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KAZAKSTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

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




Update No: 305 - (30/05/06)

The West is on side
Kazakstan's president, Nursultan Nazarbayev, like his Azeri counterpart, Ilham Aliyev, is an exemplar of the kind of corruption and autocracy that has dominated Central Asia since even before the collapse of the Soviet Union in 1991. He received Dick Cheney on one of the vice president's extremely rare ventures outside US borders in late April. 
Nazarbayev, whose election to a third seven-year term with 91 per cent of the vote last December was denounced by Western observers, has ruled Kazakstan since 1989. His security services, if not he personally, have been implicated in the professional murders of two opposition leaders since the elections.
Cheney, among other things, renewed a standing invitation to Nazarbayev to the White House. But then Kazakstan has a very great deal of resources, notably two commodities long dear to the former head of Halliburton, as to his boss - oil and gas.

The Kazak energy colossus - outside OPEC
Cheney made democratic reform his calling card throughout his just-completed overseas trip -- everywhere except Kazakstan, a land judged poor in human rights but rich in oil and gas.
"Obviously Kazakstan is important given their considerable resources," the vice president told reporters aboard Air Force Two on the way home. "It's one of the few places where we're going to see an increase in oil production from a non-OPEC state over the next few years."
It was a statement of fact in an era of increasing demand for energy, always the US priority in foreign relations.
Just briefly, Cheney touched on political reform in public remarks in Astana, the Kazakstan capital. "The way forward is clear. Continued democratic and economic reforms, the rule of law, fighting corruption, accountability of institutions and sound security policies," the vice president said at a news conference with President Nursultan Nazarbayev.
Contrast that with the verbal slap a day earlier when he spoke in Lithuania about Russian President Vladimir Putin.
Opponents of reform in Russia "are seeking to reverse the gains of the last decade," Cheney said. "In many areas of civil society -- from religion and the news media to advocacy groups and political parties -- the government has unfairly and improperly restricted the rights of her people," he added.
"No legitimate interest is served when oil and gas become tools of intimidation or blackmail ... and no one can justify actions that undermine the territorial integrity of a neighbour or interfere with democratic movements."
Cheney, as well as other officials, insisted repeatedly that the remarks had been measured, fully vetted, carefully crafted. And each time the vice president said so, he reinforced his original point.
Officials said Nazarbayev had promised Cheney to make his country more democratic, and to work with the leaders of the political opposition within the framework of a government-sponsored democracy commission.
Some in the administration claim the most recent election in Kazakstan had been better than the one before and that is the dubious line taken by Kazakstan's professional PR spokesmen in the west.
True or not, international organizations deemed it flawed. And more broadly, the US State Department's most recent report on human rights said this of Kazakstan: "Legislation enacted during the year seriously eroded legal protections for human rights."
In particular, it said one law "encroached on political rights, freedom of the press, freedom of religion, and other human rights." 

