This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS  ALMATY 002850 
 
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
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE 
July 10 - 23, 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. 
 
--   National Bank Raises Refinancing Rate 
--   Commerzbank to Invest in Almaty Metro Construction 
--   Foreign Manpower Quota for 2005 
--   Russia to Train Kazakhstani Space Specialists 
--   Economic Statistics 
--   Atasu-Alashankou Pipeline 30% Complete 
--   Second Kazakhstani Tanker Arrives 
--   PetroKazakhstan Announces New Commercial Oil Reserves 
--   India, China, Russia Interested in PetroKazakhstan 
--   PetroKazakhstan's Latest Fine - Financial Police 
     Comments 
 
 
National Bank Raises Refinancing Rate 
------------------------------------- 
 
¶2.  According to a press release from the National Bank of 
Kazakhstan (NBK), the refinancing rate is raised from 7.5% 
to 8% as of July 11.  This decision, as well as the previous 
raise from 7% to 7.5% on February 1, was caused by need to 
lower inflationary pressures.  The NBK reserves the right to 
revise the refinancing rate every quarter.  (Interfax- 
Kazakhstan, July 11) 
 
Commerzbank to Invest in Almaty Metro Construction 
--------------------------------------------- ----- 
 
¶3.  Vice-presidents of German Commerzbank, Katrine Eich and 
Hans-Ulrich Betzoltd, expressed in a letter to the President 
Nazarbayev their readiness to loan $800 million for the 
construction of the metro in Almaty.  The project is 
estimated at $1.2 billion.  According to the letter, the 
German credit agency "Hermes" will provide $327 million in 
export insurance; and the U.S. Overseas Private Investment 
Corporation (OPIC) will guarantee the loan and provide 
political risk insurance for $400 million.  The Asian 
Development Bank (ADB) provide credit in the amount of $200 
million.  (Golden Eagle Service, July 18) 
 
Foreign Manpower Quota For 2005 
------------------------------- 
 
¶4.  Kazakhstan increased its quota for foreign manpower in 
2005, up to 0.32% of the economically active population. 
The GoK cancelled its previous decree, which set a quota of 
0.28%.  In 2003, the foreign manpower quota was 0.14%; in 
2004 - 0.21%.  The population of Kazakhstan is over 15 
million people, including an economically active number of 
about 8 million.  (Interfax-Kazakhstan, July 19) 
 
Russia to Train Kazakhstani Space Specialists 
--------------------------------------------- 
 
¶5.  The best Russian aviation and space educational 
institutions should be involved in training Kazakhstani 
specialists.  Prime-Minister Akhmetov voiced this idea at a 
meeting with the representatives of Russian space education. 
Both sides agreed that Kazakhstan needs qualified personnel 
for the development of its space industry and Russian 
specialists can help to create training centers in Moscow 
and possibly in Baykonur.  The Prime-Minister instructed the 
Education and Science Ministry to cooperate with Russian and 
other educational institutions to train a sufficient number 
of specialists in the medium term.  (Kazakhstan Today, July 
21) 
 
Economic Statistics 
------------------- 
 
¶6.  According to a National Statistics Agency report, the 
surplus of Kazakhstan's external trade totaled $4,369.3 
million in January-May 2005 versus $2,531.9 million in 
January-May 2004.  Kazakhstan's foreign trade turnover was 
$17,445.9 million in the reported period, up 51% compared to 
the same period in 2004.  This figure includes exports of 
$10,907.6 million (up by 54.9%) and imports of $6,538.3 
million (up by 45%).  (Interfax-Kazakhstan, July 11) 
 
¶7.  Investment in fixed capital in Kazakhstan was KZT 821.9 
billion (about $6.1 billion) in January-June 2005, which is 
up by 1.5 times greater than in the same period in 2004, the 
National Statistics Agency reported.  Major investment 
sources were enterprises' own funds (59.6%) and foreign 
investments (26.9%).  Budget investments accounted for 10.1% 
and borrowed funds 3.4% of total investments.  (Interfax- 
Kazakhstan, July 12) 
 
¶8.  Net profits of commercial banks in Kazakhstan totaled 
KZT 35.1 billion (about $258 million) in January-June 2005, 
which is up by 43.3% year-on-year.  According to the 
Financial Supervision Agency, as of July 1, 2005 the 
aggregate equity capital held by the national banking 
sector reached KZT 432.1 billion (about $3.18 billion), a 
64.2% increase year-on-year.  Credit portfolios, including 
inter-bank loans, rose by 7.6% to make KZT 2,277.3 billion 
(about $16.8 million).  (Interfax-Kazakhstan, July 15) 
 
Atasu-Alashankou Pipeline 30% Completed 
--------------------------------------- 
 
¶9.  Construction of the 962.2 kilometer Atasu-Alashankou 
oil pipeline from central Kazakhstan to the Chinese border 
is on schedule, KazTransOil Deputy Director General Sultan 
stated.  The pipeline, which is 30% completed, will be 
commissioned on December 16.  (Interfax - Kazakhstan, July 
18) 
 
Second Kazakhstani Tanker Arrives 
--------------------------------- 
 
¶10.  On July 21, Kazakhstan received its second 12,000 ton 
tanker "Almaty."  It was built at the Vyborg ship building 
plant (Russia) at the request of the state merchant marine 
company KazMorTransFlot.  The tanker will transport oil 
between Aktau and Makhachkala and Baku and will make 7-8 
trips per month, transporting about 7.3 million barrels of 
oil annually.  The third tanker "Aktau" will be built by 
December this year.  (Kazakhstan today, July 22) 
 
PetroKazakhstan Announces New Commercial Oil Reserves 
--------------------------------------------- -------- 
 
¶11.  On July 12, Canadian firm PetroKazakhstan announced the 
successful completion of the exploration drilling on Kolzhan 
area (South Turgai basin).  Two exploration wells have flow 
rates of 250 barrels of oil per day (bopd) and 700 bopd, 
respectively.  The third well KK-43 has initial flow rate of 
120 bopd.  (Interfax - Kazakhstan, July 12) 
 
India, China, Russia Interested in PetroKazakhstan 
--------------------------------------------- ----- 
 
¶12.  India's Oil & Natural Gas Corp. (ONGC) is ready to 
purchase PetroKazakhstan for $3.5 billion, a representative 
of ONGC Videsh Ltd. stated.  China's PetroChina Co. and 
Russia's Lukoil are interested as well.  (Interfax - 
Kazakhstan, July 18) 
 
PetroKazakhstan's Latest Fine - Financial Police Comments 
--------------------------------------------- ------------ 
 
¶13.  The Astana City Court imposed a $55 million fine on 
seven local oil suppliers belonging to PetroKazakhstan for 
violations of Kazakhstani antimonopoly legislation, the 
company reported on July 15. 
 
¶14.  "The criminal investigation regarding PetroKazakhstan 
Directors is not an effort to force out the company from 
Kazakhstani market," Financial Police Head Kalmurzayev 
stated on July 12.  In April, the Financial Police brought 
a charge against the President of PetroKazakhstan Kumkol 
Resources and PetroKazakhstan Oil Products Thomas Dvorak 
and Financial Director Clayton Clift under Article 196 of 
 
the Criminal Code, "Monopolistic actions and competition 
limitation".  (Interfax - Kazakhstan, July 18) 
 
ORDWAY 
 
 
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