Kazakstan's election law banned demonstrations between
elections and the announcement of results, precisely the kind of demonstrations
that led to the collapse of unpopular regimes in Georgia, Ukraine and Kyrgyzstan
after elections were denounced as fraudulent. The amendments "enhance the
opportunity for fraud and constitute a step backward for electoral reform in
Kazakstan," said the Organization for Security and Cooperation in Europe in
a detailed analysis of the election law.
Another recent law, on extremism, restricts religious and political freedom. It
also drew international protests.
As for the law on nongovernmental organizations, amendments that are awaiting
Nazarbayev's signature would impose such burdensome requirements that it would
become impossible for such groups to continue functioning, the heads of several
groups said. They said the measures brought Kazakstan to the level of the more
tightly controlled former Soviet republics of Uzbekistan, Turkmenistan or
Belarus.
"It's completely unnecessary because there is no crisis here," said
Valentina Sivryukova, president of the Kazakstan Confederation of
Nongovernmental Organizations and a supporter of Nazarbayev. "This will
only turn people against him."
Valery Kotovich, a member of Parliament who sponsored the amendments, said they
did not differ from those in the West. "We just want to make sure these
organizations work under strict control because some are covers for extremist
groups," he said. "If I went to your country, do you think I could
operate an organization without strict controls?"
On June 15, the day the amendments to the law on nongovernmental organizations
were approved in the lower house of Parliament, George Soros, the financier and
philanthropist, came to Almaty to urge Nazarbayev to reverse course, saying,
"Uzbekistan's massacre in Andijon provides a terrifying demonstration of
where a repressive course may lead."
Speaking at a conference on Central Asia held by the New York-based Asia
Society, Soros said, "Prosperity coupled with political freedoms would
ensure stability. If the president takes the right steps, his standing will be
unassailable."
Nazarbayev insisted at the conference, "Our aim is to build a society that
respects the commonly accepted standards of Western democracy."
Soros predicts financial achievements for Kazakstan
George Soros, chairman of the open society and Soros Foundation, recently
participated at a business conference "Kazakstan attracts a new flow of
investments: strategy on diversification and stable growth." Soros said
Kazakstan is at the crossing of many roads and faced a lot of problems
especially in the field of growing oil and gas revenue but added that Kazakstan
would overcome the problems. The country's revenue is USD 15 million this year
so far and it is expected that it will double by 2010.
Credit expansion increases risks for Kazak banks
Standard and Poor ratings services in a report entitled "Heightened
risks for Kazak banks from fast growth and interregional expansion" stated
that concerns over the general trend of sustained rapid credit expansion in
Kazakstan (foreign currency, BBB- /Stable/A-3; local currency, BBB/ Stable/A-3)
is worsened by bank's growing international and interregional exposure,
especially in riskier countries such as Russia and Kyrgyzstan, Interfax reported
recently.
With underdeveloped capital markets, banks still fulfil the main financial
intermediary function in Kazakstan and make up the primary channel of capital
distribution.
S&P's credit analyst Magar Kouyoumdjian said that with stabilised inflation
and fierce domestic competition, the main factor driving this loan growth is the
tightening interest margin, particularly on corporate lending. Even though,
certain measures like improving regulation and supervision of banks and their
higher sophistication can minimise the risks but the level and rate of increases
in lending and net external liabilities indicate rising leverage in a banking
system and can be indicators of potential financial system stress.
According to the report, the system's loan volume increased on average more than
50 percent annually in the past couple of years, with growth being much higher
at the larger banks; for instance, by 72 percent at Bank TuranAlem in 2004 on
top of an 85 percent growth in 2003.
This can be attributed to fast economic growth led by the oil and gas,
agriculture, construction sectors and the emergence of the small- and mid-sized
enterprise (SME) and retail credit market the latter being the product of a
drive to diversify the economic base and of a growing middle class, the report
said.
Over the last few years, there has been substantial investment in Kazakstan's
raw material resources that has boosted the economy, which in turn increased the
demand for corporate credits. There has also been a growth in construction
associated with the new capital Astana. The government is also stressing on
housing projects and is fuelling retail lending especially mortgages. Retail
credits are growing at a faster rate in spite of the 70 percent of lending to
corporate clients.
