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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: 311 - (28/11/06)
Nazarbayev brooks no rivals or critics
President Nursultan Nazarbayev is not exactly a liberal democrat, but he is
regarded as the acceptable type of Central Asian dictator, who can be invited to
Washington, where he was in late September, hobnobbing with Bush junior and back
on the ranch with Bush senior, and London, where he was on a visit in late
November, meeting Blair and the Queen. After all, his country is lending a hand
with troops in Iraq and is doing very well. Also it has a lot of oil.
Democracy, he says, is "for the long term" in Kazakstan. This is
undoubtedly true. Leading opposition figures languish in jail. The recent
killings of two prominent Nazarbayev critics highlighted persistent doubts about
the transparency of Kazakstan's political system.
Opposition groups said the killings were politically motivated; authorities
ruled one death from multiple gunshot wounds was a suicide(!) and the other was
a murder motivated by personal enmity.
If democracy is for the long-term, in the immediate term Nazarbayev is a firm
practitioner of liberal kleptocracy. In a world long accustomed to outsize
public corruption, some analysts say that Nazarbayev is in a class by himself.
"I can't think of a leader in the free world as notoriously corrupt as
Nazarbayev," said Jonathan Winer, a former deputy assistant secretary of
state during the Clinton administration. "We've known about his corruption
for at least 15 years because our own intelligence agencies have told us."
Parliament is a rubber stamp assembly. He won re-election a year ago by 90%. He
is taking no chances with forthcoming parliamentary elections.
Two pro-government parties merge
The president announced on November 10th the merger of the ruling Otan party
with the pro-government Civic Party in what the opposition described as part of
efforts to ensure his grip on power in upcoming parliamentary elections.
The Civic Party has about 150,000 members, mostly workers of large plants and
mines in the country's heavily industrialized central regions. After the merger
Otan will have approximately one million members, becoming the largest political
party in the ex-Soviet state with a population of 16 million.
"The merger of the two leading parties will stimulate political
consolidation in the country," Nazarbayev said at the Civic Party congress
in the Kazak capital, Astana. In July, another party, Asar, headed by
Nazarbayev's elder daughter, Dariga, merged with Otan.
"The authorities wanted to create a super party that would have a decisive
number of seats in Parliament in any political situation," Zharmakhan
Tuyakbai, head of the opposition Social Democrats, told The Associated Press.
Tuyakbai, a former parliament speaker, had challenged Nazarbayev in a
presidential election last December which Western observers and OSCE said was
flawed.
"The authorities are building what they think is a right political
configuration," opposition activist Petr Svoik told the AP. "They want
to have two ruling parties and the Social Democratic party as their
opposition."
Nazarbayev, a former Communist boss, has drawn criticism in recent years for
attempts to tighten control. Nevertheless, he is credited for making Kazakstan
one of the leading former Soviet economies that has drawn vast foreign
investment to develop its Caspian Sea oil resources.
UK, Kazakstan pledge to increase bilateral relations
This of course accounts for his welcome in the West. Washington one month,
London the next. British Prime Minister Tony Blair met with Nazarbayev at 10
Downing Street on November 21st, pledging to further bilateral relations between
the two countries.
At the joint news conference after talks with him, Blair said, "this visit
indicates the very strong relationship between the UK and Kazakstan today. We
have come a long way in these past few years since you were last here, I think
in the year 2000, and this relationship is obviously about trade and energy
where the UK is I think the second largest investor in Kazakstan today."
"But it is about more than just investment in the energy sector.
Increasingly we have strong relations for example in relation to the airlines,
in relation to defence." said Blair.
Nazarbayev told reporters that the relations between Britain and Kazak had
developed "in a very stable way" since its independence in 1991.
"As of today the UK is the second largest investor after the United States
in Kazakstan. UK companies have invested around 8 billion US dollars in
Kazakstan," said the president. There are in fact 128 British firms
invested there.
After talks, the two leaders issued a joint communiqué which pledges to enhance
stability in Iraq and Afghanistan, and strengthen economic ties between the two
countries. "Both countries recognize the importance of international
security and are committed to the further deepening of cooperation in the fight
against international terrorism, the proliferation of weapons of mass
destruction, and other new threats," said the communiqué.
