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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 29,749 24,205 22,400 60
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

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Area ( 


ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

(formerly Akmola)


Nursultan Nazarbayev

Update No: 301 - (30/01/06)

Chinese Vice President Arrives in town
China is an increasingly important partner for Kazakstan, the largest potential importer of Kazak oil and other commodities. The Chinese see Kazakstan as a key enabler of the continuation of its long boom, providing the extra energy and resources it needs. 
As a token of regard Beijing sent Vice President, Zeng Qinghong, to the inauguration ceremony for President Nursultan Nazarbayev's new term, held on January 10th. He arrived in the Kazakstan capital, Astana, on January 9th at the start of an official visit to the Central Asian country. During his visit, the Vice President met with leaders of the Kazak government and parliament to exchange views on bilateral cooperation, as well as the regional situation and major international issues. 
It is the first visit of a Chinese leader to Central Asia this year, a token of esteem and amity and a sign of Chinese priorities in the region.

Re-election of a 'benevolent despot'
In the eighteenth century Europe was renowned for having a whole series of "enlightened despots" in charge, such as Frederick the Great of Prussia and Catherine the Great of Russia. It will never be a question of "Nursultan the Great," but the ruler of Kazakstan is from a different mould to other Central Asian despots. 
President Nursultan Nazarbayev, a former Soviet apparatchik appointed to rule the country before the break-up of the Soviet Union in 1991, is genuinely popular, unlike say President Saparmurat Niyazov of Turkmenistan. 
But he has one thing in common with Niyazov, a flair for micro-managing the arts. It might be kinder to compare him to Frederick the Great, a gifted composer and patron of Voltaire. After 16 years of humming the same tune on state occasions, Nazarbayev decided to change the music and add some lyrics of his own ahead of his inauguration for a new term.
Parliament voted to ditch the Central Asian state's old national anthem in favour of My Kazakhstan, a song written in 1956 and adapted by Nazarbayev himself. "The text should reflect the heroic centuries-long struggle of our ancestors for independence," Nazarbayev wrote in a letter to parliamentarians, explaining his changes.
His lines, roughly translated, include: 

"Look at my country - the legend of courage
In hoary antiquity
Our glory was born
My Kazak people is proud and strong."

Until now Kazaks had sung a Soviet-era national anthem, although its words were changed in 1996.
Nazarbayev, a 65-year-old who started his career as a steelworker, usually appears stern in public, but reveals a poetic side on his website, penning two other songs, My Country and My Land.
Last month he won a new seven-year term in office with 91 per cent of the vote, though international election observers said the poll was flawed, citing ballot box stuffing and the intimidation of opposition campaigners.