EBRD president in Kazakstan for foreign investors council
The President of the European Bank for Reconstruction and Development, Jean
Lemierre, visited Kazakstan to co-chair with Kazak President Nursultan
Nazarbayev, the 13th plenary session of the foreign investors' council (FIC),
which met in Karaganda on June 17, Kazinform reported. The council is a
consultative and advisory body established in 1998 to enhance the investment
climate and create a favourable framework for investments in Kazakstan and to
promote the integration of Kazakstan into the global economy.
The EBRD's operations in Kazakstan are focused on diversifying its economy out
of the oil sector by building earning assets in the private sector and the
development of the small- and medium-sized enterprise (SME) sector. There are
well-established and effective relationships between the EBRD and the government
for financing in the transport and municipal areas. The EBRD has also seen a
significant increase in the use of its trade facilitation and grain receipts
programmes.
Kazakstan takes a closer step to full WTO accession
During a recent visit to Japan, Kazak Prime Minister Daniyal Akhmetov
announced the official completion of bilateral negotiations for Kazakstan's
entry to the World Trade Organisation (WTO), Kazinform reported. A special group
on Kazakstan's accession to the WTO included 37 states. The government of
Kazakstan held bilateral negotiations with 15 states on commodity turnover and
service rendering in various spheres of economics of which Japan is one of those
15 states during the preparation groundwork for its accession to the WTO. For
the past two years the government of Kazakstan fulfilled much work along with
Japan's MFA. During the talks conducted in Geneva and Tokyo, conditions made by
Japanese party to Kazakstan were discussed.
ENERGY SUPPLEMENT
China National Closing on PetroKazakstan
China National Petroleum Corp., the largest Chinese oil company, has the
most to gain from buying PetroKazakstan Inc. and probably will not let another
bidder foil its $4.18 billion purchase agreement, investors noted on August
22nd. The Beijing-based producer has cut out India's Oil & Natural Gas
Corp., or ONGC, in the bidding.
China plans pipelines to ship oil from Kazakstan and may end disputes that
PetroKazakstan has with the Central Asian host country and with a joint-venture
partner, Russia's OAO Lukoil. "The cooperative steps between China and
Kazakstan and the shared border mean it makes more sense for them than ONGC,"
said Doug Hohertz, who helps manage the Mitchell Group in Houston. "They're
going to rather dance with the Chinese than the Indians."
Calgary-based PetroKazakstan has about 12% of the petroleum production in
Kazakstan, a country with more oil than the U.S. Kazakstan held 3.3 percent of
the world's oil reserves at the end of 2004, according to data compiled by BP
Plc. The country's 39.6 billion barrels of oil reserves were 35 percent greater
than the U.S. total. Kazakstan produced 1.3 million barrels of oil a day last
year.
China seeks to secure fuel for the world's fastest- growing major economy and
will be determined to close on PetroKazakstan, its biggest international
takeover, after losing its bid for Unocal Corp. of the U.S. earlier this summer,
investors said. Opposition by U.S. politicians contributed to a decision by
another state-controlled Beijing company, Cnooc Ltd., to drop an $18.5 billion
bid this month for Unocal. San Ramon, California- based Chevron Corp., the
second-largest U.S. oil company, bought Unocal for $17.8 billion.
"You could see a bidding war," said Eric Barden, at Texas Capital
Value Funds in Austin, Texas. "As they continue to compete for these
companies, they're going to continue to get a little more aggressive."
But India has not given up
India's Oil & Natural Gas Corp. will make a new bid if asked to do so by
PetroKazakstan, Chairman Subir Raha said on August 22nd in a telephone interview
with Bloomberg News Agency in Mumbai. The company's bid was "very
close" to the price China National agreed to pay, he said, declining to be
more specific.
PetroKazakstan, whose wells are all in Kazakstan, would have to pay a $125
million breakup fee to drop the purchase agreement with China National, the
companies said on August 22nd. The agreement values PetroKazakstan at $55 a
share, 21% more than its closing price on Aug. 19, the last day of trading
before the announcement.
"You could make an argument that PetroKazakstan is worth as much as
$65," said Barden, whose fund used to hold PetroKazakstan shares and
currently has about 4,300 shares of PetroChina Co., the Hong Kong-listed unit of
China National. "It's a pretty legitimate offer at $55, but I could
certainly see a possibility of China going higher."
