US embassy cable - 05ALMATY3476

UNCLAS  ALMATY 003476 
 
SIPDIS 
 
 
DEPT PASS TO EUR/CACEN MUDGE 
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 
 
E.O. 12958: N/A 
TAGS: ECON, EIND, ENRG, EPET, EFIN, KZ, ECONOMIC, Energy 
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE 
September 4 - September 17, 2005 
 
1.  Summary: This information is drawn primarily from the 
Kazakhstani local press, and has not been checked for 
accuracy.  The opinions and policies expressed in this 
report are those of the authors, not the U.S. Government. 
 
--   WTO Protocol with China Signed 
--   E-Government Contract with Alcatel 
--   Changes in Air Astana Management 
--   Transfer of International Flights to Astana 
--   Economic Statistics 
--   Kazakhstan to Order Construction of 60,000 Ton Tankers 
--   Aktau Port Expansion Project 
--   Ukraine, Kazakhstan to Expand Black Sea Terminal 
--   Oil & Gas Statistics 
 
WTO Protocol with China Signed 
------------------------------ 
 
2.  Kazakhstan and China completed bilateral talks on market 
access for goods and services, a necessary step in the WTO 
accession process.  The agreement was signed in Beijing on 
August 31.  According to a press release from the Ministry 
of Industry and Trade, "the sides agreed on the level of 
import duties on commodities of mutual interest and the 
commitments of Kazakhstan regarding access to its services 
market".  (Interfax-Kazakhstan, September 3) 
 
E-Government Contract with Alcatel 
---------------------------------- 
 
3.  The French company Alcatel and the Kazakh Agency of 
Informatization and Communication (AIC) signed a memorandum 
of understanding (MoU) to provide Kazakhstan with an e- 
government solution.  According to the MoU, Alcatel will be 
the systems integrator for conceptual elaboration and 
implementation of the pilot e-government program in Astana 
and Almaty.  The MoU also states that after successful 
completion of the pilot projects in 2006-2007, Alcatel will 
deliver the solution nationwide.  (Global Insight Daily 
Analysis, September 8) 
 
Changes in Air Astana Management 
-------------------------------- 
 
4.  The senior Management of JSC "Air Astana" will change 
before the end of September 2005.  A source inside the 
company reported that, as part of a planned staff rotation 
the current head of Royal Brunei Airlines (RBA) Pengiran 
Dato Abdul Hamid will replace the current President of "Air 
Astana" Lloyd Paxton.  (Kazakhstan Today, September 8) 
 
Transfer of International Flights to Astana 
------------------------------------------- 
 
5.  Agreements on the transfer of international flights from 
Almaty to Astana were reached with Turkey and Austria, the 
Director of the Committee for Civil Aviation, Almatbek 
Mambetov reported.  According to him, "Turkish Airlines will 
begin flights from Istanbul to Astana two times per week at 
the end of September 2005; and Austrian authorities plan to 
launch direct flights from Vienna to Astana in March 2006." 
Mambetov added that the Committee is conducting similar 
negotiations with Great Britain and The Netherlands. 
(Golden Eagle Service, September 9) 
 
Economic Statistics 
------------------- 
 
6.  Gold and currency reserves (GCR) of Kazakhstan, 
including National Bank gross reserves and reserves 
accumulated at the National Fund, increased by 1.7% in 
August making $13,209.3 million.  As the National Bank of 
Kazakhstan (NBK) informed, in August the assets of the 
National Fund made $5,393.3 million; the NBK net GCR rose by 
0.7% making $7,807.8 million.  (Interfax-Kazakhstan, 
September 7) 
 
7.  The volume of the money supply in Kazakhstan increased 
by 1.8% in July 2005, to KZT 1,866.1 billion (approximately 
$13.8 billion).  According to a press release of the 
National Bank of Kazakhstan, "cash in circulation rose by 
2.6% during July make KZT 399.5 billion (about $3 billion), 
whereas deposits made with banks and credit cooperatives 
increased by 1.6% to KZT 1,466.5 billion (about $10.8 
billion)".  (Interfax-Kazakhstan, September 8) 
 
Kazakhstan to Order Construction of 60,000 Ton Tankers 
--------------------------------------------- --------- 
 
8.  The state merchant marine company KazMorTransFlot (KMTF) 
plans to order 60,000 ton tankers at Astrakhan shipyards 
(Russia), KMTF's First Deputy Director General Kozhamkulov 
reported on September 14.  Within the GoK program for the 
construction of the Kazakhstani tanker fleet, the company 
has ordered three 12,000 ton tankers at the Vyborg shipyard 
(Russia).  Two of the three have already delivered to the 
Aktau port (Caspian Sea).  (Interfax - Kazakhstan, September 
19) 
 
Aktau Port Expansion Project 
---------------------------- 
 
9.  The three-year Aktau port expansion will require about 
KZT 33 billion (approximately $246 million) with a payback 
term of about 17 years, Corporate Development Department 
Director of Aktau port Kutpanbaev reported on September 16. 
The state's participation will be over KZT 11 billion (about 
$82 million).  According to the official, "it will likely be 
(funded by) the state development bank."  The first tranche 
of about $25 million of state funds will be used by the end 
of 2005 or the beginning of 2006 for water-development works 
to secure safe and stable operations inside a new harbor. 
(Interfax - Kazakhstan, September 19) 
 
Ukraine, Kazakhstan to Expand Black Sea Terminal 
--------------------------------------------- --- 
 
10.  Ukrtransnafta, Ukrainian pipelines national operator, 
and KazMunayGaz Trade House, a subsidiary of the national 
oil producer KazMunayGaz, signed documents to set up a joint 
venture (JV) to expand the Yuzhny oil terminal (North-east 
of Odessa) infrastructure and construct a 52-kilometer 
section of oil pipeline to link the terminal with the 
Dniester trunk pipeline system, according to Ukrtransnafta 
reports on September 15.  The JV was established based on a 
mutual desire of Ukraine and Kazakhstan to increase oil 
transportation through the Odessa-Brody pipeline system. 
The cost of the project is about $150 million.  (Interfax - 
Kazakhstan, September 19) 
 
Oil & Gas Statistics 
-------------------- 
 
11.  In 2005 Kazakhstan will produce 61 million tons of oil 
and gas condensate and 28.7 billion cubic meters of gas, 
Kazakhstan Energy Minister Shkolnik said during 
international conference in San Diego last week.  In 2004 
Kazakhstan produced over 59 million tons of oil and gas 
condensate.  In January-August 2005, oil production in 
Kazakhstan was 40.8 tons of oil and gas condensate, 5.5% 
higher than during to the same period in 2004, the National 
Statistics Agency reported.  During the same period, 10.3 
billion cubic meters of natural gas, up 43% year-on-year, 
were produced.  (Interfax - Kazakhstan, September 19) 
 
ORDWAY 
 
 
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