'Multi-vector' foreign policy
Nazarbayev's re-election underscored not only Kazakstan's geopolitical status as a state that grounds its relations with the outside world in its significance as an energy supplier, but also the likely continuation of Nazarbayev's policy of using this status as the continuing basis for his so-called "multi-vector" foreign policy.
Nazarbayev's re-election with over 90 per cent of the vote showcased a political system that has all the earmarks of post-Soviet "managed democracy," as indicated by the OSCE's initial assessment that, "despite some improvements in the administration of this election in the pre-election period, the presidential election did not meet a number of OSCE commitments and other international standards for democratic elections." Nevertheless, official Western criticism of the election was muted, and with Nazarbayev safely ensconced for another seven-year term, a number of European political figures expressed cautious support for Kazakstan's bid to chair the OSCE in 2009.
Kazakstan's multivector foreign policy manifested itself in an ongoing drive to diversify the country's oil export routes, thus reducing dependence on Russia, and to accommodate Chinese investment in the country's energy sector. On the eve of the 25th May opening of the Baku-Tbilisi-Ceyhan (BTC) export pipeline, Nazarbayev met with Azerbaijani President Ilham Aliyev and affirmed his commitment not only to export Kazak oil through the BTC pipeline, but also to build an underwater pipeline linking the Kazak port of Aktau to Baku. On 15th December, the Atasu-Alashankou pipeline linking Kazakstan and China went into operation, with the first deliveries of Kazak oil to China planned for mid-2006. In October, the China National Petroleum Corporation paid US$4.2 billion to buy PetroKazakstan, a Canadian-registered company that conducts all of its production operations in Kazakstan.
These moves took place against a steady drumbeat of high-level declarations that the maintenance of friendly Kazak-Russian relations is a priority task for Kazakstan's foreign policy. At the same time, Kazakstan maintained its symbolically important contingent of roughly 30 mine-clearing experts in Iraq.
Regionally, Kazakstan took a pragmatic approach to cooperation with immediate neighbours Kyrgyzstan and Uzbekistan. The relative vigour of the Kazak economy in 2005 continued to draw hundreds of thousands of migrant workers from both countries, allowing Astana to navigate ties with its neighbours from a position of strength. Here also, multivector components -- in this case, pushes and pulls in relations with a single country -- were in evidence. For example, in July Kazakstan declined to extradite Uzbek rights activist Lutfullo Shamsiddinov, a witness to violence in Andijon, to Uzbekistan; but in November, Kazak authorities apparently acquiesced in the abduction of a number of Uzbeks from southern Kazakstan to Uzbekistan, as Human Rights Watch charged in a 3rd December press release on the organization's website.
Relations with Kyrgyzstan revealed a similar dynamic of pushes and pulls. Even as government-controlled Kazak media portrayed Kyrgyzstan's 24th March revolution as an exercise in chaos and some former members of the Kyrgyz elite from the era of deposed President Askar Akayev fled to Kazakstan, the Kazak leadership cultivated cordial ties with its new interlocutors in Bishkek. Kazakstan pledged to help plug a gap in Kyrgyzstan's natural-gas supplies when difficulties arose with Uzbekistan in August, and took a nonconfrontational approach in December to Kyrgyzstan's US$18 million in arrears for gas payments.

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Fitch upgrades Kazakstan

Fitch Ratings upgraded the Republic of Kazakstan's Foreign Currency Issuer Default Rating to BBB from BBB- (BBB minus) and the Local Currency Issuer Default Rating to BBB+ from BBB, New Europe reported.
At the same time, the agency has affirmed the Sort-term Issuer Default Rating at F3 while the Country Ceiling has been upgraded to BBB from BBB- (BBB minus). The rating Outlooks are Stable, the Agency said.
The upgrades are supported by a strong macroeconomic performance, progress with structural reforms, a good track record in responding to shocks and the ongoing development of the oil and gas sector. The political scene remains stable, with December's presidential election passing smoothly and resulting in a further term for President Nursultan Nazarbayev, and public finances are strong. The consolidated fiscal position has been in surplus since 2001 and roughly 60 per cent of the total oil windfall received since that time has been saved in the national oil fund. Fitch estimates that the fund held US$6.7bn, or 13.3 per cent of GDP, at end-2005, providing a large buffer against shocks.
Reflecting the combination of rapid GDP growth and a tight fiscal stance, the general government debt burden is forecast to fall below 10 per cent of GDP this year, by far the lowest in the BBB peer group. The public finances also compare very well on the eternal side. The public sector's net external creditor position remains the strongest in the peer group with a net asset position of 41 per cent of current account receipts or 26 per cent of GDP.
In contrast, the countrywide external balance sheet compares less well with its BBB- rated peers. However, more than half of the total external debt is inter-company debt related to the development of the oil and gas sector. This is common practice in the oil industry as debt investment carries more tax benefits than equity investment. The servicing schedule of this dent is not clearly defined but tends to rise and fall with the oil price, and parent companies typically roll over obligations during difficult times. Excluding this, Kazakstan's debt ratios would compare well with its peers and its liquidity ration would rise above 120 per cent.
"Future economic prospects are bright, underpinned by Kazakstan's vast mineral wealth," said Sharon Raj, director in the Sovereign Group. "The oil and gas sector is developing rapidly and by 2020 output levels are expected to be running at 3.5m - 4m barrels per day, placing Kazakstan in the world's top 10 oil exporters. Against this background, the government's external position is likely to continue to strengthen."
However, Fitch notes that rising oil income could exert upward pressure on the exchange rate, which will in turn make diversifying the economy more difficult, while pressures for higher public spending are likely to mount. While even a large rise in spending would be possible to finance, it would make progress in reducing inflation more difficult.
On the political front, President Nazarbayev's dominant role has helped to deliver social stability and prudent economic policies to date but such a centralised system means that succession risks are higher than in most of Kazakstan's rated peers. As the President is relatively young and appears to be in good health, uncertainty over Kazakstan's future leadership is more of a long-term issue than a near-term concern. However, rumours of rivalries and rising tensions within political inner circles suggest that a damaging power struggle between potential successors at some point cannot be ruled out, the agency said.

