Books on Kazakstan
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Update No: 304 - (28/04/06)
The Kazak Khan of Central Asia
Nursultan Nazarbayev, President of Kazakstan, is in an enviable position for a
post-Soviet leader. His nation is awash with energy reserves and other mineral
resources, of which it has no less than 60% of the former USSR's total.
The Kazak economy is the fastest growing in the world, GDP rising by 10% per
annum on average since 2000, the year global energy prices took off. Like
Putin's Russia, Kazakstan is reaping vast revenues which can be used to renovate
the decrepit infrastructure and despoiled environment inherited from communist
Both countries are embarking on a massive programme of public works, which open
up huge opportunities for enterprising private firms abroad (see Russia May).
Transport strategy until 2015 unfolded
As part of this, Nazarbayev has approved a Transport Strategy of his republic
until 2015. The government has been ordered to work out and approve a plan of
events on the strategy's implementation. The government has to inform the
President of Kazakstan on the strategy implementation each year by January 30th.
The strategy includes construction of 50 thousand km of roads, around 2 thousand
km of railways, to develop Aktau and Kuryk ports, and to build up a fleet of
Cosying up to Putin
Russian President, Vladimir Putin, and President Nazarbayev discussed bilateral
and multilateral integration in a phone conversation on April 12th, the Kremlin
press service said on the same day, in the context of the recent visit of the
president of Kazakstan to Russia.
President Nursultan Nazarbayev had made a two-day official visit to Moscow on
April 3rd-5th, focusing on economic ties, scientific research including space,
and bilateral cultural links. In
Moscow Nazarbayev met with Putin, and delivered an address to the lower house of
parliament, the State Duma.
The countries signed protocols on the use of Russian military and research
testing grounds and centres on Kazak territory. Nazarbayev's visit also saw the
signing of an agreement on the launch of the first Kazak telecoms satellite,
Trade between Russia and Kazakstan currently totals US$10 billion, but the
country's two leaders hope to double the figure in the near future.
Playing the Chinese card
Of even more importance to Kazakstan in the long run is its other giant
neighbour, China, which is going to require its energy and minerals to an
Nazarbayev will pay an official visit to China this autumn. An agreement about
the organisation of the visit was reached at talks between Kassymzhomart Tokayev,
Foreign Minister of Kazakstan, with top officials of PRC in Beijing, Kazakstan
Today reports, citing the foreign ministry of Kazakstan.
"The next meeting at the top level will give an impact to the strategic
partnership between the two states," - representatives of Kazakstan and
China believe. "Development of the relationship with China is by all means
a priority of our foreign politics and the level of mutual understanding and
confidence is one of the determining factors of the regional security," -
Mr. Tokayev stressed at his meeting with the State Council member Tang Jiaxuan.
"Kazakstan and China are close and friendly countries, their relationship
is constantly progressing due to efforts of the leaders of both states," -
Tang Jiaxuan in his turn noted that the state policies of China concerning
Kazakstan as a key state in the vast Central Asian region is based on long term
the strategic interests of Beijing and is not subject to any fickle short-term
Kazakstan may achieve a lofty goal relying on its intellectual potential
The political regime in Kazakstan is very tight. But given the economic
dynamism, Nazarbayev is genuinely rather popular and was re-elected easily last
year not withstanding substantial vote fraud. This has emboldened him to embark
on certain reforms of the polity.
The State Commission on Democratic Reform Programme's Development and
Specification started its work in March in the capital, Astana. The Commission
is proposing to develop a nationwide dialogue on issues concerning the
modernization of the political system and deepening of the country's democratic
Delivering an address at the 1st session its chairman, President Nazarbayev
outlined the strategic priorities for the further development of political
reforms: "We strongly vow to continue the consistent political reformation
and the country's political modernization," Nursultan Nazarbayev noted.
"Our ultimate goal is constant - to strengthen the principles of an open,
democratic and law-governed state with generally recognized democratic objective
laws, such as traditions of the multinational and multi-confessional
society." Addressing the members of the Commission the Head of the State
summoned them for active and constructive work at the most important issues of
the country's political modernization, highlighting the role of the leadership
of political parties, public alliances and NGOs. Observers are not holding their
breath that democracy in this vast central Asian state has much chance of making
progress, given the apparent building up of a government apparatus ensuring that
power and ultimate wealth resides with the President's family.