On November 22nd in a suitable symbolism, Nazarbayev opened trading at the
London Stock Exchange, which has seen the listing of Kazakstan's biggest copper,
gold and oil producers over the past year.
******
The following article is self-explanatory:-
Trial to put spotlight on US support for Kazakstan
By Ron Stodghill / The New York Times
On a warm afternoon in late September, Nursultan Nazarbayev strode across the
tarmac at Andrews Air Force Base in Maryland to board his private 767.
Surrounded by an entourage of security guards and political advisers, Nazarbayev,
the president of Kazakstan, was heading home after an eventful visit that
included a meeting with President George W. Bush in the White House and a
boating jaunt in Maine with the president's father, George H.W. Bush. Nazarbayev
also attended a swank fete at the Capital Hilton Hotel where his hosts, the
television mogul Ted Turner and Sam Nunn, the former US senator, praised him for
closing a nuclear test site.
Warm welcomes aside, human rights groups frequently characterize Nazarbayev as a
dictator who, during 15 years of rule, established a hammerlock on oil riches in
Kazakstan and amassed a fortune at the expense of an impoverished citizenry.
Supporters say that he has wedded a draconian political order to clear-eyed
economic policies, making his country hospitable to foreign investment. But his
White House visit came at a tender moment. About a month earlier, the Bush
administration introduced its National Strategy to Internationalize Efforts
Against Kleptocracy, an initiative aimed at preventing public graft worldwide
by, among other things, denying corrupt leaders access to the US financial
system.
"Kleptocracy is an obstacle to democratic progress, undermines faith in
government institutions and steals prosperity from the people," President
Bush said. "Promoting transparent, accountable governance is a critical
component of our freedom agenda."
Nazarbayev's visit, coming on the heels of those sentiments, sparked renewed
criticism of his leadership and questions about the White House dedication to
battling corruption overseas, possibly explaining why the administration decided
against holding a state dinner for the Kazak leader.
But behind the scenes, a legal drama has been playing out that analysts say may
better explain why Nazarbayev and the White House are engaged in such an
elaborate form of political kabuki.
In February, the US attorney's office in Manhattan is scheduled to go to trial
in the largest foreign bribery case brought against an American citizen. It
involves a trail of international financial transfers, suspected money
laundering and a dizzying array of domestic and overseas shell corporations.
The criminal case names Nazarbayev as an un-indicted co-conspirator.
The defendant, James Giffen, a US merchant banker and a consultant to the Kazak
government, is accused of channelling more than US$78 million in bribes to
Nazarbayev and the head of the country's oil ministry. The money, doled out by
US companies seeking access to Kazakstan's vast oil reserves, went toward the
Kazak leadership's personal use, including the purchase of expensive jewellery,
speedboats, snowmobiles and fur coats, US prosecutors say.
Beyond the large amounts of cash involved and the top-flight access such sums
often secure, the case against Giffen has opened a window onto the high- stakes,
transcontinental manoeuvring that occurs when Big Oil and political access
overlap, a juncture marked by intense and expensive lobbying, overseas
deal-making and the intersection of money, business and geopolitics.
The case also illustrates the US government's struggle to reconcile its
short-term energy interests with its longer-term political goal of encouraging
democracy in countries the international community has deemed corrupt.
To be sure, many an American president has entertained a foreign leader under a
cloud of suspicion, but Nazarbayev's role in a US criminal investigation makes
him an unusual entry into that company.
Bush administration officials have acknowledged that the Kazak government falls
short in its democracy-building efforts. But some foreign policy specialists see
Kazakstan as an important ally in the administration's campaign against
terrorism and a bountiful alternative to oil reserves in the volatile Gulf, all
of which promise to make the opening of the Giffen trial more than just
hit-and-run bribery fare.
"The administration is naturally reticent about Giffen's case," said
Raymond Baker, an energy policy analyst on loan to the Brookings Institution, a
liberal research group in Washington. "It would probably be a lot easier on
everyone if he had gotten away with it."
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AUTOMOBILES
Skoda plans to boost sales 67% in 2007
Skoda Auto is planning to increase car sales 66.7 per cent in Kazakstan in 2007
compared with this year.
