US embassy cable - 05ALMATY1932

S E C R E T  ALMATY 001932 
 
SIPDIS 
 
 
NOFORN 
 
E.O. 12958: DECL: 05/20/2015 
TAGS: KZ, MOPS, PREL, POLITICAL 
SUBJECT: KAZAKHSTAN: EFFORTS TO OVERTURN BAN ON JET FUEL 
FOR GANCI 
 
 
Classified By: CDA Mark Asquino, reasons 1.4 (B) and (D). 
 
1. (C) SUMMARY: Since the April 19 ban on export of jet fuel 
from Kazakhstan, post has contacted every relevant ministry 
and agency in the GOK to request it be lifted. Beginning with 
an April 22 letter to Prime Minister Akhmetov, who signed the 
decree, Embassy has approached the Ministries of Foreign 
Affairs, Defense, and Energy and Mineral Resources with 
requests to release the fuel for which Red Star Limited 
Enterprises had contracted in support of coalition air 
operations for OEF. A May 18 meeting with Minister of Energy 
and Mineral Resources Shkolnik is the latest and most 
promising of those efforts, though there is no positive 
result yet. There is no evidence that the reluctance to lift 
the ban is part of a plan to de-stabilize the current  Kyrgyz 
government.  It is more likely that the delay in obtaining 
relief from the ban is due to typical obstruction within the 
Kazakhstani government. END SUMMARY. 
 
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Background 
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2. (C) On April 19, the Government of Kazakhstan announced a 
ban on the export of jet fuel for a period of 90 days. While 
the reasons for the ban were not publicly announced, it 
appears that the GOK implemented it to counter rising jet 
fuel costs resulting from decreased production.  On May 16, 
the President of the Kazakhstani venture Kumkul Resources 
Thomas Dvorak and President of PetroKazakhstan Bernard 
Isautier intimated  to Ambassador that PetroKazakhstan was 
producing less jet fuel than in the past, and opined that 
Kazakhstan's statements that there is a domestic shortage of 
jet fuel may be true.  While denying that the export ban was 
having any price control effect, both confirmed that there is 
ample jet fuel being produced by Russian refineries. They 
said  that the Government of Kazakhstan could direct the 
refinery at Pavlodar to produce more jet fuel, and did not 
understand why this order had not been given yet. Minister of 
Energy Shkolnik told POEC chief on May 18 that rising jet 
fuel costs were behind the GOK's decision. 
 
3. (SBU) Red Star Enterprises Limited, the Defense Energy 
Support Center's sole contractor for procuring jet fuel for 
Ganci Airbase in Kyrgyzstan, notified post on April 21 that 
due to the Kazakhstani ban and the on-going investigations of 
Akayev-owned businesses in Kyrgyzstan, coalition air 
operations might have to be reduced due to inadequate 
deliveries of jet fuel. 
 
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Post's Actions 
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4. (C) On April 22, Embassy delivered a letter from the 
Ambassador to Prime Minister Akhmetov, asking that the ban be 
lifted for fuel supplies going to Ganci. From April 23 to May 
10, Ambassador, DCM, and DATT made repeated contact with 
representatives of the Ministries of Defense and Foreign 
Affairs, encouraging these ministries to support the U.S. 
request to lift the ban on jet fuel exports. During a meeting 
with Presidential Assistant Masimov, Ambassador was informed 
that the ban was intended to control the rising price of jet 
fuel, and thereby assure that Kazakhstan has sufficient 
supplies at a reasonable price for its domestic needs. 
 
5. (C) On May 11, Ambassador met with Vice President of 
KazMunaiGas Timur Kulibayev and First Deputy Minister of 
Energy and Mineral Resources Baktikhozha Izmukhambetov 
regarding the request to lift the ban.  Kulibayev seemed 
supportive of the request, and recommended that the 
Ambassador write another letter to Prime Minister Akhmetov, 
asking that the ban be lifted specifically for the delivery 
of 4,250 tons of jet fuel for which Red Star had already 
paid. That letter was delivered on May 13. 
 
6. (S/NF) During the same meeting, Kulibayev offered to 
import more jet fuel from Russia than Kazakhstan required, 
with the intention to send the excess to Ganci; he added the 
caveat that this proposal would take time to realize. 
Izmukhambetov offered his services as the point of contact 
for the transaction. Both noted that the fact that U.S. 
forces would be the final recipient of the fuel would have to 
be kept secret. Embassy conversations with Red Star indicated 
that Red Star was already seeking contracts with Russian and 
 
 
other outside suppliers and that short-term relief from the 
ban was what was required to keep air operations at an 
acceptable tempo. 
 
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A Promise of Help 
----------------- 
 
7. (SBU) On May 18, POEC chief raised the subject with 
Minister of Energy and Mineral Resources Shkolnik. Shkolnik 
said that he had just become aware of the impact of the 
export ban that morning, upon his return from overseas. He 
stated that supporting OEF operations out of Ganci is "our 
common strategic task."  He asked that we provide him the 
specifics on how many tons of fuel were  required so that he 
could issue the order permitting the export.  Embassy sent 
him a copy of Ambassador's May 11 letter to Akhmetov 
specifying the 4,250 tons already purchased. 
 
8. (SBU) Post is in regular contact with Red Star on the 
issue. Sources in Red Star report that during the April 20 
meeting between Presidents Nazarbayev and Bakiyev, Bakiyev 
received assurances that the matter would be resolved. Red 
Star also reported that KG Vice Prime Minister Usenov sent 
Shkolnik an official letter requesting that Shkolnik prepare 
and release a decree authorizing the delivery of 20,000 tons 
of jet fuel from the refineries in Pavlodar and Shymkent to 
Red Star. 
 
9.  (SBU) Red Star informed Embassy Bishkek on May 20 that 
1,600 MT of jet fuel had been loaded on rail cars in Omsk, 
Russia and was making its way to Bishkek.  Red Star expects 
this shipment to take 5-6 days to reach Bishkek.  An 
additional 3,400 MT has not yet been loaded, but will follow 
the initial shipment in increments. 
 
10. (C) COMMENT: While we believe the case for lifting the 
ban for deliveries to Red Star has been made, it is not clear 
why the request has not yet been acted on.  Contrary to 
rumors heard from outside the mission, we see no evidence 
that the jet fuel ban is intended either to limit the War on 
Terrorism or to destabilize the new Kyrgyz government.  In 
all probability the reasons for the GOK's delay in lifting 
the ban (or refusal to do so) are murky and complex and may 
become clearer only  in the future.   The Mission will 
continue to do everything it can to get the ban lifted, and 
the jet fuel on its way to Ganci.  END COMMENT. 
ORDWAY 
 
 
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