Gas to Turkey
A proposed gas pipeline from Central Asia across the Caspian Sea to Europe received an important boost when Cheney met Nazarbayev on May 6th.
Cheney enrolled Nazarbayev's support for a scheme to bring Kazak gas to Azerbaijan to join a new line to Turkey - ending Russia's stranglehold on gas export routes out of landlocked Central Asia.
During talks with Nazarbayev, Cheney gave a "big nudge" to oil and gas corridors linking Kazakstan with Europe, while "planting a big American flag in central Asia," said Glen Howard, the head of the Jamestown Foundation think-tank. "We are flexing our muscles a little bit," Mr Howard added.
The plan is one of a flurry of new pipeline schemes spanning Central Asia and the Caucasus. They are the counters in a geopolitical chess game playing out between the US, Russia and China for control over one of the world's last undeveloped oil and gas basins.
Cheney's visit to Kazakstan, coming hard on the heels of a trip to the White House by Ilham Aliyev, the president of Azerbaijan, underscores the strategic importance to the US of Central Asia and the Caucasus at a time of increasingly strained ties with Russia. Kate Hardin, Cambridge Energy Research Associates director, said that "Europe and the US took a second look at the map" in central Asia after the crisis in January when Gazprom, the Russian natural gas giant, temporarily shut off gas supplies to Ukraine, a move that, it is now clear, was a colossal mistake by Moscow, almost certainly made by Putin himself.
Aliyev spent three days in Washington, stressing the importance of Azerbaijan as a reliable, secular Muslim ally that could offer oil and gas to Europe without being beholden to Russian transit routes. The US promoted construction of parallel oil and gas pipelines from Azerbaijan across Georgia to Turkey. Both will start up this year, marking a major strategic gain for the US in the Caspian energy arena.
Limited marketing opportunities exist in Turkey which has committed itself to import more gas than it needs from various sources, including Russia. But the broader plan is to establish Turkey as a transit highway to Europe, where Caspian gas will compete head-on with Russian supplies.
Gazprom's strategy is identical - and it is ahead in the game. Vladimir Putin, Russian president, last November announced plans to expand a pipeline Gazprom built across the Black Sea to Turkey in 2003 that could provide extra supplies to southern Europe and Italy. Gazprom's new advance from Turkey, combined with another planned export route across the Baltic to northern Europe, would create a ring of pipelines around the continent that Gazprom's detractors regard as a noose.
With oil and gas export routes now established from Azerbaijan that exclude Russia, the US is shifting its focus to trying to offset Russian dominance over exports from Kazakstan.
This is the second US attempt to bring central Asian gas into Europe. Lengthy negotiations over a scheme to pipe gas from Turkmenistan across the Caspian to Azerbaijan broke down in the 1990s mainly because Saparmurat Niyazov, the authoritarian Turkmen leader, kept changing the terms. US energy officials now regard Turkmenistan, the central Asian republic with the biggest gas reserves, as "a lost cause."
But there were other barriers to the Turkmen project that could rear their heads again. Russia claims Caspian subsea pipelines are environmentally unacceptable. Azerbaijan is reluctant to share access to the limited Turkish market with competitors from central Asia.
However, investors' misgivings about the high cost of offshore pipeline construction have evaporated against a backdrop of record oil and gas prices and frenzied concern about energy security.
Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies said: "With US$60 oil these pipelines are affordable. If you don't build a pipeline you are not in the game."
A trans-Caspian gas pipeline would fit with Mr Nazarbayev's strategy to diversify Kazak energy export routes. But the president is expected to keep all options open rather than commit to a project that would tip the delicate balance of Kazakstan's energy relations with the US, Russia and China.
Russia would object to any pipeline that eroded its monopoly over central Asian gas export routes. Gazprom's strategy is to import growing volumes of central Asian gas to feed its low-price domestic market, thereby freeing up its own production for sale to more lucrative European customers.
China is also competing for Central Asian gas and is willing to commit huge sums to pipeline projects. Kazakstan proposes to build a gas line to China that could eventually serve as a transit hub for central Asian exports moving east to feed the world's fastest growing energy consumer. 
Privately, Kazak energy officials admit that the appearance of alternative gas pipeline proposals on the board may coax more generous export terms out of the Russians.