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Kazak company to buy Tbilisi gas distributor 

The state-owned Kazak gas distribution company KazTransGas is willing to acquire full control of Tbilisi's ailing natural gas distributor, Tbilgazi. Recently an agreement on mutual cooperation on the sale was also signed between the Georgian Minister of Economic Development, Irakli Chogovadze, and general director of KazTransGas, Serik Sultangaliev. Officials are waiting on a bankruptcy and appraisal process to wrap up before naming the final price-tag, New Europe reported.
After the signing ceremony, Prime Minister, Zurab Noghaideli, forecast that the bankruptcy procedures will last until February 15 and after that the Kazak company will buy 100 per cent ownership of Tbilgazi from the Tbilisi city government. Noghaideli stressed that the deal will relieve the government of pressure from higher gas prices from Gazprom. He predicted that KazTransGas, which is a subsidiary of the state-owned Kazak gas company KazMunaiGaz, will be able to resolve the problems affecting Tbilgazi. 
Negotiations with KazTransGas have been going on for nearly two-months. The deal also blocks Russia from accessing a major part of the local distribution network. Gazprom also offered Georgia lower rates on bulk gas if it were allowed to own and operate local distribution facilities. The Georgian government has been courting Kazak investors for the past year and in November made a bid to purchase Kazak natural gas, though this deal was blocked by Gazprom, whose pipelines would have been used to ship the gas

India, China to jointly explore hydrocarbons in Kazakstan 

China and India are turning to Kazakstan's vast oil fields to fulfil their increased demand for energy. The interests of Chinese and Indian oil companies collided in the course of purchasing shares of PetroKazakstan of Canada with China National Petroleum Corporation (CN PC) emerging as the winner. However, the interests of two of the world's most quickly developing economies appear to concur in gas rather than in oil, experts from the New Delhi-based Observer Research Foundation said recently. Nandan Unikrishnan and Lydia Powell talked to Kulpash Konyrova, New Europe, in an exclusive interview in Astana during their visit to consider possibilities of transporting Kazak gas to India under the order of Ministry of Energy of India. 

Why has India pinned interest in Kazakstan hydrocarbons though you've got positive agreements with Arab countries?

India within the last five-seven years is worried about its energy security. The country is encountering the problem of searching new energy sources. Even under the most optimistic scenario the country's own reserves could cover some 20 per cent of our resource requirements. Imports are vital to us. Though at the moment India does not encounter gas problems - due to guaranteed shipments basically from Arab countries, - we should be secured of lack of problems with hydrocarbons' deliveries in future. 
Experts believe that it is the growth of economies in India and China as well as their demands in hydrocarbons that geared steep oil prices. Factors influencing the increase in prices are as follows: the situation in Iraq, tense relationships with Iran and even the Katrina hurricane. Undoubtedly, one of the reasons is that both China and India take oil in large quantities. To date they consider each other as competitors but in a year or two the situation will change for the better and they will be partners in the petroleum business. It will be mutually beneficial in gas production for all parties involved, including Kazakstan.

Then why is it gas? 

We are interested in oil too. However, gas is cheaper and is environmentally greener. It could become an energy resource of the future, at least within the next 200 years. Not only cars will convert to gas. Gas-fired combined heat and power stations are planned to be constructed. Under our estimates within the coming 15 years India will annually lack gas of approximately 60 million cubic metres. Iranian gas covers just 50 per cent of this quantity deficiency. We need new sources of blue-sky fuel and we are hoping that gas from Central Asia, Kazakstan, inclusive, will cover 20 per cent of the current deficit.
Kazakstan disposes of sufficient volumes of gas but its delivery to India is questionable. 

How do you intend to receive Kazak gas?

