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R 221329Z FEB 08
FM AMEMBASSY ASTANA
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UNCLAS SECTION 01 OF 03 ASTANA 000367 
 
SIPDIS 
 
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E.O. 12958: N/A 
TAGS: ECON EIND ENRG EPET EFIN KTDB KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JANUARY 19 - 
FEBRUARY 1, 2008 
 
 
ASTANA 00000367  001.2 OF 003 
 
 
¶1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press, and has not been verified for accuracy. 
 
-- WTO accession: updates and comments 
-- Socially Responsible Business in Kazakhstan 
-- New Special Economic Zone 
-- Inflation in January 
-- Energy Minister Proposes Oil Export Duty 
-- Prime Minister Urges Construction of Aluminum Plant 
-- National Operator To Develop Kazakhstan's Rare Metals Industry 
-- First Petrochemical Plant to Be Built in Atyrau Province 
-- KazTransOil Transits Russian Crude to China 
-- Tax Claims Against Oil Companies 
-- TengizChevrOil Increases Crude Output 
 
WTO Accession: Updates and Comments 
--------------------------- 
 
¶2.  "In 2008 we shall conclude all bilateral talks on Kazakhstan's 
accession to the WTO, and after one or two rounds of multilateral 
talks we shall be on the way to the completion of this process," 
said Kazakh Minister of Industry and Trade Galym Orazbakov on 
January 22nd in Astana. (Note. Galym Orazbekov has since been 
replaced by Vladimir Shkolnik. End note.)  The tenth session of the 
WTO Working Party will be held in April.  In 2008, Kazakhstani 
officials also intend to achieve the ranking of "market economy" as 
determined by the European Union. In 2007, Kazakhstan signed 
protocols to join the WTO with Israel, Brazil and Malaysia. 
Bilateral talks with the U.S., the EU and Australia are ongoing. 
(Central Asia General Newswire, January 23) 
 
¶3.  Belarusian Deputy Prime Minister Kobyakov said that Belarus, 
Russia and Kazakhstan should synchronize their accession into the 
WTO.  "In our view, this is possible, but our partners want to join 
it earlier," he said.  According to Kobyakov, multiple accession 
dates into the WTO will not impact the longer-term goal of creating 
a customs union.  (Interfax, January 29) 
 
Socially Responsible Business in Kazakhstan 
---------------------------- 
 
¶4.  The National Forum on Social Responsibility of Businesses was 
held in Zhezkazgan (Karaganda region) at the end of January during 
which representatives from the forum, the Ministry of Labor and 
Social Protection, and large corporations signed an agreement to 
promote the principles of the United Nations Treaty on Social and 
Labor Relations.  Signatory businesses include Kazakhmys (copper), 
the Eurasian Natural Resource Corporation (metallurgy), 
Tengizchevroil, KazZinc, and KazAtomProm (uranium). 
(Interfax-Kazakhstan, January 25) 
 
New Special Economic Zone 
------------------------- 
 
¶5.  A new 370-hectare special economic zone (SEZ) has been 
established in Burabai, Kazakhstan.  According to the GOK, the 
creation of an efficient and competitive resort infrastructure in 
the Shchuchinsk-Borovoe area (Akmola region) would attract 
significant numbers of Kazakhstani and foreign tourists. 
(Interfax-Kazakhstan, January 25) 
 
 
Inflation in January 
-------------------- 
 
¶6.  According to the Statistic Agency, inflation in January 2008 was 
1.1%.  Prices for food grew by 1.6%, non-food goods increased by 
0.8% and service by 0.6%.  January-on-January inflation totaled 
18.7%.  the average annual inflation rate in 2007 stands at 10.8%. 
The National Bank forecasts year-on-year inflation in the range of 
7.9%-9.9% in 2008, 7.5%-9.5% in 2009; and an average annual 
inflation rate of 16%-18% and 8.5%-10.5% respectively. 
(Interfax-Kazakhstan, February 1) 
 
Energy Minister Proposes Oil Export Duty 
 
ASTANA 00000367  002.2 OF 003 
 
 
-------------------------------- 
 
¶7.  On 29 January 2008, at a government meeting Minister of Energy 
and Mineral Resources Sauat Mynbayev proposed to introduce customs 
duty on the export of crude and oil products effective January 1, 
¶2009.  (Interfax - Kazakhstan, January 30) 
 