Investment Gateway to Central Asia
The real point is that Kazakstan, with an average GDP growth over the past five years of roughly 10%, has always been the most attractive investment destination in Central Asia. 
But when the World Economic Forum, in its annual 2005-2006 ranking of the most competitive nations in the world included Kazakstan for the first time, introducing it at 61st amongst the 117 countries covered, Nazarbayev, took particular notice and made it a benchmark to further accelerate the growth and global integration of his nation.
In his annual address to the people of Kazakstan in March 2006, Nazarbayev focused on economic reform. He set a vision and detailed strategy to make Kazakstan one of the 50 Most Competitive Countries of the World within the next ten years. 
If all goes according to plan, Kazakstan will achieve 350 per cent growth by 2015 over the 2000 GDP level. With abundant mineral, oil and gas resources (the world's second largest gas field is in Kazakstan) as its basis, and the dramatic recent reforms including a strong diversification drive and foreign investor confidence measures, the above economic targets should not be considered unrealistic, experts say.
Reforms have started to show concrete signs of progress. Last year Kazakhmys, a Kazak company and the world's largest copper producer was listed on the London Stock Exchange as a sure sign of global market confidence. Its banking system is already considered the best amongst the whole of the former Soviet Republics. 
Star amongst its banking sectors is the privately owned Kazkommertsbank (KKB) which has recently been recognized as the best Kazakstan bank eight years in a row by international magazine, Global Finance. It was also rated as the most reputable company in Kazakstan by E&Y Kazakstan. The role of this maturing private sector is another feather in the cap of an open and business friendly environment.
In his address to the nation, Nazarbayev laid out Kazakstan's strategy to integrate into the world economy by making WTO accession a key driver. As reported by Interfax News Agency, Nazarbayev said WTO accession would open "vast opportunities for strengthening Kazakstan's competitiveness." Foreign Minister Kasymzhomart Tokayev stated in mid March that Kazakstan aimed to join the group in 2007.
Nazarbayev also signalled the belief that fostering strong regional cooperation is the key to the realization of the country's ambitious goals. While he laid out specific focus on the relationship with Russia and China amongst other countries, he also addressed building stronger ties with the Muslim world. 
"Kazakstan's active participation in the structure of the international cooperation and cultural exchange with the Islamic states is quite natural. The country expands mutual benefit and mutual enriching ties with the majority of Islamic countries as well," President Nazarbayev said.
Similarly it has set out to become a leader amongst the Central Asian states including making serious efforts in improving Kazakstan-Uzbekistan ties. This was made evident during President's recent trip to Uzbekistan where tangible steps were taken to improve trade ties.

Promising Sectors for Investment 
Kazakstan's continuous moves to reduce its reliance on the energy sector to drive growth are opening up tremendous investment opportunities.
Renat Bekbolatov, a Kazakstan native working as an investment banker in the US and seeking to connect Muslim investors to opportunities in Kazakstan, identifies many opportunities. 
"Depending on the scale of the investment, investors can choose different areas. For example, if they want to invest big, then energy and mineral sectors look attractive. For smaller capital, they can enter areas such as: information technology, medical supplies, retail stores, entertainment, heavy machinery manufacturing, and for some creative investors willing to invest more than just cash, areas like tourism and jewellery looks potentially promising. There are plenty of investment opportunities in Kazakstan, and the growth of business is set to continue," Mr. Bekbolatov said.
Almaty, the largest city, is already vying to be a major financial centre in the region and even working for the right to hold Winter Olympic Games. Director of Municipal Department of Business and Industry Yerbol Shormanov, stated in an Interfax interview that, "In the current year, 23 innovative projects to the amount of about KZT 42 billion will be implemented in Almaty. Production will be competitive, with high added value and oriented for export. It absolutely accords with the President's tasks." One such project being implemented is the International Center of Technologies Transfer in the Almaty Technological Park (Technopark).

The ECO to the fore
When President Nazarbayev spoke of strategy towards the Muslim world, he termed the relationship as only 'natural.' Today there are concrete signs towards strong economic engagement. Kairat Kudaiberghenov, Vice Foreign Minister of Kazakstan pointed out in a recent briefing in Astana that "in early May there will be a summit of the Economic Co-operation Organization (ECO) that has Muslim countries as its members in Baku and a high ranking delegation from Kazakstan will participate in it (as reported by Kazakstan Today and Gazeta.kz)." 
The ECO which is comprised of Pakistan, Iran, Turkey, Afghanistan and the five Central Asian Republics (Kazakstan, Kyrgyz Republic, Turkmenistan, Tajikistan, and Uzbekistan, plus Azerbaijan), has so far focused on infrastructure projects such as railroad, road lines and other infrastructure projects to facilitate trade investments. 
He also added that "a number of bilateral meetings between Kazakstan and the Islamic world including Arab states are planned. During this year the President is going to visit some of these states and we are waiting for high standing delegations from these countries to visit us." 
On programs relating to the business to business interaction, an example is Pakistani investors being wooed to setup base in Special Economic Zone (SEZ) " Outustik," which was established in July 2005 as one of the initial steps towards creation of cotton-textile cluster in the South Kazakstan oblast (region) (SKO). Gali Shaimakov, commercial counsellor, embassy of Kazakstan in Pakistan has been meeting with Pakistani textile business associations for that matter. 
He said more than 15 spinning, weaving and sewing units are expected to be setup in the SEZ. He said the SEZ " Outustik " offers favourable conditions for potential investors also given that Kazakstan has high demand for cotton yarn. Textile companies working with the SEZ would be exempted from corporate income tax, land tax and property tax and partly from value added tax. He said certain simplification of the customs procedures was also envisaged for the investors. 
Further engagement with Pakistan was explored on April 6th, when the Kazakstani Institute of Strategic Studies (KISS) held an international round table on "Relationship between Kazakstan and Pakistan: current state and perspectives" in which it was noted that the current annual volume of trade between the two countries of US$10 million could quickly be raised to US$100 million per annum. In the roundtable Pakistan's geographic affinity was noted by the fact that Almaty is closer to Islamabad geographically than to the capital, Astana.

