VZCZCXYZ0012
RR RUEHWEB

DE RUEHTA #2350/01 3301513
ZNR UUUUU ZZH
R 251513Z NOV 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC 3959
INFO RUCNCIS/CIS COLLECTIVE 0858
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0257
RUEHKO/AMEMBASSY TOKYO 0967
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEKJCS/JOINT STAFF WASHDC
RUEKJCS/SECDEF WASHDC 0340
RHEHNSC/NSC WASHDC 0425
RHEFAAA/DIA WASHDC
RUEAIIA/CIA WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS ASTANA 002350 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, SCA/PPD, EEB, DRL 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL ECON EINV EPET KPAO KDEM AE
AJ, IR, RS, TX, UZ, KZ 
SUBJECT: KAZAKHSTAN:  OPPORTUNITY IN MANGYSTAU OBLAST 
 
REF: A. ASTANA 02298 
     ¶B. ASTANA 02317 
     ¶C. ASTANA 02321 
     ¶D. ASTANA 02345 
     ¶E. ASTANA 02349 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  Deputy Chief of Mission and poloff 
visited the port-city of Aktau, the capital of Mangystau 
oblast, during November 5-6.  In addition to attending the 
construction completion ceremony of the U.S.-funded Sodium 
Processing Facility on the territory of the BN-350 fast 
breeder reactor (reftel A), DCM and poloff also attended the 
Mangystau Oil and Gas Exhibition and conducted a series of 
meetings with representatives of industry, educational 
institutions, and non-governmental organizations (reftels 
B-E).  Mangystau oblast has already begun to develop several 
oil deposits, while also competing with neighboring Atyrau 
oblast to serve as the main base for oil and gas support 
services in Kazakhstan.  Interlocutors looked forward to 
increased U.S. involvement in the region, especially in the 
oil services sector.  Per capital income in Mangystau is 
significantly above the national average, and poloff,s 
interlocutors expressed satisfaction with local economic 
conditions.  A local NGO representative described good recent 
cooperation with local authorities on ecological issues.  The 
oblast shares a land-border with Turkmenistan, as well as 
Caspian Sea maritime borders with Russia, Azerbaijan, 
Turkmenistan and Iran.  Trade with Russia and Azerbaijan was 
viewed positively by the local business community, although 
they acknowledged obstacles in trade with Turkmenistan and 
Iran, and there was no evidence of a significant Iranian or 
Turkmen presence in Aktau, Mangystau,s capital city.  END 
SUMMARY. 
 
MANGYSTAU EAGER TO ESTABLISH ITSELF AS KAZAKHSTAN,S OIL 
SERVICE CENTER 
 
¶3.  (SBU) Mangystau oblast is located in Kazakhstan,s 
southwestern corner, more than 1,000 miles from Astana.  The 
arid desert oblast, which shares a land-border with 
Turkmenistan, as well as Caspian Sea maritime borders with 
Russia, Azerbaijan, Turkmenistan and Iran, is Kazakhstan,s 
seventh largest in territory, but smallest in population.  It 
is also Kazakhstan,s second least densely populated 
province.  Next to its northern neighbor, Atyrau, Mangystau 
has Kazakhstan,s most significant hydrocarbon deposits and 
an excellent natural port.  The mining sector (which includes 
oil) dominates the oblast,s economy, accounting for 8.14% of 
its GDP. 
 
¶4.  (SBU) As part of the region,s goal of establishing 
itself as a competitor to oil-rich Atyrau, Mangystau has 
created a tax-free special economic zone centered on Aktau 
port.  The port, noted Mangystau Deputy Akim (governor) 
Nurgaliyev with pride, is already the largest on the Caspian 
and currently handles one third of all traffic across the 
Caspian.  It is expected to grow to twice its size within the 
next few years, and the Development Bank of Kazakhstan has 
already committed to several port development projects. 
 
MANGYSTAU HOSTS OIL AND GAS EXHIBITION TO ATTRACT INVESTMENT 
 
¶5.  (SBU) To advance their goal of becoming the off-shore oil 
services center of Kazakhstan, regional administrators hosted 
the third annual Mangystau Oil and Gas Exhibition during 
November 4-7, 2008, at the Mangystau Exhibition Center, 
located next door to Mangystau Nur Otan Party Headquarters. 
(COMMENT:  The proximity of the exhibition, Nur Otan 
Headquarters and the Mangystau Regional Administration,s 
offices are not coincidental.  During the last Presidential 
election, Mangystau had the highest rate of votes for Nur 
Otan, despite the fact that one of the most prominent 
opposition politicians is originally from the region.  END 
COMMENT.)  During poloff,s visit to the exhibition, United 
States Commercial Service Representative Azhar Kadrzhanova 
stated that the event had grown dramatically to its current 
size of 46 participating companies.  The exhibition, however, 
was dominated by Kazakhstani and Russian companies, with only 
one U.S. company, FMC Technologies, represented.  The FMC 
representative, Material Supervisor Tanat Ishangali, stated 
that Aktau is FMC,s service base for the entire Commonwealth 
of Independent States.  Ishangali noted with satisfaction 
that FMC,s business in Aktau exceeded its commerce in Atyrau 
this year.  Ishangali also praised the Mangystau government 
for being &very cooperative,8 particularly noting that they 
have had no problems processing work permits for their 
foreign workers. 
 
