VZCZCXRO6407
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHTA #1851/01 1900710
ZNR UUUUU ZZH
R 090710Z JUL 07
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 0012
INFO RUCPCIM/CIMS NTDB WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCNCIS/CIS COLLECTIVE 0222
RUEHAK/AMEMBASSY ANKARA 2070
RUEHBUL/AMEMBASSY KABUL 0338
RUEHNE/AMEMBASSY NEW DELHI 0466
RUEHAST/USOFFICE ALMATY

UNCLAS SECTION 01 OF 02 ASTANA 001851 
 
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, JUNE 10 - 23, 2007 
 
ASTANA 00001851  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. 
 
-- Samgau's Board of Directors is Formed 
-- Kazakhstani Banking Sector Attracts Foreign Capital 
-- New First Vice President of KazMunayGas Appointed 
-- AES Fined For Antimonopoly Law Violation 
-- Chevron Interested in Burgas-Alexandroupolis Project 
-- Eurasian Bank to Finance Nuclear Plant Construction 
-- Oil & Gas Statistics for January-May 2007 
 
Samgau's Board of Directors is Formed 
------------------------------------- 
 
¶2.  Serik Burkitbaev, assistant to President Nazarbayev, was elected 
chairman of the board of the Samgau holding.  The National Holding 
"Samgau," a joint stock company, was created in April with the 
stated goal of fostering a favorable environment for achieving 
scientific and technological progress in Kazakhstan.  Vice Minister 
of Culture and Information Erzhan Babakumarov, Vice Minister of 
Economy and Budget Planning Viktor Suprun, Vice Minister of Finance 
Bakhyt Sultanov, and Vice Minister of Education and Science Farkhat 
Kuanganov were named members of the board.  Azamat Abdymomunov, 
former Vice Minister of Education, was earlier appointed chairman of 
Samgau's managing board.  (Press Service of the Government of the 
Republic of Kazakhstan, June 17) 
 
Kazakhstani Banking Sector Attracts Foreign Capital 
--------------------------------------------- ------ 
 
¶3.  Alliance Bank, Kazakhstan's leader in retail lending, has 
announced its plans to hold a global offering of its common shares 
in the form of Global Depository Receipts (GDRs).  The bank's press 
release states, "this offer is a secondary placement of existing 
common shares and represents about 20% of the bank's capital. 
Seimar Alliance Financial Corporation (SAFC) is the holder of these 
shares."  Alliance Bank's GDRs are expected to start trading on the 
London Stock Exchange in July.  (Interfax-Kazakhstan, June 21) 
 
¶4.  The European Bank for Reconstruction and Development (EBRD) 
purchased 25% of shares of KazInvestBank for 2.5 billion tenge 
($20.5 million).  Citigroup-affiliated CITI Venture Capital 
International (CVCI), a leading private equity investor in growth 
markets, also acquired a stake in the amount of $20 million. 
According to Nurlan Kapparov, Chairman of the Board of 
KazInvestBank, this deal will lead to the highest level of foreign 
participation in a Kazakhstani bank.  (Press Service of 
KazInvestBank, June 16) 
 
¶5.  Bank Austria Creditanstalt, part of the European banking group 
UniCredit, signed an agreement to purchase a controlling stake in 
Kazakhstan's Almaty Merchant Financial Bank (ATF Bank).  (Note: Head 
of the General Services Department of the Presidential 
Administration Bulat Utemuratov and his sons were known to be major 
shareholders of the ATF Bank, collectively owning about 33% of the 
common stock.  End note.)  According to ATF Bank's top managers, 
UniCredit paid $2.3 billion in this deal.  A UniCredit statement 
said that, following the transaction, Bank Austria Creditanstalt 
expects its stake in the registered capital of the ATF Bank to total 
at least 85%.  The UniCredit group will use its own internal 
resources to finance the purchase, which will be completed in the 
second half of 2007.  (Vienna, Interfax, June 22, Television Channel 
31, June 25) 
 