Turkey as a base
Amongst the OIC member countries, Turkey has always maintained the strongest relations with the Central Asian Republics, including Kazakstan. Turkish companies have been investing in CA for years due to strong geographic, cultural even language affinities with investments focused on sectors such as food, beverages, oil industries, banking, retailing and tourism in Kazakstan. This relationship is one, many others from the Muslim world can look to leverage.
In early March, Dubai Bank inked an agreement with Daruma Corporate Finance of Turkey to develop and market Shari'ah compliant corporate finance and merchant banking services, which would also be marketed to Turkey's Central Asian neighbours including Kazakstan. This partnership is reflection of Turkey's strength as a partner in helping launch many businesses into the Central Asian markets.
In 2000, the trade volume reported between Kazakstan and Turkey was US$465 million which was highest amongst Turkey's trade with the CA countries. Alarko Holding, a Turkish conglomerate is one of the biggest foreign infrastructure contractors in Kazakstan Republic. They also Chair the Turkish - Kazak Business Council run under the auspices of DEIK (Foreign Economic Relations Board) a non-profit private sector organization. The Council serves to remove trade bottlenecks amongst the two countries as well as disseminate information on business opportunities in Kazak market.
Even with such strong relations, the feeling amongst the Turkish business community seems to be that much more is desirable. Yakup Kocaman, a Turkish business journalist comments that, "Even though the Central Asian countries have got very good relationship with Turkey, many here say that Turkey has not realized the full potential of CA Republic opportunities." Perhaps, partnering with other Muslim world investors to enter the Kazakstan market is just the impetus that is needed to boost the trade relations here

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CREDIT RATINGS

S&P calls for more progress in banking system 

Banks in Kazakstan (local currency BBB/Stable/A-3, foreign currency BBB-/Stable/A-3) are entering a critical period in their development, said Standard & Poor's Ratings Services in a report, "Bank Industry Risk Analysis: Republic of Kazakstan" on April 10th, New Europe reported.
"The continued favourable macroeconomic environment in Kazakstan, good progress in developing a legal and regulatory framework, and gradual business diversification have improved domestic banks' commercial pro-files, profitability, and creditworthiness," said Standard & Poor's credit analyst Ekaterina Trofimova. "But fresh impetus, including further regulatory enhancements, is needed to maintain progress in the Kazak banking system." Kazak banks are fast outgrowing current domestic owners' ability to make fresh capital infusions, which are crucial to support growth. Standard & Poor's said owners are reaching a watershed, and will soon have to consider loosening control and opening up bank capital to outside investors. Since the early part of this decade, the Kazak banking system has benefited from Kazakstan's robust economic growth, fuelled by a solid revival in domestic demand and strong output across all business sectors, as well as government commitment to economic reforms. With 35 banks, Kazakstan is overbanked for a population of 15 million in a country the size of Western Europe. Standard & Poor's expects to see only gradual consolidation over the long term, however. "Despite some improvements, Kazak banks' creditworthiness remains constrained by nontransparent ownership, a corporate sector in need of restructuring, rapid lending growth, high loan concentrations by industry and individual borrower, and a large proportion of foreign currency lending," Trofimova said.
Lending growth accelerated to almost 70 per cent in 2005 after an average annual growth rate of 50 per cent in the five previous years. The high growth pace, particularly in fast-developing retail banking, is likely to continue in 2006 and 2007, but is not sustainable in the long term. "Indebtedness of households and companies in non resource-based industries is growing fast, increasing credit risk for Kazak banks," Trofimova said. "Although lending expansion has augmented revenues, internal capital generation has trailed growth in risk assets, constraining capitalisation," she said. Banks have been increasingly financing rapid lending growth through opportunistic foreign funding, leading to repayment concentrations and refinancing risks. Despite remaining, albeit lessening, economic and industry risks in Kazakstan, there is a potential for future ratings upgrades on Kazak banks in the short to medium term.

