08ASTANA618, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, FEBRUARY 23 – MARCH

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Reference ID Created Released Classification Origin
08ASTANA618 2008-03-24 10:00 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO2599
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0618/01 0841000
ZNR UUUUU ZZH
R 241000Z MAR 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2121
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0457
RUEHAK/AMEMBASSY ANKARA 2151
RUEHBUL/AMEMBASSY KABUL 0388
RUEHNE/AMEMBASSY NEW DELHI 0497
RUEHAST/USOFFICE ALMATY 0338

UNCLAS SECTION 01 OF 02 ASTANA 000618 
 
SIPDIS 
 
DEPT FOR SCA/CEN (O'MARA) 
DEPT PASS TO OPIC - BALLINGER 
DEPT PASS TO TDA FOR STEIN, EXIM FOR GLAZER 
DEPT PASS TO AID - EE-PHILLIPS/RUSHING 
TREASURY FOR OASIA/VELTRI 
USDOC FOR 4231/ITA/MAC/MLONDON, 4201/BISNIS 
USDOC FOR 6110/ITA/TD/BI/RHALPERN 
ANKARA FOR CFC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, FEBRUARY 23 - MARCH 
7, 2008 
 
 
ASTANA 00000618  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Quota for Sugar Imports 
-- Financial Sector News 
-- Results of 2005 EITI Report 
-- KazMunayGas To Explore Zhambyl Block of Caspian Shelf 
-- Kazakhstan-China Joint Venture To Build Gas Pipeline 
 
Quota for Sugar Imports 
----------------------- 
 
2.  The Government of Kazakhstan (GoK) introduced a quota of 47,000 
tons on the import of sugar to be effective through October 1, 2008. 
 According to officials at the Ministry of Agriculture, this 
decision was initiated at the request of local sugar producers 
seeking protection from Russian dumping practices.  In return, 
Kazakhstani sugar producers promised the GoK that they would 
stabilize sugar prices, satisfy local demand, and support domestic 
sugar beet producers. 
 
3.  According to Andrey Bodin, Chairman of the Union of Sugar 
producers of Russia, the decision to create a quota on sugar imports 
directly contradicts the purposes of the newly proposed customs 
union between Russia, Kazakhstan and Belarus. Bodin also claims this 
move contradicts generally existing agreements and trade practices 
amongst CIS countries.  "Any restrictions should be preceded by 
preliminary investigations, and Kazakhstan should have proven the 
need for this quota with its trade partners.  Unfortunately, it has 
not been done.  This decision may impact the prospects of bilateral 
Russian-Kazakhstani trade" concluded Bodin. 
 
Financial Sector News 
--------------------- 
 
4.  Troika Dialog, Russia's No.2 investment company, plans to buy 
100% of the Kazakhstani brokerage firm Almex Asset Management. 
Troika Chairman Ruben Vardanian declined to comment on the price of 
acquisition.  Troika bought the Kazakhstani company from Almex 
Holding Group, which controls Kazakhstan's third-largest bank, Halyk 
Bank.  Dinara Kulibayeva, President Nazarbayev's daughter, and her 
husband Timur Kulibayev, jointly own the Almex Holding Group.  Almex 
Asset Management, set to be soon renamed Troika Dialog Kazakhstan, 
will provide brokerage, investment banking, asset management, 
private equity and other financial services. 
 
5.  Halyk Bank has reshuffled its Board of Directors.  Shareholders 
recently elected to its Board of Directors for three-year terms 
Kamilya Arstanbekova, Askar Yelemessov (the current head of the 
Almex Asset Management), Christof H. Ruhl, Grigoriy Marchenko (the 
CEO of Halyk Bank), Alexander Pavlov, and Kairat Satylganov.  Pavlov 
and Ruhl were elected as independent non-executive directors. 
Yelemessov and Satylganov were elected as non-executive Directors, 
representing the interests of the Almex Holding Group. 
 
6.  According to the official website for the Kazakhstan Stock 
Exchange (KASE), assets of Kazakhstan-based Kazinvestbank(KIB) in 
early 2008 reached 57.936 billion tenge (about $480.6 million), 
which is a 129% increase over their assets of 25.267 billion tenge 
(about $200.9 million) a year ago.  KIB's equity capital totaled 
9.591 billion tenge (approximately $78.3 million) as compared to 
4.706 billion tenge (approximately $37.3 million) in 2006. 
Registered capital increased 88.5% over the last year reaching 8.49 
billion tenge (about $69.3 million).  In 2007, KazInvestBank's net 
profit stood at 936.774 million tenge (around $7.644 million) as 
compared to 115.098 million tenge (approximately $912.8 thousand) in 
2006.  In the summer of 2007, both the EBRD and Citigroup Venture 
Capital International acquired shares in Kazinvestbank. 
 
7.  The board of directors of Alliance Bank elected Yerik 
Sultankulov as the new CEO of Alliance Bank.  Sultankulov replaced 
Dauren Kereybaev, who was appointed deputy CEO of Seimar Alliance 
Financial Corporation, a major stockholder in Alliance Bank. 
 
Results of 2005 EITI Report 
 
ASTANA 00000618  002.2 OF 002 
 
 
--------------------------- 
 
8.  The 2005 Extractive Industries Transparency Initiative (EITI) 
report audited by Deloitte was presented in Astana at the first EITI 
conference on February 29.  Thirty-nine oil and gas companies that 
presented their financial reports declared $2.588 billion in taxes 
paid to Kazakhstan, while the Finance Ministry showed
 $2.596 billion 
of proceeds received.  According to Vice Finance Minister Daulet 
Yergozhin, the difference reflects exchange rate changes and 
incorrect data presented by some companies. 
 
KazMunayGas To Explore Zhambyl Block of Caspian Shelf 
--------------------------------------------- -------- 
 
9.  Kazakhstan's national oil and gas company, KazMunayGas (KMG), 
will explore the Zhambyl Block of the Caspian Shelf, a block with 
120 million tons of oil in probable reserves.  According to Energy 
Minister Sauat Mynbayev, KMG will transfer a 73% stake in the 
project to its subsidiary, KazMunayTeniz, and 27% to the Korean 
National Oil Company. 
 
Kazakhstan-China Joint Venture To Build Gas Pipeline 
--------------------------------------------- ------- 
 
10.  KMG subsidiary KazTransGas and Trans-Asia Gas Pipeline Company 
Ltd, which is affiliated with the China National Petroleum 
Corporation, have established a joint venture, Asian Gas Pipeline 
LLP, to build a Kazakhstan-China gas pipeline.  The first section of 
the pipeline with an annual transit capacity of 40 bcm of gas will 
extend from the Uzbekistan-Kazakhstan border via Shymkent (South 
Kazakhstan) to China's Khorgos.  The second section, 
Beineu-Bozoy-Kyzylorda-Shymkent, will have a 10 bcm annual transit 
capacity. 
 
ORDWAY

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