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O 260831Z JAN 10
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RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
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UNCLAS SECTION 01 OF 02 ASTANA 000090 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB/ESC, S/EEE, S/CIEA 
STATE PLEASE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EINV EPET SENV SOCI KZ
SUBJECT:  KAZAKHSTAN:  PARLIAMENT DISCUSSES REVISIONS TO MARITIME 
LAW 
 
ASTANA 00000090  001.3 OF 002 
 
 
REFTEL:  09 ASTANA 2255 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (U) SUMMARY:  At a January 21 roundtable hosted by the 
Association of Maritime Transportation Entrepreneurs, 
parliamentarians and representatives of 10 ministries, international 
shipping companies, and the diplomatic community discussed the need 
for significant improvements in Kazakhstan's maritime transportation 
legislation.  National maritime shipping company KazMorTransFlot 
(KMTF) highlighted its competitive disadvantage compared to other 
national shipping companies, which receive direct operational 
support from their governments.  Chevron's maritime transportation 
advisor called for the creation of a single maritime administration 
and a marine academy to meet Kazakhstan's increasing demand for 
clear, consistent regulations and well-trained naval crews that meet 
international standards.  As a result, the parliamentarians asked 
the Ministry of Transportation and Communications to provide 
recommendations on amendments to the 2002 Maritime Transportation 
Law to ensure its full compliance with International Maritime 
Organization (IMO) guidelines.  END SUMMARY. 
 
KMTF AT A COMPETITIVE DISADVANTAGE 
 
¶3.  (U) KMTF General Director Marat Ormanov compellingly argued his 
company's distinct disadvantage compared to competitors from 
Azerbaijan, Russia, and Iran.  "The competition to ship oil via the 
Caspian Sea is getting tougher," he said.  "The maritime shipping 
companies of Azerbaijan, Russia, and Iran are beefing up their trade 
fleets with government support, and we are at a competitive 
disadvantage."  According to Ormanov, unlike all other Caspian 
fleets, Kazakhstani maritime shipping companies do not receive 
call-in port preferential rates in domestic ports.  He highlighted 
that a KMTF tanker is charged $8,600 more than an Azerbaijani vessel 
of the same type for every call-in at the Baku sea port.  "As a 
result," he claimed, "we overpay $600,000 annually, and lose any 
chance at competitiveness." 
 
OIL TANKER SHIPMENTS EXPECTED TO INCREASE DRAMATICALLY 
 
¶4.  (U) Ormanov said that KMTF currently owns and operates four oil 
tankers, with two additional 13,000-deadweight ton (dwt) tankers 
expected by the end of the year.  "Meanwhile," he asserted, 
"Azerbaijan has built 10 tankers in the last four years, primarily 
to ship Kazakhstan's oil.  The lion's share of that investment came 
directly from the Azeri government."  Ormanov added that Russia's 
Caspian fleet includes 27 oil tankers (including three new ships), 
Iran has three 63,000 dwt supertankers at various stages of 
construction, and Azerbaijan has a total of 45 vessels, including 10 
new ones.  Alexander Andrushenko, chairman of the Association of 
Maritime Transportation Entrepreneurs, claimed that the percentage 
of Kazakhstan's oil exports shipped by sea will increase from 15% to 
40% by 2020 (NOTE:  During this same period, Kazakhstani oil 
production is expected to double.  END NOTE). 
 
CALL FOR A NEW MARITIME ADMINISTRATION 
 
¶5.  (U) Ormanov also highlighted the absence of a single, unified 
Kazakhstani maritime administration with the authority and resources 
to guide the development of its nascent maritime transportation 
industry.  Ormanov insisted that this administration must have 
professional staff who can enforce navigation safety, define state 
policy, establish a navigation registry, and manage the registration 
of ships and ship owners.  "Maritime transportation in Kazakhstan is 
governed by many different agencies with many other interests," he 
said, noting the Azerbaijani maritime administration's sole 
authority over maritime transportation and direct line to President 
Aliyev. 
 
LACK OF QUALIFIED CREWS A MAJOR CONCERN 
 
 
ASTANA 00000090  002.3 OF 002 
 
 
¶6.  (U) Chevron's former Regional Marine Manager, Kjell Landin, now 
a private consultant, strongly agreed.  He reiterated to the members 
of parliament and ministry officials that Kazakhstan should 
establish a single maritime administration with clear rules, a 
strong mandate, skilled staff, and sufficient resources to carry out 
its mission.  Landin also proposed the establishment of a marine 
academy, training center, and apprenticeship programs to provide 
Kazakhstani mariners for the industry.  He estimated that Kazakhstan 
will need 4,000 qualified mariners, including 1,500 officers, and 
20-40 tankers, including some large vessels (40,000-60,000 dwt) by 
¶2020.  "Out of 900 mariners presently engaged onboard 
Kazakhstani-flagged vessels, only 19% are citizens of Kazakhstan," 
he highlighted, "while the number of senior officers who are 
citizens is almost zero."  According to Landin, it takes a minimum 
of 15 years to train and certify a ship's captain.  (NOTE:  On 
January 1, Article 25 of the Law on Maritime Shipping came into 
effect, requiring that all crew members on Kazakhstani-flagged 
vessels be Kazakhstani citizens (reftel).  END NOTE). 
 
¶7.  (U) Visibly impressed, parliamentarian Zeinulla Alshymbayev, a 
member of the transportation working group in the Mazhilis (lower 
house), vowed to incorporate the experts' recommendations into 
legislation currently under discussion.  "I can see that there are 
many things we did not take into account in our draft," he 
acknowledged, such as the registration and flagging of vessels, 
long-term training programs for crews, and establishment of a 
single, unified maritime administration. 
 
¶8.  (SBU) COMMENT:  If Kazakhstan's oil production increases as 
expected over the next five years, the Kazakhstan Caspian 
Transportation System (KCTS), which entails tanker shipments across 
the Caspian, will play a critical role in bringing the crude to 
market.  The government and international oil companies thus far 
have focused on the ownership of the infrastructure required to 
transport the oil westward.  This roundtable, however, underscored 
the significant need for attention to and investment in the legal 
framework, institutional authority, and human capacity in order for 
Kazakhstan to develop its maritime transportation industry, meet 
international standards, and compete with neighboring states.  END 
COMMENT. 
 
HOAGLAND