AKTAU:  THE NEW ORLEANS OF KAZAKHSTAN? 
 
¶6.  (SBU) Deputy Akim Nurgaliyev, who just returned from the 
October 29-November 1 World Cultural and Economic Forum in 
New Orleans, acknowledged that his goal is to turn Aktau into 
&the New Orleans of Kazakhstan.8  Nurgaliyev pointed out 
that Aktau is already the largest port on the Caspian and 
that the northern portion of the Caspian Sea, where its 
competitor, Atyrau, is located, is too shallow for a port. 
Nurgaliyev firmly stated that he &would welcome Aktau 
becoming the next Dubai, Aberdeen, or New Orleans, but not 
Las Vegas.8  (COMMENT:  Nurgaliyev made clear that his 
vision for &the New Orleans of Kazakhstan8 was centered on 
attracting economic investments, especially oil services. 
Although Nurgaliyev himself mentioned the beauty of the 
French Quarter in New Orleans, he did not discuss any details 
of plans to develop tourist areas or ecological parks, 
despite press reports that Mangystau has attracted $2.3 
billion in investments into the Kenderli resort zone.  END 
COMMENT.)  Nurgaliyev returned from his October visit to 
Louisiana with a signed agreement of cooperation between 
Mangystau oblast and the port of Louisiana, which he hopes 
will help Mangystau develop into a base for off-shore oil 
service providers. 
 
MANGYSTAU WELCOMES COOPERATION WITH THE UNITED STATES 
 
¶7.  (SBU) Deputy Akim Nurgaliyev strongly encouraged the 
United States to open an American Presence Post in Aktau, 
pointing out that the Mangystau region has the second highest 
population growth rate in Kazakhstan after Astana. 
Nurgaliyev called DCM and poloff,s attention to the fact 
that Aktau airport had recently been remodeled, and that 
Mangystau has been participating in an &earth-sea-sky8 
development program.  According to Nurgaliyev, Mangystau 
secured Kazakhstani central government funding to bring in 
UAE investors to develop the region,s infrastructure. 
Nurgaliyev expressed hope that such growth for Mangystau 
would also bring opportunities for U.S. businesses, and 
mentioned having met recently with McDermott and 
Schlumberger.  Nurgaliyev also stated that an agreement has 
already been signed between with Conoco-Philips on the N 
block, which is located directly across from Mangystau,s new 
port of Kuryk.  Finally, Nurgaliyev reminded DCM and poloff 
that it is very expensive and inconvenient for Aktau 
residents to travel to Astana or Almaty to secure U.S. visas, 
and expressed the hope that if the American business 
community continued to grow with the port and oil sectors, 
the United States might establish a branch office of the 
Embassy in Aktau.  Deputy Rector of the Caspian State 
University of Technology and Engineering (CSUTE), Bekzhan 
Saurbayev, also noted that CSUTE signed an agreement with the 
Louisiana State,s university system on October 30, 2008. 
Saurbayev proudly highlighted the various exchanges taking 
place between his university and U.S. universities, and 
expressed his hope that such mutually beneficial cooperation 
would continue. 
TOO LATE FOR U.S. COMPANIES TO BID ON PORT PROJECTS 
 
¶8.  (SBU) Representatives from Caspiy Meruerty company, SEC 
Caspiy company, the Mangystau Akimat (regional 
administration) and Kazakhstan,s national shipping company, 
Kazmortransflot (KMTF), all discussed KazMunaiGaz,s 
proposal, approved by the government in 2005, to expand the 
small sea-port at Kuryk. (NOTE:  Aktau port is operating at 
maximum capacity and due to its location, is not able to 
receive tankers with 60,000 ton displacements, whereas Kuryk 
provides a better natural shelter where uninterrupted 
operations can be carried out throughout the winter and 
during storms.  END NOTE.)  KMTF played a leading role in 
constructing and operating the Kuryk port, and plans to ship 
7.5 million tons of crude from Kuryk in its first year of 
operations.  Deputy Akim Nurgaliyev indicated that since port 
development is almost complete, it would be difficult for 
U.S. businesses to find opportunities to work on port 
projects at such a late stage.  KMTF officials also indicated 
that shipbuilding contracts have already been awarded to 
Russian firms. 
 