"We are planning to sell 2,500 cars in Kazakstan in 2007. This is possible
thanks to the launch of mass production of the new Skoda Octavia model and
because sales have begun for the Skoda Fabia," Vitaly Tselikov, head of the
Skoda Auto project in Kazakstan, said at a press briefing recently, Interfax
News Agency reported.
Asia Auto, which assembles Skoda cars in Kazakstan, is planning to sell 1,500
cars in Kazakstan and has so far sold 1,200 cars, Tselikov said.
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AVIATION & SPACE
2 spaceships, 4 freighters to be launched to ISS in 2007
Two manned spaceships and four freighters will be launched to the International
Space Station (ISS) from Baikonur in 2007, Energia Aerospace Corporation
President and Director General, Nikolai Sevastyanov, said at the spaceport,
which launched a Progress M-58 cargo spaceship on October 23rd, Interfax News
Agency reported.
"Three launches will be done under the federal space programme, while the
fourth will deliver NASA cargo. The programme is combined and the cargo traffic
must be continuous, so the deliveries of American cargo to the ISS will be
proportionate throughout the year. The United States will pay for the production
and launch of only one spaceship. It is as if they order a spaceship for the
deliveries of their cargo," he said. Plans are to enlarge the ISS crew to
six people starting from 2009, so four Soyuz manned spaceships will be launched
annually in contrast to the current two, Sevastyanov said. "Energia is
considering the larger production of spaceships. We will start to produce and
launch four manned spaceships per year in 2009," he said. Besides, Energia
is developing the Russian segment of the ISS under a decision of the Federal
Space Agency. "We are building the station so that it brings more benefits
for science and industries. The new module is called 'a multifunctional lab.' It
will be the main functional module and be equal in size to the Zarya functional
and cargo module. The exterior will look the same, but the interior will be
totally different. The module will have new control systems and new
technologies, which will be tested at Progress spaceships of the 400th
series," Sevastyanov said. Energia drew up the module blueprints this year,
he said. "The module will fit digital systems and offer universal working
places and a standard interface. The multifunctional laboratory module will meet
the needs of Russian researchers and foreign clients," he said. The
expenditures will be compensated within a decade.
Energia is developing space machinery, which will compensate its costs,
Sevastyanov said. "This is already true of telecom and earth monitoring
satellites. Now we need to make manned spaceships cost effective," he said.
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BILATERAL TRADE
Moscow, Astana to improve structure of bilateral trade
Russia and Kazakstan are counting on the acceleration of growth in bilateral
trade and the improvement of its composition, New Europe reported.
Russian Prime Minister, Mikhail Fradkov's, talks with Kazak Prime Minister,
Danial Akhmetov, focused on the analysis of the structure of trade, which shows
that 26 per cent is in machinery and 28 per cent in mineral resources, the
Russian prime minister said at a briefing. The increase in sales of machinery
"is a good sign," he said.
The target of US$10 billion will be achieved thanks to a 30 per cent rise in
comparison with last year, Fradkov said. Akhmetov expressed hope that investment
cooperation between Russian and Kazak companies will expand, which will allow
for levels of trade growth of 30 per cent or more. "The US$10 billion trade
target is a new initial figure that will grow," Akhmetov said.
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CREDIT RATINGS
S&P rates Eurasian bank B/B and kzBB+
Standard & Poor's Ratings Services has assigned its B/B long- and short-term
counterparty credit ratings to Kazakstan-based JSC Eurasian Bank. At the same
time, it assigned its kzBB+ Kazakstan national scale rating to the bank. The
outlook is stable. The rating agency said in a statement that the ratings on
Eurasian bank reflect its modest customer franchise, short track record of the
new strategy, rapid loan growth, and limited financial flexibility in the
high-risk economic environment of the Republic of Kazakstan (foreign currency,
BBB/Stable/A-3; local currency, BBB+/Stable/A-2). "Positive rating factors
include its wealthy and supportive shareholders, diversifying customer base,
good profitability, adequate capitalization, and reduction of individual loan
concentrations," said Standard & Poor's credit analyst, Annette Ess,
New Europe reported.