PetroKazakstan Chief Executive Bernard Isautier, 62, said he can't solicit bids
after agreeing to the sale to China National. He said he expects no objection to
the sale from the government of Kazakstan. China National, known as CNPC, can
add value to the company's holdings, he said.
'Major Symmetry'
"There is tremendous and major symmetry between our assets and CNPC's
expertise, assets and markets," Isautier told investors on August 22nd on a
conference call.
China has begun construction of an $850 million, 200,000- barrel-a-day pipeline
from Kazakstan, according to the U.S. Energy Department. The 613-mile
(986-kilometer) conduit is scheduled to begin operating next year. The pipeline
will make Kazak oil more profitable by cutting shipping costs and providing
access to more markets, said Wilf Gobert, at analyst Peters & Co. in
Calgary.
Isautier has said in earnings conference calls that the pipeline could add as
much as $7 per barrel to profit. "That's why the pipeline is potentially so
dramatically important to PetroKazakstan's economics and why it would make a lot
of sense for the Chinese to pre-empt that value creation by buying the
reserves," Gobert said.
Among former Soviet states, Kazakstan is second only to Russia in oil
production. Chinese President Hu Jintao in July visited his Kazak counterpart,
Nursultan Nazarbayev, to discuss construction of pipelines to transport oil and
gas to China.
Access to Markets
China and Kazakstan are building another pipeline, running 3,000 kilometres
at a cost of $3 billion. Landlocked Kazakstan, which plans to triple oil output
by 2015, wants to bypass Russia's pipeline network and get its oil to other
markets.
"Strategically, geographically, Kazakstan's three proposed pipelines and
its existing railroads can link straight into China and fuel their refineries
there," said Tom James, managing director at commodities consulting firm
Global Risk Partners in The Hague.
The links to Kazakstan also give Chinese buyers the most to gain financially
from buying PetroKazakstan, said Martin Molyneaux, an analyst at FirstEnergy
Capital Corp. in Calgary.
'Legitimately More Insecure'
The defeat over Unocal will make China more determined in bidding for
companies such as PetroKazakstan, said policy analyst David Goldwyn, president
of Goldwyn International Strategies. "We have made China legitimately more
insecure and so more aggressive competition for long-term supply contracts would
be a natural consequence of our signalling that the U.S. market is closed to
them," said Goldwyn, who was assistant secretary of energy under President
Bill Clinton.
China lacks strategic petroleum reserves to draw upon in emergencies, Goldwyn
said in an August 15th telephone interview. Chinese oil fields are failing to
meet domestic demand, which more than doubled in the past decade to about 6.75
million barrels a day, according to an estimate by the International Energy
Agency. The nation's economy grew at a 9.5 percent rate in this year's first
half and has tripled in size in a decade.
Production was curtailed
PetroKazakstan's production averaged 151,102 barrels of oil a day in 2004.
The company in May said it would not meet its 2005 output target of 170,000
barrels a day because government rules on burning of natural gas would reduce
production by as much as 73,000 barrels of oil a day.
Kazakstan is seeking back taxes and charged two company executives in April with
breaking antimonopoly laws.
Lukoil, Russia's biggest oil producer, and PetroKazakstan jointly own Kazak oil
producer Turgai Petroleum CJSC. Since last year, the companies have engaged in
court battles over oil prices and access to pipelines. Lukoil is suing
PetroKazakstan for $256 million after alleging it should have been paid more for
oil from the joint venture, according to a July 28 statement by PetroKazakstan.
In turn, PetroKazakstan is suing Lukoil for $293 million.
Shares of PetroKazakstan jumped C$9.91, or 18 percent, to C$64.81 ($53.84) at
3:09 p.m. Toronto time on August 22nd in Canadian stock trading. The stock has
climbed 46 percent this year. Shares of PetroChina, the Hong Kong-listed unit of
China National, were unchanged at HK$6.30 ($1.07).
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AVIATION & SPACE
Ukrainian constructors offer Kazakstan space cooperation
At a recent governmental session devoted to the questions of fulfilling
Kazakstan's space industry development programme, director general of the
construction bureau Yuzhnoye of Ukraine, Alexander Degtyarev, offered to
establish cooperation with Kazakstan in the sphere of outer space exploration
programmes, Kazinform quoted the press service of the government as saying.