STRONG OPTIMISM ABOUT ECONOMIC OPPORTUNITIES 
 
¶9.  (SBU) According to Kazakhstani government statistics, per 
capital GDP in Mangystau oblast is $15,451, significantly 
above the national average of $6,870 (although below 
Atyrau,s average of $21,640).  Poloff,s various 
interlocutors in Aktau without exception expressed 
satisfaction with the current economic situation ) and 
confidence that the future was even brighter. 
Representatives from MAEK-Kazatomprom, FMC Technologies, 
Caspiy Meruerty, SEC Caspiy, and CSUTE all said they were 
optimistic about opportunities for economic development and 
employment in Mangystau (reftels B-E). 
 
¶10.  (SBU) Caspian State University of Technology and 
Engineering particularly seems poised to benefit from the 
region,s increasing prosperity.  The university, which 
currently owns property throughout the city, including 
significant waterfront holdings, is planning to open its new 
campus near the airport on September 1, 2009.  The university 
is also developing a beach-front restaurant and shopping 
complex less than 100 yards from the luxurious $200 per night 
Renaissance Marriott Hotel. 
 
LOCAL NGO REPORTS GOOD COOPERATION WITH LOCAL AUTHORITIES 
 
¶11.  (SBU) Kirill Osin, Director of a local NGO, 
Eco-Mangystau, explained to poloff that his organization 
recently established good cooperation with local authorities. 
 Osin,s NGO runs an information resource center, organizes 
environmental clean-up campaigns and lobbies media and 
government on environmental issues.  Currently Eco-Mangystau 
is working on a project called &Transparency in Local 
Administration,8 by creating a database of information about 
local leaders and their decisions. At the 2005 Extractive 
Industry Transparency Initiative (EITI) conference, the 
Akimat (regional administration) accepted Osin,s proposal to 
establish a four-party council, including representatives 
from the regional administration, NGOs, mass media and 
extractive industry companies. 
 
ENTHUSIASM ON AZERBAIJAN, CAUTIOUS ON IRAN AND TURKMENISTAN 
 
¶12.  (SBU) Deputy Akim Nurgaliyev told DCM and poloff that 
Mangystau hopes to be the center of several trade routes:  1) 
a revitalized &New Silk Road,8 2) a new north-south route, 
and 3) a regional Caspian route.  Despite the fact that 
Mangystau oblast has maritime access to Azerbaijan, 
Turkmenistan, and Iran, poloff saw surprisingly few visible 
signs of their influence in Aktau.  Nevertheless, Nurgaliyev 
emphasized that Azerbaijan already has a consulate in Aktau, 
and that the the Russian Federation, Iran and Uzbekistan plan 
to open consulates. If relations between the United States 
and Iran improve, noted Nurgaliyev, there would be many 
opportunities in the Mangystau region for both Kazakhstan and 
the United States, in particular, sending oil to the Iranian 
port of Neka.  Nurgaliyev specifically mentioned 
opportunities for increased oil swaps with Iran. 
 
¶13.  (SBU) Kazakhstan,s national shipping company, 
Kazmortransflot (KMTF) has been working very closely with 
Azerbaijan, especially Kaspar (Azerbaijan,s National 
Shipping Company) and hopes to sign an agreement on 
principles with another leading Azerbaijani company.  KMTF 
officials confirmed that the volume of trade with Russia and 
Azerbaijan is anticipated to remain significant, but 
downplayed the extent of their cooperation with Iran, 
pointing out that occasional shipments of oil south to Iran 
are complicated by political issues and infrastructure 
limitations.  KMTF officials also mentioned unsuccessful 
Kazakhstani efforts at closer cooperation with Turkmenistan. 
Interlocutors from KMTF were interested in working with all 
Caspian states to simplify paperwork procedures and develop 
emergency response plans. 
 
¶14.  (SBU) Educational institutions are also actively 
pursuing cooperation in the Caspian region.  CSUTE has 
students from all five Caspian republics.  Deputy Rector 
Saurbayev told DCM and Poloff that authorities changed the 
name of the university in May to emphasize its role in 
preparing regional specialists.  Saurbayev also noted that 
the university recently created special programs to help 
Turkmen and Iranian students.  Saurbayev told the DCM and 
poloff that although the majority of CSUTE,s &foreign8 
students come from former Soviet states, many former 
Kazakhstani citizens living in Iran have also sent their 
children to study at Caspian State University. 
 
AKTAU CITY:  A CITY OF CONTRASTS 
 
¶15.  (SBU) COMMENT:  The view from the two sides of the 
Marriott Renaissance Hotel, where standard single rooms 
without breakfast are $200 per night and business suites run 
$1000 per night, clearly demonstrates the contrast between 
Aktau,s past and future.  On one side, a large television 
screen displays advertisements (above streets with very 
little traffic) showcasing the city,s modernity; on the 
other side is a Soviet MiG fighter jet.  The beachfront near 
the hotel is lined with posh clubs, yet the beach is littered 
with debris and broken bottles.  Nevertheless, as reftels A-E 
indicate, local interlocutors are optimistic that Mangystau 
and Aktau have tremendous potential for economic growth. 
Regional administrators are working hard to partner with 
NGOs, encourage international cooperation, and welcome 
private business.  END COMMENT. 
HOAGLAND