Kazak refineries to be exhausted by 2015
The capacity of Kazakstan's oil refineries could be exhausted by 2015, the
energy and mineral resource ministry said. "Three or four years ago we
forecast the refining capacity would last to about 2018. But things have
changed. Now the forecast is that by 2015 we'll exhaust the capacity of plants
to supply the domestic market," head of the oil industry at the ministry,
Musabek Isayev, said at a refining conference in Almaty, Interfax News Agency
I nterfax quoted him as saying it's time to think about how to increase oil
refinement in Kazakstan. Isayev said the ministry expects oil refinement this
year to be 12 million tonnes, 15.7 million tonnes in 2010, and 17.7-18 million
tonnes in 2015. Kazakstan has three large refineries in Chimkent, Pavlodar, and
Atyrau, he said. It also has another 13 mini refineries. "But they are
producing unsteadily when they receive oil," he said. "Kazakstan is in
the centre of the Eurasian continent and has unlimited opportunity to sell
petroleum products in Central Asia," he said.
KazMunaiGas wants to buy refinery in Europe
The main oil intrigue in Kazakstan lately has been KazMunaiGaz' battle for the
shares of Lithuanian Mazeikiu Nafta. The bets for victory have been swinging
from the Kazak national oil and gas company to Polish Orlen, New Europe
However, in this situation, another equally important question remains: where to
get the money, and serious money, in the case of victory?
"From the beginning we have intended to win," KazMunaiGaz President,
Uzakbai Karabalin, said, responding to a question from New Europe about their
chances in the competition for Mazeikiu Nafta shares.
And so intent on winning in its long desire to "open a window to
Europe" KazMunaiGaz will spare no effort. It's worth mentioning that in
light of the latest events the management of the Kazak company said it was ready
to buy not only the 53.7 per cent of shares from YUKOS, but also 20 per cent of
the Lithuanian share, and also at the market price. Thus, its proposed price for
the Lithuanian plant has now grown from US$1.2bn to 1.65bn.
Considering that last year the company had "serious acquisitions" in
the form of return of once sold BG shares, a quite reasoned question arises:
"How does KazMunaiGaz plan to pay for the purchase of Mazeikiu
shares?" KazMunaiGaz president responded: "We'll always find money for
a good cause!"
One of the sources of funding could be sale of shares of A KazMunaiGaz
subsidiary. It is known that the national company intends to put up for sale 49
per cent of one of its main subsidiaries - AO "Exploration Production"
- at an international stock exchange. However, this is a rather lengthy process
and the money for Mazeikiu will be required pretty soon. So this scenario is
The company may use its own funds. Thus, KazMunaiGaz' net profit in 2005 was
over 101bn tenge (approximately US$800m). But even if they use their entire
profit for the acquisition, it will not be enough, because there are production
costs, salaries, social contributions, etc. And properly speaking, such major
deals are never paid with own money. "Undoubtedly, we are going to
borrow," Karabalin explained.
In such case, another question arises: "What will be provided as
collateral?" "It will depend on the conditions of the bank,"
Karabalin said without specifying what would be pledged as security.
But, as a rule, the foreign banks are very cooperative with oil companies, and
often the oil produced, or rather the oil to be produced, is used as collateral.
And KazMunaiGaz would get a loan at a very low interest rate.
The case with Mazeikiu is more complicated. It is known that Vilnius itself
intends to buy YUKOS' shares and not without a help from KazMunaiGaz. Litavos
Ritas recently reported that the Lithuanian government could receive a loan from
KazMunaiGaz to buy YUKOS' shares.
That news, with a reference to anonymous sources, appeared in the Lithuanian
paper just after another trip of Uzakbai Karabalin to Vilnius and his meeting
with Prime Minister, Aldgirdas Brazauskas.
The same Litavos Ritas, also with a reference to anonymous sources, reported
that "the Lithuanian government would not object to the Kazak company
taking over the management of Mazeikiu Nafta."
Not to miss out on the attractive deal for KazMunaiGaz, the Kazak government is
at the same time working on another question of equal importance - secured
supplies of oil to Lithuania, which is one of the main tender conditions. The
Kazak Minister of Energy and Mineral Resources, Baktykozha Izmukhambetov, told
New Europe about a planned visit to Moscow this year, "We are going to
discuss with Viktor Khristenko, Industry and Energy Minister, possible supplies
of our oil by the Transneft system." That is, this question still remains
open, Russia has not made a final decision yet. "There is still a chance
for us," said Izmukhambetov. "And it is more realistic for us than for
the Polish company that has none of its own crude. And the purchase of oil
through the port of Butinge, which is the Polish scenario, is not the best
solution and it does not guarantee that they can easily buy oil there and secure
necessary supplies for the plant."
Should KazMunaiGaz lose in the Mazeikiu tender, it will not give up its idea to
"open a window in Europe." It has every intention to take a shot at
anything that would mean a realistic opportunity to buy a refinery.
Kazakstan ups hydrocarbon reserve forecast for KSCS
The Kazak Energy and Mineral Resources ministry has increased the forecast for
hydrocarbon reserves in the Kazak sector of the Caspian Sea (KSCS). KSCS
reserves (excluding reserves developed within the North-Caspian project) are
currently estimated at 11.563 billion tonnes of hydrocarbons, Amantai Suesinov,
the deputy director of the ministry's oil industry department said in Aktau,
reported Interfax News Agnecy.