Ukrainian specialists stated the activation of joint efforts and unification of
possibilities of Kazakstan, Ukraine and Russia in the space industry will ensure
successful realisation of national space programmes and occupy the deserved
place in multilateral international space projects.
Commenting upon precise directions of cooperation, Degtyarev highlighted the
perspectives of such projects as appliance of Baikonur infrastructure for launch
of Zenit carrier rockets of various modifications, creation of reusable piloted
space ship Clipper, launch of minor space crafts and many other directions.
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BANKING
Allahabad Bank to enter Kazak market
India's Allahabad bank and Punjab national bank have re-drawn their joint
strategy for venturing into Kazakstan, Interfax News Agency reported recently.
Both banks are exploring the possibility of acquiring a local bank to gain a
strong foothold in that country. Earlier, the two had announced the setting up
of a joint venture to start banking operations in Kazakstan. "We have kept
it (the joint venture) on hold," the chairman and managing director of
Allahabad Bank said. He added that both banks will join together and acquire a
bank. He said the bank had sought the views of Ernst and Young on entering the
insurance field through its subsidiary, Allbank Finance Ltd. According to him,
the subsidiary had surrendered its leasing licence to the Reserve Bank of India.
It has now decided to focus on merchant banking, he added. The CMD informed the
press that TCS, Infosys and i-flex had put in their bids for offering
core-banking solution to link 400 branches. The differential norms relating to
capital requirements and recognition of global capital adequacy adopted by
various countries had resulted in the change of thinking vis-a-vis the Kazakstan
foray.
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CREDIT RATINGS
Standard & Poor's affirms Kazakstan ratings
Standard & Poor's Ratings Services said on July 26 that it affirmed its BBB-
long-term foreign currency and its BBB long-term local currency sovereign credit
ratings on the Republic of Kazakstan. At the same time, the A-3 short-term
foreign and local currency ratings on Kazakstan were also affirmed. The outlook
is stable, the agency said in a press release, New Europe reported.
"The ratings on Kazakstan are supported by the sovereign's good economic
and fiscal prospects, notwithstanding its vulnerability to oil prices,"
said Standard & Poor's credit analyst Luc Marchand. "Creditworthiness
is further underpinned by high capital investments and prudent policies."
Kazakstan also enjoys a good external position, with high liquidity and
increasing net public sector external assets, despite the increased external
leverage of domestic commercial banks, the rating agency said. In 2005 and 2006,
gross domestic product (GDP) growth will be sustained at 8.8 per cent and 7.1
per cent, respectively. Macroeconomic stabilisation should continue, with price
growth estimated at about 7.0 per cent in 2005 and 6.5 per cent in 2006.
The government has maintained prudent fiscal and monetary policies, which have
limited budget deficits and inflation.
A small fiscal surplus is expected in 2005, of about 2.7 per cent of GDP before
tax revenue transfers to the National Fund (a deficit of about 1.1 per cent
after transfers). General government debt is projected to be a low 10.5 per cent
of GDP at year-end 2005, and will continue to decrease in the next few years by
about 1.0-1.5 per cent of GDP annually. Additionally, with the National Reserve
Fund (National Fund) expected to reach about US$7.4 billion by year-end 2005, a
substantial fiscal buffer has been created. External liquidity remains high due
to expected current account surpluses and very high net foreign direct
investment (FDI) inflows.
Public sector net external assets are expected to reach about 74.5 per cent of
current account receipts (CARs) by 2006, compared with an estimated 59.5 per
cent in 2005.
The ratings are constrained, however, by a highly centralised and opaque
political system and weak economic structure. The Kazak authorities have shown a
consistent commitment to market reforms and prudent fiscal and monetary policies
over the past few years, according to the agency. "We expect that the
government will continue to pursue a fiscal policy that is aimed at decreasing
the public sector debt burden, while gradually addressing growing spending needs
in the social sector, government employee pensions, and physical
infrastructure," Marchand said. Even a sharp decline in oil prices would
not lead to lower sovereign creditworthiness, as the government has accumulated
sufficient funds to sustain such a strain on the budget for about three years
without impairing its original fiscal targets, S&P said.