Prime Minister Urges Construction of Aluminum Plant 
------------------------------------ 
 
¶8.  Kazakhstan's Prime Minister Karim Masimov urged the Ministry of 
Industry and Trade to transfer the bauxite fields in Kostanay 
province (North Kazakhstan) to the social entrepreneurial 
corporation Tobol for the construction of a new aluminum smelter. 
(Kazakhstan today, January 23) 
National Operator To Develop Kazakhstan's Rare Metals Industry 
---------------------------------------- 
 
¶9.  Kazakhstan's Ministry of Industry and Trade proposed to create a 
national operator for developing the country's rare metals industry. 
 Kazakhstan has unique reserves of rhenium, niobium and other rare 
metals that can be used in petrochemical, aviation, and space 
industries.  (Kazakhstan Today, January 23) 
 
First Petrochemical Plant to Be Built in Atyrau Province 
--------------------------------------------- - 
 
¶10.  The first integrated petrochemical plant in Kazakhstan, with a 
designed capacity of 1.2 million tons of polyethylene and 
polypropylene per year, will be built in Karabatan (West Kazakhstan) 
near the gas refinery of Agip KCO, which will receive Kashagan oil. 
The project must be implemented and 50% owned by JSC Kazakhstan 
Petrochemical Industries (owned by JSC SAT & Company and a 
subsidiary of the national oil and gas company KazMunayGas (KMG), 
JSC Exploration & Production KazMunayGas).  (Kazinform, January 22) 
 
¶11.  KMG and the International Petroleum Investment Company (IPIC) 
of UAE signed a memorandum of understanding to cooperate in building 
the Karabatan petrochemical plant.  (Panorama newspaper, January 25) 
 
 
¶12.  LyondellBasell Industries, the world's third-largest 
independent chemical company, announced its intention to acquire a 
25% stake in the Karabatan petrochemical plant.  (Interfax - 
Kazakhstan, January 25). 
 
KazTransOil Transits Russian Crude to China 
--------------------------------------- 
 
¶13.  KMG subsidiary, KazTransOil, started transiting Russian crude 
to China via the Omsk-Pavlodar-Atasu-Alashankou pipeline.  The 
estimated transit volume in January consists of 51.1 thousand tons 
from the Russian oil company TNK-BP Ltd, and 50 thousand tons from 
the Russian oil and gas company JSC Gazprom Neft.  KazTransOil is 
scheduled to transit 300 thousand tons of Russian crude in the first 
quarter of 2008.  (Interfax - Kazakhstan, January 22) 
 
Tax Claims Against Oil Companies 
-------------------------------- 
 
¶14.  In 2007, the State Agency for Fighting Economic Crimes and 
Corruption (Financial Police) initiated 23 criminal charges against 
subsoil users in Mangistau, Atyrau, and Zhambyl provinces for 14.3 
billion-tenge ($119.1 million) of contract violations.  It also 
accuses the shareholders of JSC KarazhanbasMunay of failure to pay 
41 billion-tenge of taxes on the increased share value that resulted 
from the purchase of a 50% stake by KMG subsidiary, Exploration & 
Production KMG (EP KMG), from CITIC Canada Group (the owner of JSC 
KarazhanbasMunay).  (Kazakhstan today, January 25) 
 
¶15.  The Financial Police accused of fraud two KMG subsidiaries - 
KazTransGas for 533 million tenge when building 17 gas wells in 
Amangeldy field (Zhambyl province), and EP KMG in the amount of 366 
million tenge when estimating the cost of seismic and geodynamic 
assessment of the oil reserves in Uzen field (Mangistau province). 
 
ASTANA 00000367  003.2 OF 003 
 
 
(Interfax - Kazakhstan, January 25) 
 
TengizChevrOil Increases Crude Output 
------------------------------------- 
 
¶16.  TengizChevrOil (TCO) raised its daily crude output by 11,000 
tons to 40,000 tons by putting into operation the Sour Gas Injection 
and the Second-Generation Plant projects.  The Sour Gas Injection 
project allows TCO to increase the productivity of its oil 
reservoirs, reduce sulphur volumes, and minimize gas flaring 
amounts.  At its full capacity, the Second-Generation Plant will 
process sour gas. It is currently using 1/3 of its designed 
capacity.  The projects are expected to run at their full capacity 
by raising the daily crude output to 70,000 tons in the second half 
of 2008.  (Kazinform, January 30)