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

UNCLAS SECTION 01 OF 03 ALMATY 000324 
 
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 
January 8 - 21, 2006 
 
¶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. 
 
--   New Inter-State Bank in Russia and Kazakhstan 
--   EBRD is Among the Largest Investors in Kazakhstan 
--   Almaty to Become the Regional Financial Center 
--   Economic Statistics 
--   Georgia Hopes Kazakhstan Connects to BTC Soon 
--   KazTransGaz to Increase CAC Gas Pipeline Capacity 
--   KazTransGaz to Acquire Kyrgyz Gas Company 
--   Oil Production in Kazakhstan in 2005 
--   Gas Production in Kazakhstan in 2005 
--   Oil Refining in Kazakhstan in 2005 
 
 
New Inter-State Bank in Russia and Kazakhstan 
--------------------------------------------- 
 
¶2.  Russia and Kazakhstan have reached an agreement on the 
establishment of the Eurasian Development Bank (EDB).  The 
charter capital of the EDB will total $1.5 billion, 
including $1 billion as Russia's share (2/3 of votes) and 
$500 million as Kazakhstan's contribution (1/3 of votes). 
The bank is released from paying duties and taxes and 
granted immunity from search, arrest, confiscation or any 
other form of withdrawal.  The bank's goal is to maintain 
high rates of economic growth, enlarge mutual trade, and 
stimulate direct investments in both countries.  (Interfax - 
Kazakhstan, January 12) 
 
EBRD is Among the Largest Investors in Kazakhstan 
--------------------------------------------- ---- 
 
¶3.  The European Bank for Reconstruction and Development 
(EBRD) funded $343 million worth projects in Kazakhstan in 
2005, up 25% from 2004.  As Andr Kuusvek, EBRD Director for 
Kazakhstan said at the presentation of the report on 
economic development in CIS countries in 2005, "EBRD's 
project funding in Kazakhstan comprised over 80% of the 
bank's total operations in Central Asia."  According to 
Kuusvek, in 13 years of EBRD activity the bank has funded 
about 80 projects worth $1.5 billion, allowing the bank to 
say that EBRD is the "largest investor in the country after 
oil and gas companies."  (Interfax - Kazakhstan, January 17) 
 
Almaty to Become the Regional Financial Center 
--------------------------------------------- - 
 
¶4.  Economy and Budget Planning Vice-Minister Batyrkhan 
Isaev presented a draft of the Law on the Almaty Regional 
Financial Center.  According to the draft, the Regional 
Financial Center is supposed to have a special legal regime, 
which will be extended to all registered legal entities 
which base their headquarters in Almaty.  The 2006 budget 
earmarks KZT 1.5 billion (about $11.25 million) for the 
implementation of this project.  (Interfax - Kazakhstan, 
January 18) 
 
Economic Statistics 
------------------- 
 
¶5.  "In 2005 Russian-Kazakh cooperation grew.  The two 
countries strengthened economic ties: early reports indicate 
that trade turnover in 2005 exceeded $9 billion. 
Cooperation was dynamic and forward-going in other spheres 
as well," Russian Foreign Ministry spokesman Mikhail Kamynin 
said on January 9 in Moscow.  (Interfax - Kazakhstan, 
January 9) 
¶6.  Trade turnover between Kazakhstan and China in 2005 may 
exceed $6 billion, President Nazarbayev said at talks with 
Chinese Vice President Zeng Qinghong.  Nazarbayev believes 
that trade between the two countries will exceed the $10 
billion mark in the near future.  (ITAR-TASS World, 10 
January 2006) 
¶7.  As Irbis agency reported, the total value of year 2005 
transactions at the Kazakhstan Stock Exchange (KASE) is 
estimated at KZT 10,696.4 billion (about $80.5 billion), up 
34.5% from 2004.  In 2005 trading in non-state securities 
totaled KZT 367.8 billion (about $2.8 billion), a 1.5-fold 
increase.  Meanwhile, the total value of state securities in 
2005 stood at KZT 631.8 billion (approximately $4.8 
billion), a drop of 16.1% from 2004.  Currency transactions 
at the KASE last year totaled $12,044.1 million, a 27.5% 
increase from 2004.  (Interfax - Kazakhstan, January 9) 
 
Georgia Hopes Kazakhstan Connects to BTC Soon 
--------------------------------------------- 
 
¶8.  During her official visit to Kazakhstan on January 19- 
21, the Speaker of the Georgian Parliament Nino Burdjanadze 
expressed hope that Kazakhstan will join the Baku-Tbilisi- 
Ceyhan (BTC) oil pipeline soon.  According to the Speaker, 
Georgia hopes that Kazakhstan will become involved in gas 
transportation projects as well.  Kazakhstan confirmed its 
intention to join BTC and to sign a corresponding agreement 
soon.  An intergovernmental agreement for the transport of 
Kazakhstani oil by means of the BTC is currently being 
negotiated between Kazakhstan and Azerbaijan.  This 
agreement envisions the construction of additional 
infrastructure between Aktau and Baku in order to carry 
Kazakhstani oil to Baku and the BTC.  In the project's 
initial stage, 7.5 million tons of Kazakhstani oil will be 
transported through the BTC, with a subsequent increase to 
20 million tons.  (Interfax - Kazakhstan, January 20) 
 