Energy ministry specialists carried out the estimate on the basis of new data on
the deposits in the KSCS, he said at public hearings on valuating the impact on
the environment of planned oil operations in the KSCS.
Geological reserves within the North-Caspian project are estimated at 5.45
billion tonnes (with recoverable reserves of 2.24 billion tonnes), including
fields and structures: Kashagan - 4.85 billion tonnes (2.02 billion), Aktote -
269 million tonnes (100 million), Kalamkas - 159 million (57 million), Kairan -
150 million (56 million) and Kashagan Southwest - 20 million tonnes (six million
tonnes). Earlier, Kazakstan's former energy minister Vladimir Shkolnik said
according to ministry data, hydrocarbon reserves under the Caspian Sea are
estimated at 125 billion barrels overall.
In the context of territorial jurisdiction, these can be distributed in the
following way: Azerbaijan - 27 billion barrels, Iran - 7.5 billion, Kazakstan -
50-60 billion, Turkmenistan - 16 billion, and Russia - 15 billion barrels.
Shkolnik said hydrocarbon reserves in the KSCS were "distributed
unevenly." The Northern part of the KSCS may contain up to 48 billion
barrels, the central part - 7.5 billion and the southern part - four billion
barrels. Evaluating Kashagan included 3D seismic exploration of 1,573 square
kilometres and the drilling of six wells, Suesinov said.
Another four wells are to be drilled in 2006-2008 in the western part of the
field and the isthmus area.
For the Kalamkas structures, 3D seismic exploration was carried out on 1,187
square kilometres and the data obtained is currently being processed. Drilling
on two Kalamkas wells was completed in 2005 and the well Kalamkas-3 is to be
drilled in 2006. Drilling of the Aktote-2 well has been completed and 3D seismic
exploration was carried out on 362 square kilometres. At Kairan, 3D seismic
exploration was carried out on 245 square kilometres.
Kairan-2 well is to be drilled in 2006. For the Kashagan Southwest structure, 3D
seismic exploration is planned in 2011-2012 with final data processing due in
Kazakstan approved a three-stage government programme for developing the KSCS to
2015 in 2003, Suesinov said. Stage one, from 2003-2005, envisaged the creation
of conditions for the development of hydrocarbon reserves in the Caspian Sea;
stage two, from 2006-2010 - ensure faster development of these reserves and
stage three, from 2011-2015 - stabilise oil production at an optimum level.
Two artificial islands were built in the KSCS in 2003-2005 and 19 wells were
drilled, of which four were operational and the rest were for exploration and
evaluation, Suesinov said. Investment in this period was 3.8 billion Euro.
The construction of 16 installations and drilling of 144 wells is envisaged for
2006-2010, he said. Investment in this period will total about 12.9 billion
The construction of 38 installations and 469 wells is planned for 2011-2015 and
investment should total about 16.8 billion Euro, he said. About three million
tonnes of oil per year is to be produced in the KSCS by 2008, about 18 million
tonnes by 2010 and around 90 million tonnes by 2015.
KazMunaiGaz oil, condensate production up 1.8% in 2 mths
Kazakstan's national oil and gas company KazMunaiGaz produced 1.491 million
tonnes of oil and gas condensate in the first two months of the year, up 1.8 per
cent from the same period last year, the company said in a press release. Oil
production grew through the use of new technology to increase oil recovery,
according to the press release. Oil transport in the KazTransOil system grew 7.9
per cent to 6.494 million tonnes. The company is the transport unit of
KazMunaiGaz. Gas transport by Intergas Central Asia, another KazMunaiGaz unit,
totalled 22.85 billion cubic metres, up 4.4 percent year-on-year. Oil transport
is planned at 36.6 million tonnes and gas at 123.2 billion cubic metres this
year. Capital investment by KazMunaiGaz totalled 9.289 billion tenge in the
first two months, up 40 per cent from the same period last year. That included
8.583 billion tenge invested in production. Earnings totalled 118.6 billion
tenge, up 51.4 percent year-on-year.
Kazakstan unveils national transport strategy
Kazakstan's Transport and Communications Minister, Askar Mamin, presented the
country's national transport strategy for the period ending 2015 to President
Nursultan Nazarbayev. The strategy provides for the building of over 50,000
kilometres of motorways and about 2,000 kilometres of railways, Mamin said,
Interfax News Agency reported.
The Caspian ports of Aktau, Bautino and Kuryk will also be developed, and
serious attention will be given to aircraft-building, the minister said.
"In fact, we plan to devote the next 10 years to the construction of an
effective transport infrastructure," Mamin said.