Three options are available for us: 1) in tankers from Kazakstan to Iran by sea, there from as a liquefied gas to be transported to India, 2) from Kazakstan to Iran there from by gas pipeline via Pakistan, 3) southward through gas pipeline Kazakstan-Turkmenistan-Afghanistan- Pakistan-India. One more option is available, via China, which is being thoroughly considered. It is common knowledge that China has agreed with the Kazak government to construct a gas pipeline from Kazakstan to China. We could receive gas through China by extending the gas pipeline. However, actually it's hardly a viable project. Mountains are on the way from North China to North India. So the issue is to lay gas pipeline via mountains, which are difficult to cross mostly because of snows. No technologies of gas injection in highlands are available so far.

Which of three options is the most acceptable and lucrative?

The best option will be the most expensive one. The first route from Kazakstan to Iran by sea is politically the safest one, but it fails to give much volume. The Kazakstan-Iran option by sea and from Iran through the pipeline via Pakistan is the cheapest but politically insecure. The option through the Kazakstan-Turkmenistan-Afghanistan-Pakistan-India pipeline is the most expensive averaging US$ three billion but it's the most acceptable. Asian Development Bank has already endorsed this project.

When do you think gas will be transported from Kazakstan to India should the last option be finally okayed?

Construction of the Kazakstan-Turkmenistan-Afghanistan-Pakistan-India gas pipeline involves several countries. The process of agreeing and executing inter-government arrangements could take some three-four years. Construction of the gas pipeline could take the same timing, i.e., ten years as minimum. 

To what extent is India interested in construction of the Kazakstan-China gas pipeline? 

It will be beneficial for China as well because gas for India will increase volumes of injection and will contribute to decrease of transportation royalty and the gas cost will be lower for China. We see here the potential for cooperation. 
Turning to the issue of cooperation two petroleum companies of China and India have been laying claims to PetroKazakstan shares. However, you've given up in price. China, bidding against you, has won.
Economy-wise, it's not the best time for acquiring the oil company with high oil prices world-wide. However, when prices drop such companies could not be available. Yes, India showed interest in buying PetroKazakstan shares and will appreciate the opportunity to acquire this company at this stage. However, let us leave the decision with the government of the Republic of Kazakstan and it would be undiplomatic to comment on the above. India is a large developed country. So, if it decided to enter any sphere, namely your country's petroleum sector, then at first instance it must be cost effective with all things considered. It is not an issue of price. India could have paid this price as well. The thing is whether it would be profitable in future. If CNPC buys these shares then they find this purchase as economically advantageous for lots of reasons. With Atasu-Alashankou oil pipeline commissioned this year they are finalizing the entire technological chain, from upstream to midstream and downstream. It is worth paying double. As far as India is concerned, we lack such secured technology cycle. Even if we could have bought fields and we could produce oil the issue of oil transportation and sale will come out. Thus, political issues are vital, but the above is requisite if this project is profitable economy-wise. 