KazTransGaz to Increase Central Asia-Center Capacity 
--------------------------------------------- ------- 
 
¶9.  Kazakhstan's state gas transport company KazTransGaz 
(KTG) plans to increase the capacity of the Central Asia- 
Center (CAC) pipeline to 55 billion cubic meters (bcm) per 
year in 2007, Intergas-Central Asia Director General 
Berlibayev said on January 18.  In 2006 the company plans to 
launch a number of major investment projects for that 
purpose.  According to Berlibaev, KTG plans to use 2006 
profits to fund the project.  In 2005, the CAC transported 
45 bcm of gas from Uzbekistan and Turkmenistan.  In 2006, 
KTG will transport 52 bcm of gas by CAC, in order to satisfy 
contracts with Russia's Gazprom.  (Interfax - Kazakhstan, 
January 18) 
 
KazTransGaz to Acquire Kyrgyz Gas Company 
----------------------------------------- 
 
¶10.  KazTransGaz (KTG) is engaged in talks to acquire assets 
of the Kyrgyz gas company KyrgyzGaz (KG), KG Director 
General Zhusupov announced.  According to KTG Director 
Sultangaliev, KTG would acquire KG assets as payment for the 
$18 million KG owes for Kazakhstani gas shipments.  KTG and 
KG (82% state-owned) already cooperate in a joint venture, 
KyrKazGaz.  KTG is reportedly interested in purchasing the 
Bishkek and Chu gas networks.  (Interfax - Kazakhstan, 
January 19) 
 
Oil Production in Kazakhstan in 2005 
------------------------------------ 
 
¶11.  In 2005, oil and gas condensate production in 
Kazakhstan reached 61.5 million tons, 4% higher than in 
2004, according to GOK preliminary figures.  National oil 
and gas company KazMunayGaz (KMG) produced 9.4 million tons 
of oil and condensate in 2005 (up 5.3% from 2004). 
Enterprises with KMG participation produced 15.4 million 
tons of oil in 2005 (up 0.6%).  TengizChevrOil produced the 
largest share, 13.6 million tons (down 0.7%).  Other oil 
companies produced 36.7 million tons of oil last year (up 
4.8%): Karachaganak Petroleum Operating - 10.3 million tons 
(up 21%), CNPC-Aktobemunaygaz - 5.8 million tons (up 8.6%), 
MangistauMunayGaz - 5.7 million tons (up 7.7%), 
PetroKazakhstan Kumkol Resources - 3.1 million tons (down 
30%), Turgai Petroleum - 3 million tons (down 13%), 
KazGerMunay - 1.9 million tons (down 12.8%).  (Interfax - 
Kazakhstan, January 16) 
 
Gas Production in Kazakhstan in 2005 
------------------------------------ 
 
¶12.  In 2005 according to GOK statistics, Kazakhstan 
produced 26 billion cubic meters (bcm) of gas and gas 
liquids, 27% higher than in 2004, including 14 bcm of 
natural gas.  KazMunayGaz (KMG) produced 1.5 bcm of gas last 
year, up 9.4% year-on-year.  Enterprises with KMG 
participation produced 7.7 bcm of gas last year (up 52.2%), 
including TengizChevrOil with 7.2 bcm (up 50%).  Other 
companies produced 16.7 bcm of gas (up 19%), with 
Karachaganak Petroleum Operating producing 11.5 bcm (up 
26.1%), and CNPC-Aktobemunaygaz producing 2.6 billion bcm 
(up 17.7%).  (Interfax - Kazakhstan, January 16) 
 
Oil Refining in Kazakhstan in 2005 
---------------------------------- 
 
¶13.  In 2005, 11.2 million tons of oil were refined in 
Kazakhstan, 18.7% higher than 2004, the GOK reported.  The 
Shymkent refinery produced 4.0 million tons of refined 
products (up 12%), Pavlodar refinery - 3.7 million tons (up 
24%), and the Atyrau refinery - 3.5 million tons (up 21%). 
Gasoline production was 2.4 million tons in 2005, 23% higher 
compared to 2004.  Kazakhstan also produced 3.3 million tons 
of diesel fuel (up 18%), 234,000 tons of aviation kerosene 
(down 20%), 3.6 million tons of fuel oil (up 43%) and 1.3 
million tons of liquefied gas (up 2%).  (Interfax - 
Kazakhstan, January 16) 
 
ORDWAY