A continued strengthening of the government's financial position, further
improvement in governance and the business environment, and an acceleration of
structural reforms would further enhance the country's credit standing, the
agency said.
S&P raises KazTransOil ratings, keeps stable outlook
Standard & Poor's Ratings Services said on August 2 that it raised its
long-term issuer credit and senior unsecured debt ratings on Kazakstan-based oil
transport company KazTransOil (KTO) to BB+ from BB. The outlook is stable. The
ratings on KTO continue to remain constrained, however, by the company's lack of
transparent regulation, the relatively poor state of the company's assets by
international standards, and the operational demands of expanding the pipeline
network to allow exports to China. These weaknesses are offset by KTO's monopoly
operations, with limited competition from rail and other pipelines; the
company's strategic importance to Kazakstan's growing oil industry; and the
increasing support of the Kazak government, New Europe reported.
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ENERGY
Kazakstan, Russia sign oil production sharing agreement
Russia and Kazakstan recently signed a US$23bn production sharing agreement to
develop one of the Central Asian nation's largest oil and gas fields, Interfax
News Agency reported. The shareholding structure will be 50:50.
Executives from Russian oil firm Rosneft-Kazakstan Ltd and the Kazak national
oil and gas company, Kazmungaz, signed the deal at a ceremony in the Kazak
capital, Astana. Rosneft holds 25 per cent, and the Russian state company
ZarubezhNeft (specialising in offshore drilling) holds an option for the
remaining 25 per cent.
Russian President, Vladimir Putin, attended the signing ceremony along with his
Kazak counterpart, Nursultan Nazarbayev. Putin was in Astana for a regional
security alliance summit. The agreement is for 55 years, with up to 10 years to
be spent on exploration and 45 on extraction, said Baktykozha Izmukhambetov,
first deputy minister of energy and mineral resources of Kazakstan.
Over the term of the agreement, Kazakstan will earn more than 30bn Euro in taxes
and other payments, Izmukhambetov said. The deal envisages equal investments in
the Kurmangazy field, located offshore in the Caspian Sea, with an estimated
980m tonnes of known oil and gas reserves, said Izmukhambetov. Extraction of the
oil and gas could begin in a decade. "We have worked on the Kurmangazy
project since 2002. This is the completion of a huge amount of work," said
Putin.
Kazakstan has vast oil and gas resources, located mainly in the western part of
the Central Asian country.
More than three-quarters of the total profits from the Kurmangazy field will go
to Kazak government coffers, in contrast with other deals that have given the
Kazak government much lower proceeds.
Primarily an international consortium led by Italy's Eni SpA is developing
Kazakstan's largest field, Kashagan, with more than a billion tonnes of
estimated gas and oil reserves.
Astrakhan seeks stake in Baku-Tbilisi-Ceyhan pipe
The governor of Russia's Astrakhan province has bid to act as courier for Kazak
oil being shipped to Baku to be transported through the Baku-Tbilisi-Ceyhan,
Interfax News Agency reported recently.
The Baku-Tbilisi-Ceyhan oil pipeline is near completion and stakeholders are
working to ensure there will be a steady flow of oil upstream from Azerbaijan
and beyond. In May officials reached an agreement with Kazakstan to ship 10
million tonnes of Kazak oil via the BTC.
The next step discussed was how to ship this oil to Baku and officials initially
said tankers from Aktau would be able to take the oil. Aleksandr Zhilkin, the
governor of Ashtrakhan, a Russian region with borders on the Caspian Sea and
Kazakstan, predicted that Kazak oil will be transported via his own port. In
June he held negotiations with Kazak President, Nursultan Nazarbayev, regarding
shipping opportunities and introduced the subject of oil shipments as well.
Meanwhile Georgia is waiting for the operation of the pipeline and the newspaper
Rezonansi states that construction of the BTC is practically finished.
CNPC unit in Kazakstan opens new oil field
The subsidiary enterprise of the China National Petroleum Corporation (CNPC) in
Kazakstan, CNPC-AktobeMunayGaz joint-stock company, has opened an oil field on
July 29 in the central area of the eastern part of the Caspian depression in
Aktyubinsk region, Interfax News Agency reported.
