09ASTANA200, KAZAKHSTAN: NEW OIL AND URANIUM DEALS WITH INDIA

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Reference ID Created Released Classification Origin
09ASTANA200 2009-02-03 10:38 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Astana

VZCZCXRO1676
OO RUEHAG RUEHAST RUEHBI RUEHCI RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW
RUEHLA RUEHLH RUEHLN RUEHLZ RUEHNEH RUEHNP RUEHPOD RUEHPW RUEHROV
RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTA #0200/01 0341038
ZNR UUUUU ZZH
O 031038Z FEB 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4508
INFO RUCNCIS/CIS COLLECTIVE 1128
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0525
RUEHKO/AMEMBASSY TOKYO 1231
RUEHUL/AMEMBASSY SEOUL 0255
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 0702
RUEKJCS/SECDEF WASHDC 0618
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1160

UNCLAS SECTION 01 OF 02 ASTANA 000200 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN 
STATE PLEASE PASS TO USTDA FOR DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON EPET ENRG EINV EMIN KNNP IN KZ
SUBJECT:  KAZAKHSTAN:  NEW OIL AND URANIUM DEALS WITH INDIA 
 
REF: (A) NEW DELHI 0190 
     (B) 08 ASTANA 1910 
     (C) 08 ASTANA 2535 
 
ASTANA 00000200  001.2 OF 002 
 
 
1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
2.  (SBU) SUMMARY:  On January 23-26, at the invitation of Indian 
President Pratibha Patil, President Nazarbayev, accompanied by more 
than 100 state and private business representatives, paid an 
official visit to India, seven years after his last trip to Delhi in 
February 2002.  During the visit, India and Kazakhstan agreed to two 
significant energy deals, one for the exploration of the Satpayev 
oil field in the North Caspian, and one for the supply of 
approximately 300 tons of uranium to India annually for five years 
(1,500 to 2,000 tons in total).  Kazakhstan imports Indian tea, 
pharmaceuticals, textiles, foods, tobacco, rubber products, and 
electronic equipment, and exports to India salt, cement, leather, 
and non-ferrous ores.  During the first 10 months of 2008, trade 
between Kazakhstan and India totaled $308 million.  END SUMMARY. 
 
INDIA'S NATIONAL OIL COMPANY SIGNS SATPAYEV AGREEMENT 
 
3.  (U) After seven years of negotiations, Kazakhstan's national oil 
and gas company, KazMunayGas (KMG), and India's Oil and Natural Gas 
Corporation (ONGC), together with India's Mittal Energy Limited, 
signed an agreement to explore the Satpayev offshore Caspian oil 
reservoir, which has estimated recoverable reserves of 253 million 
tons of crude oil.  According to India's Petroleum Secretary R.S. 
Pandey, a newly established joint venture of ONGC and Mittal Energy 
will pay an $80 million signing bonus for a 25 percent stake in the 
project, with the option of an additional 10 percent upon commercial 
discovery.  KMG will be the lead operator of the field and hold the 
remaining 75 percent stake. 
 
4.  (SBU) On January 30, D.C. Manjunath, Second Secretary of the 
Embassy of India, told Energy Officer that President Nursultan 
Nazarbayev's visit to India was helpful in moving negotiations 
forward.  He said that KMG and ONGC first signed a memorandum of 
understanding in 2005 and expressed frustration that the Satpayev 
deal has taken so long to consummate.  He called the Heads of 
Agreement signed during Nazarbayev's visit "long overdue." 
Manjunath said there is no deadline to sign a contract for the 
exploration and production of the Satpayev field, but he indicated 
that ONGC is eager to come to terms before proposed changes to the 
Subsoil Law take effect.  (NOTE:  Kazakhstan's new Subsoil Law will 
eliminate the use of production sharing agreements, require separate 
exploration and production contracts, and impose stricter local 
content requirements.  See reftel B.  END NOTE.) 
 
KAZAKHSTAN COURTING INDIAN INVESTMENT IN PETROCHEMICAL PLANT 
 
4.  (U) After Nazarbayev met with Indian Oil Industry Minister 
Moorli Deora, Kazakhstan invited Gali India Ltd. and Indian Oil 
Corp. to enter into negotiations on the construction of a 
petrochemical plant in Kazakhstan.  (NOTE:  On January 22, 
Kazakhstan's Prime Minister Karim Masimov attended a groundbreaking 
ceremony for the Karabatan Petrochemical Plant in Atyrau Oblast, 
which has a design capacity of 1.2 million tons of polyethylene and 
polypropylene per year.  The plant is expected to receive and refine 
oil from the supergiant Kashagan field beginning in 2012.  END 
NOTE.) 
 
KAZATOMPROM TO SUPPLY URANIUM TO INDIA 
 
5.  (SBU) Also during Nazarbayev's visit, Kazakhstan's national 
nuclear energy company Kazatomprom (KAP) and the Nuclear Power 
Corporation of India Limited (NPCIL), run by India's State 
Department of Atomic Energy, signed a memorandum of understanding 
and cooperation.  According to Kazatomprom, the two companies will 
cooperate in the extraction and production of uranium, the supply of 
uranium pellets and fuel assemblies to Indian nuclear facilities, 
and the training of KAP personnel.  KAP also announced that it will 
 
ASTANA 00000200  002.2 OF 002 
 
 
take advantage of the opportunity to review the technical 
feasibility studies for India's heavy-water nuclear reactors in 
order
 to assess whether plants of similar design would be suitable 
for Kazakhstan.  Manjunath from the Embassy of India said India is 
most interested in conducting joint mining activities in Kazakhstan 
and securing a long-term contract to ensure the steady supply of 
uranium.  He also noted that the MOU is broadly defined and could 
allow KAP and NPCIL to sign specific agreements on technology 
transfer and value added production. 
 
6.  (SBU) During a January 16 meeting with Energy Officer, 
Kazatomprom Vice President Sergei Yashin explained that under the 
agreement, Kazakhstan will supply approximately 300 tons of uranium 
and processed fuel annually to India for up to five years.  Yashin 
said that India's nuclear power plants require both new power blocks 
and a guaranteed supply of uranium.  He said that KAP partners 
Westinghouse -- in which KAP owns a 10 percent share -- and General 
Electric will build the reactors and KAP will guarantee the supply 
of uranium.  Yashin confirmed KAP's plans to become the world's 
number one exporter of uranium by 2010, and he said they will 
increase uranium production from 8,500 tons in 2008 to 11,900 tons 
in 2009 (see reftel C). 
 
FUTURE TECHNCIAL AND ECONOMIC COOPERATION WITH INDIA 
 
7.  (U) Before Nazarbayev's visit, India's Ambassador to Kazakhstan, 
Ashok Sanjhar, announced at a press conference that the government 
of India is eager to expand the scale of technical and economic 
cooperation with Kazakhstan.  Under an existing bilateral program, 
each year approximately 100 Kazakhstani technicians, military 
officers, businessmen, and government officials receive training at 
India's top universities in information technology, English 
language, mass media, environment, education, banking, textile 
manufacturing, and pharmaceutical production.  Sanjhar suggested 
other opportunities for cooperation with Kazakhstan, including 
establishing a new Kazakhstani-Indian Technical Institute, 
initiating an educational exchange program, and opening centers of 
Indian medicine in Almaty and Astana to treat cardiovascular and 
oncologic diseases. 
 
HOAGLAND

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