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ENERGY

China wants another Kazak-Chinese oil pipeline 

China is interested in constructing a second branch of the Kazak-Chinese oil pipeline, said Kazak Foreign Minister, Kasymzhomart Tokayev. "An oil pipeline with a capacity of 20 million tonnes has been built from western Kazakstan to China, and now the Chinese are raising the issue of building another branch of the pipeline to Chinese territory," Tokayev, who was on an official visit to Beijing, said recently, New Europe reported.
Tokayev recalled that China and Turkmenistan signed an agreement on supplies of Turkmen natural gas to China during Turkmen President Saparmurat Niyazov's recent visit to that country. Under the agreement, China is entitled to choose transit routes. "This involves a number of aspects to be negotiated as regards the future supplies of gas to China, a country that urgently needs energy resources," the Kazak minister said. "This issue (the transit of Turkmen gas through Kazakstan) was also touched upon during the current negotiations. This subject calls for careful consideration at the level of experts before an appropriate decision is made at the political level," he said.

EU, Kazakstan discuss energy sector cooperation 

The Kazak Minister of Energy and Mineral Resources, Baktykozhy Izmukhambetov, and Belgium's Chairman of the House of Representatives, Herman De Croo, on April 10th discussed cooperation between Kazakstan and the European Union in the energy sector, a ministry spokesman said, New Europe reported. 
Izmukhambetov informed De Croo about the prospects of development of the oil and gas industry and electric power complex of Kazakstan. "In 2005, the republic produced over 61 million tonnes of oil and of gas condensate. By 2010, we will be producing almost 100 million tonnes. Kazakstan's current yearly production of gas is 26-27 billion cubic metres and it will grow to 40-45 billion cubic metres by 2010," Izmukhambetov said. Growing oil production is connected with the development of the Kazakstan sector of the Caspian Sea. 
De Croo noted that the European Union was interested in diversification of energy supplies. "We want to have more than one supplier of energy resources to ensure energy security," he said.
Belgium's chairman of the House of Representatives also advised that the European Parliament would hold a high level seminar "Strategic Partnership of the European Parliament and Kazakstan in Energy Sector" on June 20.
Belgium is also interested in cooperation with Kazakstan in the use of alternative energy sources, namely, wind energy. The country has a great experience in new energy generating technologies. According to the ministry of foreign affairs, the turnover of goods between Kazakstan and Belgium in 2005 was 154.71 million dollars (export - 9.92 million, import - 144.79 million), in 2004 - 118.8 million (export - 10.7 million, import - 108.1 million), and in 2003 - 66.9 million (export - 8.8 million, import - 58.1 million). 
The mutual trade has grown by 30.2 per cent since 2004. According to the statistics provided by the National Bank of Kazakstan, Belgian investment in Kazakstan economy for the period from 1993 to the third quarter, 2005 totalled US$186,300.
Exports to Belgium include non-ferrous metals, wool, textile, clothes, basic metals and basic metal items, chemical and related products. Imported from Belgium are machinery and equipment, mechanisms, electrical equipment, mineral products, optic, photo- and other instruments and devices, textile goods, food products, tobacco, chemical and associated products.
Seven Belgian companies operate in Kazakstan - Solvay Pharma Kazakstan (pharmaceuticals), Sarens Group (oil and gas industry infrastructure), Maxx Intermodal Systems (transport logictics), Ahlers Bridge (sea shipments and logistics, customs clearance), Atlas Copco (equipment for oil and gas and mining industry), TD Williamson SA (maintenance of oil and gas pipelines), and Meura SA (brewery). There are also nine companies with Belgium capital in Kazakstan: Almaty Greenhouse Company, Erkant LLP, A&A Asia, Westship Agency, Delloitte & Touche, Check Point Services Ltd., and DHL International.