CNPC-AktobeMunayGaz is the largest oil extracting company in Aktobe region. It
was reported that CNPC invested over 1.8bn Euro in its subsidiary in Kazakstan
since it obtained the AktobeMunayGaz oil company eight years ago, and for that
money the old Zhanazhol gas refinery was reconstructed, a new gas refinery was
built, and also infrastructures for extracting, storing and shipping oil and gas
were created. "This event is of historic significance and the company
itself links its prosperity and future with it," Director General, Jiang Qi,
said while addressing the official opening of the new oil field in Aktobe
(administrative centre of Aktyubinsk region).
Jiang recalled that the company had started the seismic exploration of the
territory in August 2002 and in the following several years it drilled three
test wells - Vostochnyy Kuantay-1, Ashchysay-1 and Nadezhda. He said currently
from 85 to 120 tonnes of crude hydrocarbon was being extracted every day at the
new oil well. "However, "he said," it is early yet to speak about
forecasting indicators of extraction as currently exploration of its layers are
continuing." The director general said that based on the results of
drilling work at Ashchysau-1 oil well, it was decided to drill a second test
well of Ashchysay-2 with a view to tracing its productive limits, and in the
fourth quarter of this year start another seismic exploration at the same
sector. He stressed that over the period of 1997-2004, the company increased the
volume of oil extraction from over 2.7m tonnes to over 5.3m tonnes.
The company is planning to extract six million tonnes of oil in 2005, he said.
At the end of 2004, the remaining recoverable reserves of the Zhanazhol oil
field, which is being developed by the company, was over 78m tonnes of oil.
Apart from that, the Kenkiyak oversalt and Kenkiyak undersalt deposits contained
17.2m and 28.3m tonnes of crude hydrocarbon, respectively.
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FOREIGN ECONOMIC COOPERATION
Kazakstan offers India new trade opportunities
India and Kazakstan have entered into new business partnerships which comprise
machine building for the oil and gas industry, agricultural machinery,
petrochemical industry, construction material, food processing, IT and bio-tech
parks, health and textiles, Interfax News Agency reported recently.
Currently the rapid growth and infrastructure development in Kazakstan has
opened doors for Indian companies to invest. Gross domestic product (GDP) of
Kazakstan amounted to US$27.48bn in 2003 with 9.2 per cent GDP growth. Its per
capita income is US$1,882. Kazakstan, a mineral rich country with a population
of 15 million less than India but with a geographical area near the size of
India is emerging rapidly as a developing economy in central Asia, with its rich
oil and natural gas resources. India was one of the first countries to recognise
the independence of Kazakstan. It has been reported that trade between the two
nations currently stands at 96.6 million Euro.
The major Indian presence in the country is pharmaceutical and tea markets, and
Indian companies have participated in the petrochemical sector. Indian
Ambassador, Asoke Mukerji, said Indian companies that have expertise in
different fields could venture into Kazakstan. He stated that in the field of
transportation, India has received an inquiry from the Kazak railways to
modernise the locomotive fleet of the Kazak. There are about 700 locomotives. It
is a country as huge as India, it relies on the railway infrastructure network
for moving both passengers and freight.
Mukherji added that it is indicative of Kazakstan interest in India that they
looked to India and looked at the track record of India for modernisation in
locomotives. Kazakstan has asked for help through a commercial contract. In
these areas and in the field of construction, both countries can collaborate
efficiently.
Astana, Warsaw set up cooperation commission
Kazak Prime Minister, Daniyal Akhmetov, and Polish Minister of Economy and
Labour, Yatsek Pekhota, agreed to set up a commission for economic cooperation -
the first sitting of which is due to take place in September this year in
Warsaw, Interfax News Agency reported recently.
Pekhota and Akhmetov discussed the question of the forthcoming session of the
commission and commented upon cooperation in the sphere of agriculture, energy,
transport and transit.
Pekhota also underlined the importance of realising the Odessa-Brody-Plotsk
pipeline project.
The Polish side expressed an interest in Kazak investment in the project.
Pekhota said opportunities of involving the four largest oil refining companies
of Poland into partnership were negotiated with KazMunaiGas earlier in July.
Meanwhile, Poland is interested in Kazak companies taking part in the
privatisation of the oil-refining group Lotos, Piechota said after meeting with
Akhmetov, according to Interfax. "Currently, the first stage of
privatisation will involve the stock exchange, and in the second stage, we're
going to search for investors who will join this branch. And it seems to us that
Kazakstan and Kazak firms could be a good investor," Piechota said.
