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E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, APRIL 15 - 28, 
2007 
 
 
ASTANA 00001234  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. 
 
-- WTO Accession Process Underway 
-- Pakistan Extends Cooperation with Kazakhstan 
-- Former Head of Valut Transit Bank in Detention 
-- Economic Statistics: Output and Inflation 
-- PM Addresses GOK's Right to Revise Oil Contracts 
-- GOK to React to Kashagan Delay when Officially Notified 
-- PM Says There is No Politics in Trans-Caspian Pipeline 
-- TCO to Supply Gas to Petrochemical Plant 
-- KMG Onshore Subsidiary Sells Non-core Assets 
 
WTO Accession Process Underway 
------------------------------ 
 
¶2.  The GOK press service reported that bilateral talks on the WTO 
accession were held in Washington on April 18-20.  The state's role 
in the economy, observance of trade rights, intellectual property 
rights protection, as well as regulations on the import of dairy 
products to Kazakhstan were discussed.  In addition, the USTR 
conducted a seminar on international veterinary and phytosanitary 
control regulations.  The U.S. side, the press release states, 
intends to complete the negotiation process by the end of the year. 
(GOK's Press-Service, April 25) 
 
¶3.  A bilateral protocol on market access for goods and services was 
signed with Brazil on April 25.  Import duties for meat, dairy, 
sugar, coffee and tobacco products, as well as issues of contracting 
of foreign specialists and managers were discussed during the 
preceding negotiations.  According to an official statement released 
by the GOK, "the terms of the Protocol meet the long-term priorities 
of the development of Kazakhstani agriculture."  In 2006, trade 
turnover with Brazil was $196.9 million.  (Interfax - Kazakhstan, 
April 26) 
 
Pakistan Extends Cooperation with Kazakhstan 
-------------------------------------------- 
 
¶4.  The 6th Session of the Pakistan-Kazakhstan Joint Ministerial 
Commission (JMC) was held in Astana.  The two governments' 
representatives signed a protocol calling for enhanced cooperation 
between the two countries in the areas of trade, economy, science 
and technology, education, communications, environment, tourism, and 
water and power sectors.  The two sides also agreed to hold an 
exhibition of Pakistani products in Almaty in September and a 
Kazakhstani products exhibition in Pakistan in October. 
(Organization of Asia-Pacific News Agencies, 23 April) 
 
Former Head of Valut Transit Bank in Detention 
--------------------------------------------- - 
 
¶5.  The Karaganda Oblast Prosecutor's Office has moved Ex-President 
of Valut Transit Bank Andrey Beliayev from home arrest to detention 
at a pre-trial center.  Beliayev is accused of fraud, abuse of 
power, embezzlement, and production and sale of falsified documents. 
 The Valut Transit Bank has been undergoing forced liquidation since 
March 1 of this year.  (Interfax - Kazakhstan, April 13) 
 
Economic Statistics: Output and Inflation 
----------------------------------------- 
 
¶6.  In the words of Prime Minister Masimov, "social and economic 
development indices demonstrate a positive trend in all sectors of 
the national economy."  Masimov cited the first quarter GDP growth 
rate of 10.3% (annualized) as well as year-on-year increases of 9.6% 
in industrial output and 3.7% in farming production. 
(Interfax-Kazakhstan, April 24) 
 
¶7.  According to the Statistics Agency, inflation in Kazakhstan in 
the first quarter of 2007 was 2.6% (vs. 3.2% in January-March 2006), 
or 8.1% annualized.  Chairman of the National Bank of Kazakhstan 
(NBK) Anvar Saidenov has attributed current inflationary pressures 
 
ASTANA 00001234  002.2 OF 002 
 
 
to rising prices charged by natural monopolies and increasing budget 
spending.  According to Saidenov, "in the first quarter, government 
spending rose 30%, a substantial contribution to the aggregate 
demand."  The GOK's official inflation forecast for 2007 is the 
range of 5%-7%.  (Interfax - Kazakhstan, April 23) 
 
PM Addresses GOK's Right to Revise Oil Contracts 
--------------------------------------------- --- 
 
¶8.  The GOK has the right to revise the contracts of those subsoil 
users who fail to comply with them, Prime Minister Masimov said 
during his press-briefing on April 24.  "The president has always 
clearly stated that contracts are stable.  Should a contract be 
signed and should both parties, including the state and subsoil 
users, be clearly fulfilling it, the contract will not be revised," 
Masimov stated.  At present, Kazakhstan's Energy Ministry is 
monitoring how subsoil users fulfill their contractual terms, and 
the audit results will be published in the media.  (Interfax - 
Kazakhstan, April 24) 
 
GOK to React to Kashagan Delay when Officially Notified 
--------------------------------------------- ---------- 
 
¶9.  The GOK will react to Kashagan production delays only after 
receiving official notification of the delay from Agip KCO, Prime 
Minister Masimov announced on April 24, adding that any GOK actions 
would be in conformity with the Kashagan Production Sharing 
Agreement.  According to Energy Minister Izmukhambetov, Agip KCO is 
to announce the delay in late June or early July 2007.  (Interfax - 
Kazakhstan, April 24) 
 
PM Says There is No Politics in Trans-Caspian Pipeline 
--------------------------------------------- --------- 
 
¶10.  Kazakhstan's approach to potential Trans-Caspian oil and gas 
pipelines is governed entirely by calculations of economic benefit, 
and has nothing to do with politics, Prime Minister Masimov reported 
on April 24.  "The position of the previous and current governments 
on the Trans-Caspian pipeline is as follows: any transportation of 
energy must benefit the nation.  The GOK will move in the direction 
that will benefit the country and where it is reasonable to export 
hydrocarbons," the Prime Minister said.  (Interfax - Kazakhstan, 
April 24) 
 
TCO to Supply Gas to Petrochemical Plant 
---------------------------------------- 
 
¶11.  Kazakhstan's Energy Ministry and TengizChevrOil (TCO) have 
reached agreement on the supply of associated gas to Kazakhstan's 
first petrochemical plant, Minister Izmukhambetov announced on April 
¶17.  According to KazMunayGas President Karabalin, TCO will provide 
6 billion cubic meters of gas per year; by 2017 the quantity could 
increase to 7.6 billion cubic meters.  Kazakhstan Petrochemical 
Industries has announced its plans to construct a petrochemical 
plant in Atyrau region.  The plant's construction is to start in the 
3rd quarter of 2007.  (Interfax - Kazakhstan, April 23) 
 
KMG Onshore Subsidiary Sells Non-core Assets 
-------------------------------------------- 
 
¶12.  KazMunayGas Exploration & Production (KMG E&P, a subsidiary of 
Kazakhstan's national oil and gas company KazMunayGas) announced the 
sale of its wholly-owned "Burgulau" subsidiary, which provides 
exploration and drilling services (Western Kazakhstan).  A bidding 
process will take place in Astana on May 10.  The guarantee fee to 
be paid by the bidders is KZT 1.25 billion (about $10.25 million). 
(Interfax - Kazakhstan, April 23) 
 
¶13.  KMG E&P will also sell its wholly-owned "TsBKO" subsidiary (a 
machine-assembly yard) located in Atyrau.  (Interfax - Kazakhstan, 
April 26) 
 
MILAS