Kazakstan may build nuclear power plant by 2015 

Kazakstan may build its first nuclear power plant since the end of Soviet rule by 2015, a high official in the Energy and Mineral Resources Ministry told reporters in Astana on March 28th, New Europe reported.
Nesipkul Bertisbayev, director of the ministry's department of power engineering and coal industry said a working group led by Prime Minister, Danial Akhmetov, is considering various aspects of such a project. In January 2006, Akhmetov said Kazakstan needs its own nuclear power plant. The former Minister of Energy and Mineral Resources, Vladimir Shkolnik, earlier said Kazakstan "has the political will to build a nuclear power plant" and noted the availability of appropriate personnel, the production of nuclear fuel inside the country, and the selection of a location for a plant near Lake Balkhash in central Kazakstan. Kazakstan, with more than 20 per cent of the world's known uranium reserves, has been considering building its own nuclear power capability since the late 1990s. In a country that has suffered from more than 450 nuclear tests at the former Semipalatinsk nuclear test site, the issue of peaceful nuclear energy remains highly controversial.

KPO to increase supplies through CPC by 10% - BG 

The Karachaganak Petroleum Operating (KPO) consortium plans to increase hydrocarbon supplies from the Karachaganak oil and gas condensate field through the Caspian Pipeline Consortium pipeline to 7.7 million tonnes, to be exported to Western markets.
BG Kazakstan President, Lewis Affleck, said the company's aim is to increase the capacity of all units by 10 per cent by the end of this year. The company currently supplies about seven million tonnes of stabilised hydrocarbons to the CPC pipeline for export to the West and at the end of the year it plans to supply about 7.7 million tonnes, he said, Interfax News Agency reported.
Affleck said that along with the project to expand capacities, the consortium will also implement a programme to drill 16 wells using new technology, which is used for difficult wells throughout the world. This programme will result in increasing the recoverability of reserves, Affleck said. He said that at the moment the consortium has drilled a few of these wells and the results have been very positive: about 10,000 barrels of hydrocarbons per day.
Both projects were approved by the consortium partners, he said. In addition, the consortium is considering implementing other projects to increase the profitability of the Karachaganak field.
These primarily involve the construction of a fourth line to stabilise and de-sulphurise sulphur the hydrocarbons produced at the field as part of the planned expansion of the Karachaganak Processing Complex. 
This line will increase the capacity of the complex to about 10.3 million tonnes per year, Affleck said.
He said the consortium is working very actively on this project and that it thinks that this year the partners and the government will approve it. They said that the consortium plans to launch the project by 2009.
Affleck also said that KPO plans to carry out a gas project as part of the third phase of the field's development, which will make it possible to double gas production to about 16 billion cubic meters per year by 2012.
He said that the company expects the expansion of the CPC to 67 million tonnes to be completed by the start of the third phase, and that this should take place in about 2012. The CPC partners have not yet reached agreement on plans to expand the pipeline system.

