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UNCLAS SECTION 01 OF 02 ASTANA 000170 
 
SIPDIS 
 
DEPT FOR SCA/CEN, EEB 
PLEASE PASS TO USTDA DAN STEIN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EFIN EIND ENRG EPET KTDB TI CH IN KZ
SUBJECT:  KAZAKHSTAN ECONOMIC AND ENERGY UPDATE, JANUARY 4 - JANUARY 
17, 2009 
 
ASTANA 00000170  001.2 OF 002 
 
 
¶1.  Summary:  This information is drawn primarily from the 
Kazakhstani local press and has not been verified for accuracy. 
 
-- New Refinancing Rate 
-- Update from Samruk-Kazyna 
-- Humanitarian Aid for Tajikistan 
-- Arcelor Mittal To Modernize Coal Mines 
-- China To Build A Gas-Fired Power Plant In Aktobe 
-- Sunkar Resources To Buy Tengiz Sulfur 
-- KazMunayGas Buys MangistauMunayGas 
-- ONGC To Develop Satpayev Block 
-- Railway To Be Built In Kuryk Sea Port 
-- Preliminary 2008 Energy Statistics 
 
NEW REFINANCING RATE 
 
¶2.  On January 1, 2009, the National Bank of Kazakhstan (NBK) 
lowered the refinancing rate from 10.5% to 10% per annum.  According 
to the NBK's press release, this decision was driven by the 
deceleration of inflation in 2008-2009 and the necessity to support 
the banking sector with short-term liquidity.  The lower refinancing 
rate will help the NBK to maintain stability in the banking sector. 
 
UPDATE FROM SAMRUK-KAZYNA 
 
¶3.  According to Kayrat Kelimbetov, CEO of the Samruk-Kazyna 
National Welfare Fund, the first auctions to purchase distressed 
bank loans will be held in February.  He said that the management of 
the Distressed Assets Fund has already started negotiations with 
commercial banks to sell these loans, which will be categorized as 
mortgages, credits for small and medium business, or corporate 
loans.  The government plans to capitalize the Distressed Assets 
Fund with $1 billion from the national budget. 
 
¶4.  On January 17, 2009, Kayrat Kelimbetov and German Gref, 
President of Russia's Sberbank, met in Astana to discuss the 
anti-crisis measures taken by both countries.  They agreed that 
Samruk-Kazyna and Sberbank should synchronize their actions and keep 
each other informed on the implementation of their respective 
anti-crisis programs. 
 
¶5.  The monthly salaries of Samruk-Kazyna's Kelimbetov and his 
deputies Timur Kulibayev and Arman Dunayev do not exceed 1.3 million 
tenge (approximately $10,731), the fund's managing director Kayrat 
Aitekenov said.  Given the current crisis conditions in Kazakhstan, 
Samruk-Kazyna's top managers received no annual bonuses at the end 
of 2008, and fund employees will receive no raises in 2009. 
 
HUMANITARIAN AID FOR TAJIKISTAN 
 
¶6.  Kazakhstan will pay off its $12-million state debt to Tajikistan 
in-kind by supplying it with wheat worth $5 million, diesel oil 
worth $4 million, and fuel oil worth $3 million.  The debt was 
originally corporate debt which the Government of Kazakhstan took 
over.  In December, Kazakhstan decided to redeem it in the form of 
official humanitarian aid. 
 
ARCELORMITTAL TO MODERNIZE COAL MINES 
 
¶7.  On January 8, ArcelorMittal Temirtau announced plans to invest 
$300 million in 2009 to modernize its coal mines. 
 
CHINA TO BUILD A GAS-FIRED POWER PLANT IN AKTOBE 
 
¶8.  "Khabar" television reported on January 6 that the Northern 
China Company (NCC) signed a memorandum of understanding with the 
Aktobe Regional Administration to build a 120-MW gas-turbine power 
plant in Aktobe Oblast.  The NCC would invest $140 million to 
complete the $200-million project by 2011. 
 
SUNKAR RESOURCES TO BUY TENGIZ SULFUR 
 
¶9.  On January 13, Tengizchevroil signed a protocol of intentions 
 
ASTANA 00000170  002.2 OF 002 
 
 
with Sunkar Resources Plc, a British-owned phosphate fertilizer 
producer, to supply Sunkar's sulfuric acid plant with sulfur 
starting in 2011. 
 
KAZMUNAYGAS BUYS MANGISTAUMUNAYGAS 
 
¶10.  On January 12, Kazakhstan's state oil and gas company 
KazMunayGas (KMG) signed a contract to buy a 50% stake plus two 
voting shares in MangistauMunayGas (MMG) from the Indonesian-based 
Central Asia Petroleum Ltd.  MMG has recoverable reserves of 194 
million tons of crude oil.  With the deal KMG also gains control 
over the Pavlodar Petrochemical Plant.  China's national oil company 
is widely expected to be awarded the remaining minority stake in 
MMG. 
 
ONGC TO DEVELOP SATPAYEV BLOCK 
 
¶11.  During President Nazarbayev's January state visit to India, 
Minister of Energy Mynbayev signed a contract with India's Oil and 
Natural Gas Corporation Videsh (ONGC) to award the oil company a 
30-40% stake in the Satpayev offshore block.  KazMunayGas and ONGC 
Videsh signed a memorandum of understanding to develop the oil field 
jointly in February 2005.  The block holds an estimated 253 million 
tons of recoverable reserves of crude oil. 
 
RAILWAY TO BE BUILT IN KURYK SEA PORT 
 
¶12.  On January 13, "Khabar" television reported that at the end of 
2008, a group of private investors signed a contract with the 
Ministry of Transport and Communications to build a 14-km railway at 
the Kuryk seaport to transport crude oil.  The construction of the 
railway, with a projected throughput capacity of 5.5 million tons of 
crude a year, is expected to be completed in 2011 in order to ship 
crude from the Kashagan oil field when it comes on-stream. 
 
APPOINTMENTS IN KAZMUNAYGAS 
 
¶13.  The Board of Directors of KazMunayGas named Nurbol Sultan 
Director General of KMG subsidiary KazTransOil; Bolat Nazarov the 
Director General of KMG subsidiary KazTransGas; and Ardak Kassymbek 
the Managing Director of KMG.  Prior to the appointments, Sultan 
supervised the Corporate Finance Department of KMG, Nazarov was the 
Deputy Director General of KazRosGas, and Kassymbek held the post of 
the Executive Director of KMG. 
 
PRELIMINARY 2008 ENERGY STATISTICS 
 
¶14.  According to preliminary government estimates posted on January 
12, Kazakhstan produced 70.6 million tons of crude oil and gas 
condensate in 2008, an increase of 4.8% over 2007.  Kazakhstan 
exported 62.3 million tons of crude oil, 2.8% more than in 2007. 
Kazakhstan produced 105 million metric tons of coal, an 11.2% 
increase compared to the previous year.  National  nuclear company 
Kazatomprom produced 8,500.5 tons of uranium, an increase of 28% 
over 2007. 
 
HOAGLAND