The stable outlook reflects our expectations that the bank will benefit from the
development of the financial sector in Kazakstan, supported by the country's
good economic prospects, and that the new management team will be successful in
implementing its strategy. "A positive rating action will depend on further
development of the bank's franchise, improvements in capitalisation,
profitability, and funding diversification," Ess said. Ratings could be
pressured downward by an inability to manage rapid asset growth, deterioration
in asset-quality indicators, reduced capitalization, and a significant decline
in profitability, the statement said.
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ENERGY
KazMunaiGaz, CNPC to build gas pipeline to China
KazMunaiGaz Kazak national oil and gas corporation and China's CNPC will start
the construction of a trunk gas pipeline linking Kazakstan to China in 2008,
KazMunaiGaz general manager for gas projects, Musabek Isayev, said in Beijing on
November 9th. He took the floor at the China Gas Summit 2006, New Europe
reported.
The pipeline's annual capacity will stand at 10 billion cubic metres, he said.
The commercial operation of the pipeline will start in 2009, while the second
segment will be launched in 2012 to increase annual capacity to 30 billion cubic
metres, he said.
KazMunaiGaz is actively cooperating with Chinese companies in gas projects,
Isayev confirmed. China's demand for natural gas will grow by annual 15 per cent
in the next 20 years, deputy head of the oil and gas department at the Chinese
State Development and Reform Commission, Wang Jing, said at the forum.
In that case, China's gas consumption will surge from its current 45 billion
cubic metres to 300 billion by 2030, Wang said.
Russia's UES to boost import of electric power from Kazakstan
Russia's Unified Energy System (UES) is planning to increase the import of
electric power from Kazakstan shortly. UES CEO, Anatoly Chubais, visited the
Ekibastuz GRES-2 power station recently as part of his trip to Kazakstan and
announced the plans to build two more generating units there. For this purpose
the Russian company is prepared to pay around US$ one billion, New Europe
reported.
Russia's new energy strategy provides for upgrade and expansion of the Kazak
station. Russia is experiencing a severe energy deficit. Power consumption is
growing rapidly, and the available facilities fail to meet the demand.
Considering the energy crises that shook Russia last winter and the criticism of
"Russian energy king" Chubais, Russia's energy policy priority today
is to ensure supply of electric power to the home market.
Responding to questions from Kazak journalists, Chubais said UES has revised its
export-import policy. "We are minimising export and maximizing
import," he said.
Kazakstan will play an important role in this revised policy. "We intend to
increase import from the neighbouring countries, in particular, from Kazakstan,"
UES spokeswoman, Tatyana Milyaeva, explained. At the same time, export of power
from Russia to Belarus, Ukraine, the Caucasus and the Baltic states will be
reduced. Import of power from Kazakstan will be increased, first of all, from
the Ekibastuz GRES-2, in which Russia bought a 50 per cent interest in 2005.
Ekibastuz GRES-2 is one of the largest stations in Kazakstan. It has two
generating units of total capacity of 1,000 megawatt.
During his visit to GRES-2, the head of the Russian company stated that
"the construction of a new 500MW generating unit has been decided in
principle." The Russians are prepared to spend some US$500 million on this
project. The work will be completed in 2011. The longer term plans provide for
construction of a fourth generating unit. Besides, RAO has adopted a two-year
upgrading programme for GRES-2 that will cost 12 billion tenges.
Russia is willing to pay this kind of money to cover the existing energy
deficit. After the above-mentioned energy crisis in Moscow last year, the
Russians have addressed the energy system issues very seriously. Russia has
adopted a new energy strategy. The strategy is designed up to year 2010 and it
provides for construction of new power stations of total capacity of 20,000
megawatt across the country. Russia has budgeted as much as US$81 billion for
these purposes. These expenditures have been approved by the government.
"This is the largest investment programme in the history of the Russian
companies. US$81 billion makes approximately 1.5 times the entire stabilisation
fund of the Russian Federation," Chubais told a press conference in Astana.
The large investment highlights the fact that Russia is very serious about the
resolving its energy problems. But power consumption has also been growing each
year in Kazakstan and its energy system requires serious investments.