Atasu-Alashankou pipeline to cut Aktau seaport traffic 

This year the Aktau seaport may lose work due to increased competition. Big volumes of Kazakstan oil will be transported by the Atasu-Alashankou pipeline, which will be fully operative in May. This will be a problem since major oil supplies from the Caspian will not be available until 2012. These problems will be addressed by a new Programme of Development of Sea Transport of Kazakstan developed by the ministry of transport and communications. Very soon a new document by the ministry will be submitted to the government.
The initial output of Atasu-Alashankou pipeline is ten million tonnes per year. As of this year, the Aktau seaport will lose considerable volumes of work of transporting oil from the Kumkol fields. To compare, this year's transport volume should be 6.5 million tonnes whereas last year it exceeded 10 million. And the reduction will continue over the next two or three years, up to 2009.
One of the main reasons for the losses is that the Kazakstan seaport's livelihood is labour dependent on oil cargo business. The port's problems will begin when the Atasu-Alashankou pipeline starts operating as it will become a major competitor. In addition, other oil companies - Karakudukmunai, Kasgermunai, and Buzachi Petroleum - will partially shut down this year. Major oil supplies from Kashagan and Tengiz are not expected before 2012. But the new pipeline, it appears, is not the only reason to blame for the loss of cargo business. New rail and motor roads, which divert other equally paying cargoes - crops and metals - from the port, have also been built lately. For example, the grain terminal in Aktau has already been idle for several years, as Kazakstan grain growers prefer to ship grain to Iran via the port of Astrakhan instead. As the Kazak port this year did not renew the discounts for transit shipments of Russia's steel, there is chance that other countries' existing ports will be in demand.
Thus, this year the Aktau seaport has found itself unprepared for all these changes. "You should have conducted marketing studies to be prepared for any situation and to take adequate measures. It is necessary to diversify your cargoes, to work out new promising routes," Minister of Transport Askar Mamin told the seaport leadership at the enlarged industry meeting recently held in Astana.
Cotton may well diversify the cargoes both from Kazakstan and from Central Asia. Consumer goods from China, that continue to flow to the West in large quantities and also aluminium oxide from Kazakstan and Russia, can also diversify the cargoes.
However, re-orientation to greater volumes of cargo creates another problem of upgrading of Aktau seaport, which will also be necessary to handle the promising major oil supplies from Kashagan.
The development of the seaport infrastructure was also the main subject for discussion by the ministry meeting. Last year, stage two of the Aktau seaport construction project began. This is due to increase output to 20 million tonnes for bulk oil cargoes and up to 3.2 million tonnes for dry cargoes. The state is fully supporting this project and has provided a government guarantee for a private loan of USD$25 million. However, as the meeting noted, today the project is almost three months behind schedule. "The construction of government infrastructure facilities has not started yet. In our opinion, this is a result of poor coordination and insufficiently strict control over the progress of implementation of the measures on the part of the seaport management, as well as of a strange and passive position of the contractor - Mobilex," Vice Minister of Transport and Communications Zhenis Kasymbek said at the meeting. "In this connection, it is necessary to expedite the project works. 

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FOREIGN RELATIONS

Kazakstan, China boost ties in different spheres 

According to an agreement signed by the foreign ministries of Kazakstan and China, people from Kazakstan get the opportunity to purchase Chinese goods during one-day visits without visas. As per agreement, officials of both countries opened a small free trade zone in the border area allowing Kazak visitors one-day visa-free shopping to buy Chinese goods at Chuguchak City, several miles into China, reported Interfax News Agency.
About 300 public officials from the East Kazakstan region, including akims (mayors) of towns and districts, headed by Deputy Akim of the Oblast Magzam Bayandarov, took part in the official opening ceremonies for the zone early in March. Kazak officials intend to build warehouses, hotels, highways and other necessary infrastructure to promote better international trade through Kazakstan. It is expected that expanded trade between citizens along the borders of Kazakstan, China and Russia, which meet in this region, will greatly contribute to development of economies.

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TELECOMMUNICATIONS

GSM Kazakstan to invest 140m Euro in its network 

GSM Kazakstan, the country's biggest cellular operator, plans to invest at least 140 million Euro in developing its network in 2006, New Europe reported.
"Company investment in development will not be less than last year, when it was more than 140 million Euro," Serdar Kanogullari, the company's CEO, said at a meeting on April 3rd in Almaty. 
GSM Kazakstan has invested 550 million Euro in developing its network since 1999, when it started working in Kazakstan. The company is planning to increase its subscriber base to four million subscribers in 2006 from the current 3.3 million, Kanogullari said.

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