"In the framework of the talks held with Kazak Energy and Natural Resources
Minister Vladimir Shkolnik, we received confirmation that Kazakstan is
interested in participating in the privatisation of this enterprise,"
Piechota added. During the talks, the Polish side informed Shkolnik about how
the process of privatising Lotos was proceeding, Piechota said.
Astana, Beijing boost trade, economic ties
At a meeting between Kazakstan Prime Minister, Daniyal Akhmetov, and
Vice-Premier of the Chinese Council of State, Wu Yi, the two sides agreed to
further boost the relationship between the two countries and exchange opinions
about the perspectives of developing commercial and economic relations,
particularly in the fuel and energy industry and procurement of China's new
technologies, Kazinform reported.
The Chinese official pointed out that the relationship between Kazakstan and
China has entered a new development phase. The two states have established
strategic partnership relations and the mutually beneficial cooperation is
observed to be developing rapidly.
In the current year the goods turnover output is expected to exceed US$5bn. Wu
Yi said that China is interested in further collaboration with the Republic of
Kazakstan in economy and trade spheres.
For his part, Akhmetov noted energy cooperation was an important constituent of
the mutual economic development. Currently Kazakstan is evaluating the
opportunities of working out several variants of gas pipeline construction in
the Chinese direction.
Also the oil pipeline Atasu-Alashankou is drawing to the end. Meanwhile, the
Kazakstan deputy prime minister, Akhmetzhan Yesimov, pointed out that China is
the most attractive market for international investors with import intensity
accounting for US$560bn a year.
He praised the significance of trade and economic cooperation between the two
countries. The two countries share a 1700 kilometres border contributing to
economic interaction development. Sinopek Chinese petrochemical corporation and
"Engineering and Transfer Technologies Centre" JSC Kazakstan company
were introduced during the business forum. The bilateral trade rate was at
US$4.5bn in 2004. It is 37 per cent more than the 2003 rate. Currently, the
Chinese investments rate accounts for US$1.800bn.
Trade turnover between Kazakstan and China may exceed five billion this year,
Kazak deputy industry and trade minister, Bolat Smagulov, told a bilateral
business forum in Astana on July 15. "Trade turnover reached 1.760bn Euro
over the first four months of the year. It means that this indicator may exceed
our heads of states' target of five billion Euro this year while the volume of
bilateral trade turnover may total 10bn Euro by 2010," Smagulov said. Last
year's bilateral trade turnover was 4.5bn Euro.
French investments directed to Kazakstan
The investment of France in Kazakstan is increasing, Jacques Binales, advisor
for economy and commerce of the French embassy to Kazakstan, announced on July
14 at a special meeting, Kazinform reported.
France is the ninth largest investor in Kazakstan. According to the Binales,
French exports to Kazakstan in the first half of the year amounted to 70-80m
Euro. Exporters predict this sum will grow to 200m Euro. The data of Kazakstani
exports to France depend on oil contracts, said Binales. He added that it is
hard to trace Kazakstan's exports to France as trading operations are chiefly
performed via Switzerland. France is known to have been participating in three
projects. The company Total is involved in the operations on Kashagan oil field.
Cogema and Kazatopmprom set up a joint venture producing uranium. French Cement
and Shymkent cement plant also founded a joint enterprise.
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TOURISM
Tourism boosts Kazak economy
The president of Kazakstan, Nursultan Nazarbayev, in a message to the people
recently stated that the Kazak economy would benefit from the tourism cluster.
Tourists visited exotic resorts and Kazakstan was one of them, New Europe
reported.
4.3 million tourists from non-CIS countries visited Kazakstan last year.
According to 2001-2005 Kazakstan tourism development conception, it can
influence the country's economy. Nazarbayev pointed out the necessity of
tourism, oil and gas engineering, food and fibre, metallurgy and construction
materials clusters development. They determine long-term specialisation of the
country's economy in non-primary spheres, the message read. The largest objects
attracting tourists are in South Kazakstan. Aisha-Bibi mausoleum, Karakhana,
Babadzhi-Khatun, Khodzha Akhmed Yassavi complex, national parks, are among them.
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