08ASTANA1609, KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, AUGUST 3 – AUGUST

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Reference ID Created Released Classification Origin
08ASTANA1609 2008-08-28 02:07 2011-08-30 01:44 UNCLASSIFIED Embassy Astana

VZCZCXRO0200
RR RUEHLN RUEHVK RUEHYG
DE RUEHTA #1609/01 2410207
ZNR UUUUU ZZH
R 280207Z AUG 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3127
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0613
RUEHAK/AMEMBASSY ANKARA 2178
RUEHBUL/AMEMBASSY KABUL 0414
RUEHNE/AMEMBASSY NEW DELHI 0514
RUEHAST/USOFFICE ALMATY 0684

UNCLAS SECTION 01 OF 02 ASTANA 001609 
 
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, AUGUST 3 - AUGUST 
16, 2008 
 
ASTANA 00001609  001.2 OF 002 
 
 
1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- Banking Sector Updates 
-- New Player in Local Capital Market 
-- Competition Agency Announces Inspection Results 
--   Ministry Presents Draft of New Subsoil Use Legislation 
-- Arcelor Mittal Reduces Its 2008 Output 
-- Petrocapital Resources To Buy Almas International 
-- Rusal Plans To Build Aluminum Plant 
-- Gasprom Neft Seeks To Buy Gas Stations in Kazakhstan 
 
Banking Sector Updates 
---------------------- 
 
2.  According to the Financial Supervision Agency, Kazakhstan's 
commercial banks earned a net profit of 67.9 billion tenge 
(approximately $565 million) during January-June 2008, which is down 
41.4% in comparison with the same period in 2007.  Commercial bank 
revenues totaled 1.297 trillion tenge (approximately $10.8 billion), 
a 68.7% increase over January-June 2007.  However, expenses totaled 
1.229 trillion tenge (approximately $10.2 billion), a 95.1% increase 
over the same period in 2007. 
 
3.  Alnair Capital Holding has increased its stake in 
KazKommertsBank (KKB) to 25.15%, officially making it a "bank 
holding company," according to the definition used by the Financial 
Supervision Agency.  Alnair Capital Holding is controlled by Sheikh 
Tahnoon Bin Zayed Al Nahyan of Abu Dhabi.  Kazakhstani newspaper 
Respublika speculates that the new shareholders are anxious for 
radical changes in KKB's top management. 
 
4.  Kazakhstan's Alliance Bank has secured a $95 million loan from 
Merrill Lynch International.  According to an Alliance press 
release, the 9.67% loan will mature on January 20, 2010.  Alliance 
Bank will in turn use the borrowed funds to provide credit to their 
clients. 
 
5.  According to the Kazakhstan Stock Exchange (KASE), ABN AMRO 
Kazakhstan was recently renamed RBS Kazakhstan.  The change comes 
following the purchase of Netherlands-based ABN AMRO by a consortium 
of the Royal Bank of Scotland, Fortis, and Santander back in October 
2007. 
 
New Player in Local Capital Market 
---------------------------------- 
 
6.  The Eastland Capital Group Ltd has announced plans to invest 
between $10-15 billion in Kazakhstan, directed at projects in the 
oil and gas, mining, metallurgy, transport-logistics, agro-industry, 
and financial sectors.  Eastland Capital manages large sovereign and 
private funds from the Middle East, South-East Asia and Europe. 
 
Competition Agency Announces Inspection Results 
--------------------------------------------- -- 
 
7.  Competition Agency Chairman Mazhit Yesenbayev accused the 
national oil and gas company KazMunayGas (KMG), PetroKazakhstan (a 
subsidiary of China National Petroleum Corporation), and Helios (a 
MangistauMunayGas subsidiary) of monopolizing 70% of the wholesale 
market for oil products.  The Competition Agency brought charges to 
the financial police against a total of 64 companies suspected of 
price collusion in the oil products market. 
 
Ministry Presents Draft of New Subsoil Use Legislation 
--------------------------------------------- --------- 
 
8.  Energy Minister Sauat Mynbayev presented to the government a 
draft for new legislation on subsoil use, which would mandate 
separate contracts for exploration and production, favor bidders 
that offer socio-economic assistance to local communities, and give 
the government a first right of refusal over subsoil assets.  From 
January to June 2008, 20 subsoil use contracts were annulled, 
compared to 84 during November-December 2007.  According to 
Mynbayev, 90 percent of companies are meeting their contractual 
 
ASTANA 00001609  002.2 OF 002 
 
 
obligations per their subsoil use contracts. 
 
Arcelor Mittal Reduces Its 2008 Output 
-------------------------------------- 
 
9.  Arcelor Mittal Temirtau (AMT) plans to produce 3.8 million tons 
of steel in 2008, down from 4.2 million in 2007.  In 2008, AMT 
intends to invest approximately $500 million to upgrade its 
production facilities. 
 
Petrocapital Resources To Buy Almas International 
--------------------------------------------- ---- 
 
10.  Petrocapital Resources Company, a U.S.-fi
rm, reached an 
agreement with Jurby Corporation to acquire a 50 percent stake in 
Kazakhstan's Almas International Trading Company for $54 million by 
2010.  Almas exports crude and oil products to Poland, Ukraine, the 
Netherlands, the UK, Estonia, Latvia, Mongolia, Afghanistan, 
Kyrgyzstan, and Tajikistan.  Almas's revenues exceed $1 billion a 
year. 
 
Rusal Plans To Build Aluminum Plant 
----------------------------------- 
 
11.  The Rusal ("Russian Aluminum") company managing the Bogatyr 
open coal mine in Ekibastuz announced plans to build an aluminum 
plant in Ekibastuz with a designed capacity of 500,000 tons of 
aluminum a year and a 2.5-year construction period. 
 
Gasprom Neft Seeks To Buy Gas Stations in Kazakhstan 
--------------------------------------------- ------- 
 
12.  Russia's Gasprom Neft plans to purchase gas stations in 
Kazakhstan to supply its fuel products, including from the Omsk 
refinery, which is close to the Kazakhstan border. 
 
ORDWAY 
1 
 
 
4

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