08ASTANA971, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, APRIL 19 – MAY 3,

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Reference ID Created Released Classification Origin
08ASTANA971 2008-05-22 07:33 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO0584
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #0971/01 1430733
ZNR UUUUU ZZH
R 220733Z MAY 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 2464
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0513
RUEHAK/AMEMBASSY ANKARA 2168
RUEHBUL/AMEMBASSY KABUL 0399
RUEHNE/AMEMBASSY NEW DELHI 0505
RUEHAST/USOFFICE ALMATY 0442

UNCLAS SECTION 01 OF 02 ASTANA 000971 
 
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, APRIL 19 - MAY 3, 
2008 
 
ASTANA 00000971  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Kazakhstan-Uzbekistan Commercial Ties 
-- Trade Increases within Eurasian Economic Community 
-- Astana Finance Enters Russian Market 
-- Return of Ex-Finance Minister 
-- First Drilling in Atash 
-- Court Rules in Favor of Karachaganak Petroleum Operating B.V. 
-- Zhambyl Hydropower Plant To Be Privatized 
-- 70% of Equipment in Mittal Mines is in Disrepair 
-- Samruk to Buy A 50% Stake in Two Open-Pit Coal Mines 
-- Kazakhstan Seeks More Oil Transit via Georgia 
 
Kazakhstan-Uzbekistan Commercial Ties 
------------------------------------- 
 
2.  "We are close to reaching a consensus on creating a free trade 
zone between our countries," said President Nazarbayev at a press 
conference following talks with Uzbekistan's President Islam Karimov 
on April 22 in Astana.  Nazarbaev announced plans to open chambers 
of commerce in both Uzbekistan's and Kazakhstan's capitals. 
Kazakhstan-Uzbekistan trade doubled in 2007 compared to the previous 
year totaling $1.4 billion: $871.8 million in exports from 
Kazakhstan to Uzbekistan and $538.5 million in exports from 
Uzbekistan to Kazazhstan.  (Interfax-Kazakhstan, April 23) 
 
Trade Increases within Eurasian Economic Community 
-------------- ----------------------------------- 
 
3.  According to Tair Mansurov, Secretary General of the Eurasian 
Economic Community (EEC), trade between members states has tripled 
over the past seven years: from $27 billion in 2000 to $97 billion 
in 2007.  Mansurov noted that these encouraging statistics will 
encourage EEC countries to think more concretely about a future 
customs union.  (Interfax, April 28) 
 
Astana Finance Enters Russian Market 
------------------------------------ 
 
4.  Russia's Alfa Bank sold a 100% stake in its subsidiary Alfa Bank 
Bashkortostan for $16.88 million to Kazakhstan's Astana Finance. 
Astana Finance provides a number of investment-banking services, 
including long-term project finance, leasing, and mortgage services. 
 The government holds a 25.5% stake in Astana Finance.  (Interfax, 
April 30) 
 
Return of Ex-Finance Minister 
----------------------------- 
 
5.  Natalia Korzhova, former Minister of Finance, has been appointed 
the Executive Secretary of the Ministry of Finance.  The positive of 
executive secretary for all government agencies was introduced by 
President Nazarbayev in August 2007.  Executive secretaries are 
equal in rank to first vice ministers.  (Interfax-Kazakhstan, April 
29) 
 
First Drilling in Atash 
----------------------- 
 
6.  Atash Co., owned by KazMunaiTeniz and Russia's Lukoil Overseas 
Shelf B.V., started its first drilling operations in the Atash 
section of the Caspian Sea using floating drilling facilities.  The 
estimated reserves at Atash are 141.7 million tons of crude. 
(Delovoi Kazakhstan newspaper, May 1) 
 
Court Rules in Favor of Karachaganak Petroleum Operating B.V. 
------------------ ------------------------------------------ 
 
7.  The West Kazakhstan regional court has ruled unlawful the 
refusal of the regional environmental office to review environmental 
payments made by Karachaganak Petroleum Operating B.V. (KPO) in the 
3rd and 4th quarters of 2007.  Because the regional environmental 
office refused to review its submissions, KPO did not submit a tax 
report, and in turn the West Kazakhstan Tax Committee has blocked 
 
ASTANA 00000971  002.2 OF 002 
 
 
its bank accounts since December 2007.  KPO expects that the tax 
authorities will unblock its accounts after verifying its 
environmental payments.  (Press release of KPO, April 22) 
 
Zhambyl Hydropower Plant To Be Privatized 
----------------------------------------- 
 
8.  Energy Minister Sauat Mynbayev has suggested that Kazakhstan 
sell a 50% state stake in the Zhambyl Hydropower Plant (Zhambyl 
GRES), which supplies electricity to  South Kazakhstan.  Zhambyl 
GRES operates only in wintertime, and it is the only power plant in 
the country that has no reserve capacity in case of an emergency. 
(Interfax-Kazakhstan, April 22) 
 
70% of Equipment in Mittal Mines is in Disrepair 
------------------ ----------------------------- 
 
9.  After an inspection of eight coal mines belonging to the 
ArcelorMittal Temirtau steel company, the prosecutor's office 
alleged that 70% of equipment used in the mines is in disrepair, 
equipment being installed is obsolete, and labor safety standards 
are not being met.  The prosecutor's office gave ArcelorMittal one 
month to correct the violations discovered.  (Kazakhstan TV channel, 
April 24) 
 
Samruk to Buy A 50% Stake in Two Open-Pit Coal Mines 
------------------ --------------------------------- 
 
10.  The Samruk state asset management holding company will pay 
United Company Rusal $345 million for a 50% stake in the Bogatyr and 
Severniy open-pit coal mines.  Access Industries Inc. is the 
operator of the mines.  (Panorama newspaper, April 25) 
 
Kazakhstan Seeks More Oil Transit via Georgia 
------------------ -------------------------- 
 
11.  Energy Minister Sauat Mynbayev and Samruk Chairman Kanat 
Bozumbayev held talks in Astana with Georgia's Minister of Economic 
Development, Ekaterina Sharashidze.  Kazakhstan is interested in 
increasing to 10 million tons per year the volume of its crude oil 
which is exported via Georgia's railroad and oil pipelines.  (Astana 
TV channel, April 25) 
 
ORDWAY

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