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

UNCLAS  ALMATY 000004 
 
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 
December 11 - December 24, 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. 
 
--   Parliament Approves Amendments to Comply with WTO Rules 
--   Foreign Banks Welcome in Kazakhstan after WTO Accession 
--   Almaty Hotel Sold by KazTransGaz 
--   Kazakhstan to Produce 63 Million Tons of Oil in 2006 
--   Kazakhstan Commissions Atasu-Alashankou Pipeline 
--   KMG, Shell & Oman Pearls Sign PSA 
--   Ex Vice-President of KMG to Head KazEnergy Association 
--   PetroKazakhstan Wins One Case; Another Advances 
 
Parliament Approves Amendments to Comply with WTO Rules 
--------------------------------------------- ---------- 
 
¶2.  Parliament passed a series of amendments to legislation 
on subsidies, compensation, and anti-dumping measures.  The 
amendments are intended to bring the law on subsidies and 
compensatory measures into compliance with the World Trade 
Organization (WTO) agreement on subsidies and compensatory 
measures, and to match the law on anti-dumping measures with 
the WTO Agreement on Implementation of Article 6 of the 
General Agreement on Tariffs and Trade 1994.  The bill will 
now be forwarded to the President for endorsement. 
(Interfax - Kazakhstan, December 21) 
 
Foreign Banks Welcome in Kazakhstan after WTO Accession 
--------------------------------------------- ---------- 
 
¶3.  After Kazakhstan joins the WTO, the Financial 
Supervision Agency (FSA) will not object to granting foreign 
banks the right to open branches in Kazakhstan.  However, 
according to FSA Chair Zhamishev, the FSA plans to establish 
asset limitations in order to ensure equal competition in 
the banking market.  The FSA will also require branches of 
foreign banks to maintain reserve deposits with the National 
Bank of Kazakhstan in proportion to their assets.  (Interfax 
- Kazakhstan, December 21) 
 
Almaty Hotel Sold by KazTransGaz 
-------------------------------- 
 
¶4.  On December 22 Kazakhstani company BNA Development won 
the auction held by KazTransGaz (KTG), KazMunayGaz's 
subsidiary, to acquire the "Almaty" hotel and property for 
$17.2 million.  The auction for the "Kazakhstan" hotel 
failed.  The two hotels were transferred to KTG for public 
sale as part of KTG's Summer 2005 acquisition, at the 
government's initiative, of the Almaty Power Consolidated 
(APC) company.  (Interfax - Kazakhstan, December 22) 
 
Kazakhstan to Produce 63 Million Tons of Oil in 2006 
--------------------------------------------- ------- 
 
¶5.  Kazakhstan plans to produce 63 million tons of oil in 
2006, Energy Minister Shkolnik reported.  According to the 
National Statistics Agency, Kazakhstan produced 50.6 million 
tons of oil in 2004.  (Interfax - Kazakhstan, December 19) 
 
Kazakhstan Commissions Atasu-Alashankou Pipeline 
--------------------------------------------- --- 
¶6.  On December 15 President Nazarbayev formally opened a 
900-kilometer oil pipeline linking Atasu in central 
Kazakhstan with Alashankou in the north-western Chinese 
province of Xinjiang.  Its initial capacity is around 
210,000 bpd.  The $800-million line was paid for by 
KazMunayGaz, Kazakhstan's state oil company, and the 
Chinese National Petroleum Corporation.  The pipeline will 
initially be filled by crude delivered by rail from Aktobe 
and western Siberia.  Within the next few years, a pipeline 
that links Atasu with the Kumkol field will be reversed to 
allow Kumkol's oil to be delivered to China.  After 2010, a 
pipeline will be built between Kumkol and Kenkiyak to link 
 
China to other Kazakhstani oil fields.  At that time, the 
capacity of the line is to be doubled.  The Kenkiyak-Atyrau 
pipeline was commissioned in 2003.  (The Economist 
Intelligence Unit, December 19) 
KMG, Shell & Oman Pearls Sign PSA 
--------------------------------- 
¶7.  On December 14 KazMunayGaz (KMG), Shell, and Oman Pearls 
Company signed a Production Sharing Agreement (PSA) to 
develop the Zhemchuzhina field in the Kazakhstani sector of 
the Caspian Sea.  The participants (KMG - 25%, Shell - 55%, 
Oman Pearls Company - 20%) intend to begin exploration in 
¶2006.  The project's recoverable hydrocarbon reserves are 
estimated at 750 million barrels.  According to the PSA 
terms, the contractors pledge to carry out a $30-million 
exploration program and employ Kazakhstani "local content". 
(Interfax - Kazakhstan, December 19) 
Ex Vice-President of KMG Heads KazEnergy Association 
--------------------------------------------- ------- 
 
¶8.  The former first vice-president of KazMunayGaz (KMG), 
Timur Kulibaev, has been appointed CEO of "KazEnergy 
Association."  According to the press source, the new 
association, recently established by KMG and its 
subsidiaries, was created to facilitate dialogue between 
energy companies and the authorities, and to participate in 
the drafting of laws related to the energy industry. 
(Interfax - Kazakhstan, December 19) 
 
PetroKazakhstan Wins One Case; Another Advances 
--------------------------------------------- -- 
 
¶9.  PetroKazakhstan, recently acquired by CNPC, won its 
appeal of a court decision that obliged the company to pay 
$720 million for anti-monopoly violations associated with 
the Shymkent refinery. 
 
¶10.  The criminal investigation into activities of former 
PetroKazakhstan executives has been completed and the case 
submitted to the Procurator General's Office, the Deputy 
Chair of Kazakhstan's Financial Police Kenenbaev announced 
on December 23.  As reported earlier, the Financial Police 
brought charges against three foreign citizens accused of 
antimonopoly law violation.  (Interfax - Kazakhstan, 
December 23) 
 
ORDWAY 
 
 
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