VZCZCXRO8555
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0691/01 0780132
ZNR UUUUU ZZH
R 190132Z MAR 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8812
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0100
RUEHAK/AMEMBASSY ANKARA 2033
RUEHBUL/AMEMBASSY KABUL 0306
RUEHNE/AMEMBASSY NEW DELHI 0435
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 000691 
 
SIPDIS 
 
DEPT FOR SCA/CEN (O'MARA) 
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 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, February 25 - March 
10, 2007 
 
 
ASTANA 00000691  001.2 OF 002 
 
 
¶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. 
 
-- Kazakhstani-Israeli WTO Protocol Signed 
-- New Deputy CEO in Nurbank 
-- New Independent Director of Kazpost JSC 
-- Agricultural Statistics 
-- KTG Invests in Georgia; Eyes European Market 
-- Kazakhstan to Build Refinery in Georgia 
-- KMG Sells KazGerMunay's 50% Share to Its Subsidiary 
-- Oil, Gas, Coal Production in Jan-Feb 2007 
Kazakhstani-Israeli WTO Protocol Signed 
--------------------------------------------- -- 
 
¶2.  According to the Government's press service, a bilateral 
protocol on accession of Kazakhstan to the WTO was signed on 
February 27 by Israel's Deputy Prime Minister - Minister of 
Industry, Trade, and Labor Eliyahu Yishai and Kazakhstan's Vice 
Minister of Industry and Trade Zhanar Aitzhanova.  Prior to signing, 
the two sides discussed access to the Kazakhstani market for Israeli 
producers of high-tech equipment, chemicals, and processed foods as 
well as investment policy toward computer service providers.  (Press 
Service of the Government of Kazakhstan, February 28) 
 
New Deputy CEO in Nurbank 
------------------------- 
 
¶3.  Nurali Aliyev was appointed the First Deputy Chief Executive 
Officer of Kazakhstan-based commercial Nurbank JSC, the bank's press 
service reported on February 27.  An early January shareholder 
meeting had elected Aliyev to the Board of Directors.  The 
22-year-old Nurali is a son of Presidential daughter and Mazhilis 
deputy Dariga Nazarbayeva and Kazakhstani Ambassador to Austria and 
former Deputy Minister of Foreign Affairs Rakhat Aliyev.  According 
to the Interfax-1000 Ranking of CIS Banks, Nurbank was as of June 
2006 the 60th largest bank in the CIS and the 8th largest in 
Kazakhstan by assets.  (Interfax - Kazakhstan, February 28) 
 
New Independent Director of Kazpost JSC 
--------------------------------------- 
 
¶4.  Kalle Tarien, Director for development of postal communication 
of Finland PostGroup, was appointed an independent director of 
Kazpost JSC.  Kazpost is a state-owned company, which became part of 
the Samruk State Holding in early 2006.  According to Samruk's 
Deputy Executive Director Ulf Wakurka, "the work of Kalle Tarien 
will raise corporate management of the Kazakhstani postal service to 
the world standards."  (Interfax - Kazakhstan, March 5) 
 
Agricultural Statistics 
----------------------- 
 
¶5.  Kazakhstan completed the first nationwide farm census, reports 
the National Statistics Agency.  The agricultural census covered 
2,500 districts, 7,500 villages and towns; more than 9,500 
agricultural enterprises; about 194,000 farm units; and over 535,700 
dachas on a total area of 81.1 million hectares.  The following 
results were reported: more than 5.7 million heads of cattle, 12.9 
million heads of sheep, 1.3 million heads of swine, 1.2 million 
heads of horse, 140,000 heads of camel, and 28.3 million heads of 
poultry.  (Interfax - Kazakhstan, March 5) 
 
¶6.  Kazakhstani farm exports for the first time reached $1.3 billion 
in 2006.  According to Minister of Agriculture Akhmetzhan Yesimov, 
"grain and flour constitute the largest portion of Kazakhstan's 
agricultural exports."  Kazakhstan is now the world's 7th largest 
exporter of grain and 3rd largest exporter of flour.  In 2006, the 
country's gross agricultural output amounted to KZT 838 billion 
(approx. $6.7 billion), a 7% increase from 2005.  (Interfax - 
Kazakhstan, March 5) 
 
KTG in Georgia; Eyes European Market 
------------------------------------ 
 
ASTANA 00000691  002.2 OF 002 
 
 
 
¶7.  KazTransGas (KTG), a subsidiary of national oil and gas company 
KazMunayGas (KMG), has invested $50 million in the Tblisi 
gas-distribution system, according to KTG Director General Serik 
Sultangaliyev.  (KTG bought the Georgian company "Tbilgas" in 2006.) 
 In total, KTG plans to invest over $80 million in Tbilisi over the 
next four years.  The company also plans to enter the European UCTE 
energy market (Union of the Coordination of Transmission of 
Electricity) through joint energy projects with Bosnia and 
Herzegovina.  According to Sultangaliyev, Kazakhstan is planning to 
begin selling its natural gas to European countries and Georgia in 
the near future.  "Kazakhstan is currently carrying out work to 
develop the appropriate infrastructure -- the construction of gas 
refining enterprises without which it would be impossible to carry 
out this task," he said.  (Interfax - Kazakhstan, March 5) 
 
Kazakhstan to Build Refinery in Georgia 
--------------------------------------- 
 
¶8.  Kazakhstan is considering building an oil refinery in Georgia's 
Black Sea port of Batumi, President Nazarbayev announced after a 
meeting with Georgian President Saakashvili in Astana on March 5. 
"The Caucasian corridor that provides an outlet to Europe (and) the 
Mediterranean Sea is becoming important for us," Nazarbayev said. 
"Georgia is our active partner in that area."  KazMunayGas is in a 
process of buying a controlling stake in the Batumi port, the 
President added.  According to President Saakashvili, the 
construction of an oil refinery in Batumi, a "huge project worth 
about $1 billion" is very important,   "not only for Georgia's 
economy, but for the entire (Caspian) region."  (Kazakhstan 
Newsline, March 11) 
 
KMG Sells KazGerMunay's 50% Share to Its Subsidiary 
--------------------------------------------- ------ 
 
¶9.  On March 5, KazMunayGas subsidiary "KMG Exploration and 
Production" (KMG E&P), announced an agreement to purchase 50% of 
KazGerMunay from its parent company for KZT 133.3 billion (approx. 
$1.1 billion).  The deal is KMG E&P's first significant step in 
implementing the growth strategy which was announced during the 
company's IPO in 2006.  The transaction will make KMG E&P the second 
largest oil producer in Kazakhstan.  The deal, which will be 
financed from the company's own sources, will be voted upon at an 
April 12 shareholder meeting.  KazGerMunay is a joint venture 
between KMG and PetroKazakhstan.  (KMG press-center, Kazakhstan, 
March 5) 
 
Oil, Gas, Coal Production in Jan-Feb 2007 
----------------------------------------- 
 
¶10.  In January-February 2007, oil and gas condensate production in 
Kazakhstan reached 10.8 million tons, 12.4% higher than during the 
same period in 2006. 
 
¶11.  In January-February 2007, gas production in Kazakhstan totaled 
4.56 billion cubic meters, 15.7% higher compared to the same period 
in 2006, including 2.68 billion cubic meters of natural gas, up 
25.7% year-on-year. 
 
¶12.  In January-February 2007, Kazakhstan produced 15.8 million tons 
of coal, 4.8% less compared to the same period the previous year. 
(Interfax - Kazakhstan, March 6) 
 
ORDWAY