VZCZCXRO5912
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #0861/01 0951042
ZNR UUUUU ZZH
R 051042Z APR 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 8996
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0114
RUEHAK/AMEMBASSY ANKARA 2035
RUEHBUL/AMEMBASSY KABUL 0310
RUEHNE/AMEMBASSY NEW DELHI 0439
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 000861 
 
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, March 18 - 31, 
2007 
 
 
ASTANA 00000861  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. 
 
-- Kazakhtelecom Sells Shares to Pension Funds 
-- GOK to Sell Share in Eurasian Natural Resources Co. 
-- Russia, Kazakhstan Sign Economic Cooperation Agreements 
-- Property Legalization Extended Again 
-- Kazakhstan's President Favors Odessa-Brody's Extension 
-- Trans-Caspian Pipeline Construction under Discussion 
-- TCO, Environmental Ministry Reach Agreement on Spending 
 
Kazakhtelecom Sells Shares to Pension Funds 
------------------------------------------- 
 
¶2.  On March 21, the "Samruk" state holding company sold a block of 
state-owned ordinary shares of JSC "Kazakhtelecom" to Kazakhstani 
saving pension funds.  A total of 98,410 shares were sold under bid, 
raising a total of KZT 4.9 billion (approx. $40 million).  The 
average sale price was KZT 50,238 ($405) per share.  As the result 
of the transactions, the State's share of "Kazakhtelecom" has been 
reduced to 51%.  (Kazakhtelecom press-release, March 26) 
 
GOK to Sell Share in Eurasian Natural Resources Co. 
--------------------------------------------- ------ 
 
¶3.  On March 31, Prime Minister Karim Masimov requested that Finance 
Minister Nataliya Korzhova oversee the sale of a .8% share of the 
Eurasian Natural Resources Corporation Plc (ENRC) to the public. 
(The total share of ENRC owned by the GOK is 24.8%.)  Masimov also 
directed the heads of the state holding companies to consider 
selling part of their stock to the public.  The final decision on 
those issues will be made on April 10.  (Interfax - Kazakhstan, 
April 2) 
 
Russia, Kazakhstan Sign Economic Cooperation Agreements 
--------------------------------------------- ---------- 
 
¶4.  On March 30, three documents on economic cooperation were signed 
in Astana during the visit of Russian Premier Mikhail Fradkov to 
Kazakhstan.  Kazakhstani Energy Minister Baktykozha Izmukhambetov 
and Russian Deputy Minister of Industry and Energy Andrey Reus 
signed a protocol of amendments to the 2002 Intergovernmental Treaty 
on Oil Transit.  Both the President of Kazakhstan's Development 
Bank, Askar Sembin, and the CEO of the Eurasian Development Bank, 
Igor Fingovenov, signed cooperation agreements with the Chairman of 
Russia's Vnesheconombank, Vladimir Dmitriyev.  (Interfax - 
Kazakhstan, March 31) 
 
Property Legalization Extended Again 
-------------------------------------------- 
 
¶5.  On March 26, President Nursultan Nazarbayev signed a law 
prolonging the deadline for property legalization until August 1, 
¶2007.  Kazakhstan started the legalization process in July 2006.  As 
of now, over 920,000 real estate entities, with a total value of 
about $1.55 billion, have been legalized.  (Kazakhstan Today, March 
26) 
 
Kazakhstan's President Favors Odessa-Brody's Extension 
--------------------------------------------- --------- 
 
¶6.  Kazakhstan would like to see the Odessa-Brody pipeline extended 
to Gdansk, Poland, and wants Russia to be involved in talks on the 
project, President Nursultan Nazarbayev said at a joint news 
conference in Astana on March 29 after discussions with Polish 
President Lech Kaczynski.  According to President Nazarbayev, "the 
projected twofold increase in oil extraction by 2012-2015 is making 
us seek new ways [of transporting it].  An Odessa-Brody-Gdansk 
project would be a good alternative for us...I would like to 
emphasize our interest in this [project] and Russian organizations 
ought to be invited to participate," he said.  "It's not a 
political, but an economic issue, because excess oil would be 
transported from Kazakhstan through Russia."  Nazarbayev added that 
 
ASTANA 00000861  002.2 OF 002 
 
 
"Kazakhstani companies would like to buy oil refineries in Poland 
and to build a pipeline jointly."  (Interfax - Kazakhstan, March 
30) 
 
Trans-Caspian Pipeline Construction under Discussion 
--------------------------------------------- ------- 
 
¶7.  A Trans-Caspian pipeline can only be constructed after the three 
primary issues are resolved, Kazakhstan's Foreign Minister Marat 
Tazhin said at a press conference in Astana on March 28.  Firstly, 
Tazhin said, the Caspian countries should decide on the legal status 
of the Caspian Sea.  Second, there are technical issues: "We cannot 
say now that we have documentation or some ready-to-go design in 
place," he continued.  Third, "the project needs an economic 
assessment.  Without a reliable sense of supplies, it is hard to say 
(about project expediency)," Tazhin emphasized.  (Interfax - 
Kazakhstan, March 28) 
 
TCO, Environmental Ministry Reach Agreement on Spending 
--------------------------------------------- ---------- 
 
¶8.  Environmental Minister Nurlan Iskakov announced that his 
Ministry had reached agreement with TengizChevrOil (TCO) on a 
three-year plan for TCO environmental activities.  The plan entails 
TCO spending  about KZT 40 billion ($323 million) per year.  The 
money will be allocated for resolving issues with sulfur, gas 
flaring, wastes recycling and technological process improvement. 
(Express-K newspaper, March 29) 
 
ORDWAY