New First Vice President of KazMunayGas Appointed 
--------------------------------------------- ---- 
 
¶6.  Maksat Idenov, 39, has been appointed First Vice President of 
the national oil and gas company KazMunayGas (KMG).  Prior to this 
appointment, Mr. Idenov served as Shell Vice-President for Strategic 
and Commercial Development, Middle East, South Asia and Caspian. 
Previously, Mr. Idenov worked as Assistant to Kazakhstan's Minister 
of Oil and Gas Industry; Deputy Head of the World Bank's Energy 
Department, Europe and Central Asia Region; and Presidential Advisor 
 
ASTANA 00001851  002.2 OF 002 
 
 
on Caspian energy and oil and gas export pipelines.  Idenov replaced 
Zhaksybek Kulekeyev, who was appointed the Chief Executive Officer 
of the state-owned railroad company Kazakhstan Temir Zholy. 
(Interfax - Kazakhstan, June 18) 
 
AES Fined For Antimonopoly Law Violation 
---------------------------------------- 
 
¶7.  On June 15, East Kazakhstan court fined AES, a U.S.-based power 
generating company, for violations of the antimonopoly law.  AES's 
Shulbinskaya and Ust-Kamenogorskaya hydroelectric power stations 
have been ordered to pay KZT 2.7 billion (approx. $22 million) to 
the Kazakhstani budget.  According to Industry and Trade Minister 
Orazbakov, an Antimonopoly Committee investigation revealed that AES 
had exploited its vertical monopoly in East Kazakhstan, selling 
electricity through an affiliated company, to derive monopoly 
profits.  (Interfax - Kazakhstan, June 18) 
 
Chevron Interested in Burgas-Alexandroupolis Project 
--------------------------------------------- ---------- 
 
¶8.  Chevron is interested in participating in the 
Burgas-Alexandroupolis project, together with KazMunayGas (KMG), 
Chevron's Executive Vice President George Kirkland said at the 17th 
session of the Foreign Investors' Council in Ust-Kamenogorsk on June 
¶15.  According to Mr. Kirkland, "We [Chevron] welcome the progress 
of Burgas-Alexandroupolis project, which will help ease congestion 
through the Bosporus Strait.  In step with CPC expansion, Chevron is 
interested in participating in this project together with KMG." 
(Interfax - Kazakhstan, June 18) 
 
Eurasian Bank to Finance Nuclear Plant Construction 
--------------------------------------------- ------ 
 
¶9.  The Eurasian Bank of Development [jointly established by 
Kazakhstan and Russia in 2006] is ready to participate in nuclear 
power plant construction in Kazakhstan, the Bank's President 
Finogenov said.  According to Finogenov, the Bank has signed a 
corresponding memorandum with national atomic company KazAtomProm 
and Russian "Techsnabexport".  (Interfax - Kazakhstan, June 19) 
 
Oil & Gas Statistics for January-May 2007 
----------------------------------------- 
 
¶10.  According to the National Statistics Agency, in January-May 
Kazakhstan produced 22.9 million tons of crude oil, and 12.4 billion 
cubic meters of natural gas, up 5.4% and 19.6%, respectively, from 
the same period in 2006.  (Interfax - Kazakhstan June 12) 
 
¶11.  In January-April Kazakhstan exported 19.9 million tons of oil 
and gas condensate (valued at $7.7 billion), up 15.6% versus 2006. 
During the same period the republic exported 1.2 million tons of oil 
products (79% higher compared to the same period last year).  Oil 
products imports came to 0.7 million (up 20.3%).  Imports of natural 
gas reached 2.6 billion cubic meters (up 68.8%).  Kazakhstan 
exported 4.4 billion cubic meters of natural gas in the reporting 
period (up 90.1%).  (Interfax - Kazakhstan, June 12) 
 
MILAS