Bozumbayev outlines major breakthrough in energy sector 

Three new investment projects in the next couple of years are expected to lead to a major break through in the energy sector of Kazakstan, the president of the national energy company AO KEGOC said. Two of them will fully release the republic from electric power imports and the third will significantly enhance its export capabilities, Kairat Bozumbayev said in an interview in Astana recently, New Europe reported. 
The first project - construction of a new power transmission line "North - South Kazaktan" is already underway. The project is financed by the International Bank of Development (US$100 million), the European Bank of Development (US$147.8 million) and by the Development Bank of Kazakstan (US$74.4 million). Already some US$19.58 million worth of works have been completed.
The new line is expected to become operational in 2008. By implementing this project the former Soviet republic will "kill two birds with one stone." Firstly, the energy-rich north of Kazakstan will provide the south of the country with electric power generated from the cheap Ekibastuz coal. This way the energy dependence of the south of Kazakstan on Kyrgyzstan will be eliminated. Secondly, the same line can be used to transit cheap power from the Kyrgyzstan hydroelectric stations during the flood periods to Russia and partly to the north of Kazakstan.
The other two projects are still on paper. However, even by very conservative estimates they promise major advantages and benefits, Bozumbayev said. One of them should, at last, free Kazakstan from the supplies of power from Russia. Today the annual import from this neighbour is about 3.6 billion kwh. And it mainly goes to the Aktobe region. This is the only region that is not covered by the general power grid of Kazakstan and receives electric power from Russia, and at its high tariffs at that (2.7 cents per kw, and next year RAO EES intends to increase them), he added.
The years of negotiations with Russia about the transmission to the Aktobe region of cheap power from the Ekibastuz power stations (two stations - Ekibastuz GRES- 1 and GRES -2 are situated at the north of Kazakstan and they work on the coal from the Ekibastuz open-pit mines) by RAO EES lines have yielded no results. So the Kazak government has decided to build a new HVL "Northern Kazakstan - Aktobe Region." Initially, it will be a 250-megawatt line. By 2010, though, its capacity should grow to 400 megawatt. And thus the new line will cover over and above the growing requirements of the Aktobe region, Bozumbayev said. Also, the Ekibastuz power, including the transport costs, will be 20 per cent cheaper than Russian. "I cannot really describe this project as integrative with the energy system of the Russian Federation. However, our country should enjoy some energy independence," the KEGOC president noted. The cost of the project is US$116 million. And the intent is to use the pension funds to finance this project through an issue of special bonds. Also, private Kazak companies will invest in this project. Once HVL repays the investment, it will be nationalised.
While the two above-mentioned projects have the purpose to secure energy independence of Kazakstan, the third one is designed to enhance its export opportunities. The project is question is the "Power Bridge Kazakstan-China." 
The project will consist of two parts. It's the construction of a new 7,200 megawatt power station in the Ekibastuz region near the coal mines in the north of the republic with its existing Ekibastuz GRES- 1 and GRES -2. The new station will be built on a separate, independent site. From it, a new power transmission line will go to the Chinese town of Xian (3,800 km) or to Wuhan (4,200 km). In brief, it is going to be one of the highest-capacity heat power plants in the world and a longest HVL.
According to Bozumbayev, it is expected that upon completion of the project the China exports will be over six thousand megawatt, and at the tariffs prevailing in the Chinese markets. The remaining thousand will be distributed to the domestic market at our tariffs. 
The cost of this project (both the station and the HVL) will be US$9.5 billion. In spite of such a high price, it is a very promising project that will pay in ten years. First, China is a stable and "energy greedy" market. Today the power demand in the Celestial grows at the rate of 30 per cent. For comparison, this rate in Kazakstan was only slightly over five per cent for the last two years. Second, the advantage of this project is that it will have no problems with fuel supplies. The Ekibastuz coal reserves will be enough for some 50 years. 
"Already three major banks have expressed their desire to invest in the project: two foreign and one Kazakstan banks, on the condition that Beijing provides its guarantees. However, the participation of banks will be subject to a tender," Bozumbayev said.
He also noted that with all the benefits that the project is promising, Kazakstan has made one considerable condition to China: The ecological standards should be of the EC level. Of course, the construction of such a powerful thermal station that will burn a lot of coal will undoubtedly affect the environment of the Ekibastuz region. So such approach is fully justified and important. 
A working group composed of representatives of the Chinese state power grid company are now examining this condition of Kazakstan. And it looks like they have no intention to give up, as they have promised to submit a feasibility study for the future station as early as next year. 

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Kazzinc launches anode rolling line 

Kazzinc, a major zinc producer in Kazakstan, has launched a cold-rolling line for anodes at its Ust-Kamenogorsk Metallurgical Works. The new line will improve the quality of cathode zinc by reducing lead content to 0.0035-0.005 per cent, and increase the service, increase the service life of anodes by 50 per cent, and reduce the amount of lead and silver used to make anodes, the company said. Kazzinc is a major integrated producer of zinc and associated copper, precious metals and lead. Switzerland's Glencore International AG controls 99 per cent of Kazzinc stock through subsidiaries, New Europe reported.

Kazakstan boosts alumina output 2.3% 

Aluminum of Kazakstan, which controls Kazakstan's alumina and bauxite industry, raised alumina output 2.3 per cent in 2005. The company said that it produced 1.5 million tonnes of alumina in 2005, Interfax News Agency reported.
It produced 1.465 million tonnes in 2004. The company said it invested around eight billion tenges in development in 2005. Aluminum of Kazakstan, one of the world's nine biggest alumina producers, incorporates the Pavlodar alumina refinery, Turgai and Krasny Oktyabr (Red October) bauxite mines, Keregetas limestone quarry and a heat and power plant.

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