In spite of the recently signed power transit agreement with UES it will be long
time until Kazakstan becomes independent from the Russian energy system. The new
power transmission line that will bring power directly from Kazakstan's north to
its south bypassing Russia will be built only in 2009.
Kazak company KEGOC head Kanat Bozumbaev said that in a couple of years
Kazakstan may face a similar power deficit as Russia is experiencing now.
"So far we have time - two years - while Kazakstan has spare
capacities," Bozumbaev said. "But if we do not build anything, we too
will have power deficit by 2008." He explained that new projects were being
considered and would be made public shortly. The KEGOC head said in order to
avoid an energy crisis, Kazakstan will have to invest at least US$ four billion
in its energy industry over the next five years.
Repsol to expand presence in Kazak energy market
Repsol YPF, the largest oil corporation in Spain, is interested in expanding its
presence in Kazakstan and is prepared to fend off competition from Chinese
energy companies to consolidate its position in the energy-rich Caucasus state.
China National Petroleum Corporation (CNPC) wants to buy MangistauManaiGas, one
of the largest oil producing companies in Kazakstan. Migel Corvalan, the general
manager of Repsol, talked to New Europe correspondent Kulpash Konyrova about the
Spanish company's projects in Kazakstan and its prospects in the region.
Mr. Corvalan, as we know Repsol YPF has been present on the Kazakstan market
since 1997, what are the results of these nine years?
We opened the representation office in Almaty to start the exploration work for
Baiganinsk block in 1997. After completing all seismic surveys, geological and
geophysical studies as per contract, we opened an operations office in Aktobe in
2001, in order to drill two wells, which unfortunately gave us negative results.
After final evaluations, the partners (Enterprise/Shell) decided to relinquish
the project and all studies; maps and final reports on the area produced were
returned back to Ministry in 2004.
In 2003 we started negotiating development of the Caspian block Darkhan with the
national oil company KazMunaiGas. A memorandum of understanding (MOU) was signed
between Repsol YPF and KazMunaiGas in February 2003 in order to study and
present offers for the joint projects Darkhan/Amangeldy. However tax legislation
changes at the beginning of 2004 related to PSA (Production Sharing Agreement),
resulted in unfavourable conditions for projects, making them economically
unviable. As far as we know right now, KazMunaiGas is in negotiations with CNPC
for Darkhan block.
In 2005 we initiated negotiations for participation in the exploration and
production project Zhanbay in the northern part of Caspian Sea (projected
geological resources of the block are estimated at 300 million tonnes of
standard oil. (as per KazMunaiGas estimates). Long negotiations with KMG and
Nelson Resources first, resulted in the following division for participation on
the block: KMG - 25 per cent, Repsol YPF -25 per cent and LUKoil - 25 per cent,
who were entitled to this share with the earlier acquisition of Nelson
Resources. Negotiations between the three parties have been concluded already
and now all corresponding documents are under revision to be signed soon,
hopefully not later than November 2006.
What about exploration of the gas field Amangeldy in the South Kazakstan, which
was also listed amongst the projects of your company?
Amangeldy was a social project, connected with Darkhan as joint projects and as
mentioned before, we did not conclude the negotiations for this package.
Tengizchevroil to increase oil production 62%
Tengizchevroil, which is developing the large Tengiz field in Atyrau region in
Kazakstan, plans to significantly increase oil production in 2007 - to 22
million tonnes, KazMunaiGaz First Vice President, Zhaksybek Kulekeev, said at an
international conference in Almaty on November 1st, New Europe reported.
"The Tengiz field produces at least 13.5 million tonnes of oil per year.
Next year they plan to increase oil production to 22 million tonnes, and from
2008 to increase oil production to 25 million - 28 million tonnes per
year," he said. Consequently, growth in production in 2007 may amount to 62
per cent. This year Tengizchevroil plans to keep oil production at the same
level as in 2005. Last year the company produced 13.6 million tonnes of oil and
3.4 billion cubic metres of associated gas, compared to 13.6 million tonnes of
oil and 4.7 billion cubic metres of gas in 3004. By 2010 Tengizchevroil plans to
annually produce up to 27 million tonnes of oil, following a number of projects
to expand production, which the company plans to complete in 2008.
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