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UNCLAS SECTION 01 OF 02 ASTANA 001088 
 
SIPDIS 
 
STATE FOR SCA/CEN, EEB/ESC 
STATE PLEASE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EPET ENRG EINV EFIN KZ
SUBJECT:  KAZAKHSTAN:  ECONOMIC AND ENERGY UPDATE, JUNE 7-20 
 
¶1.  SUMMARY:  This information is drawn primarily from the 
Kazakhstani local press and has not been verified for accuracy. 
-- Kazakhstan Welcomes IMF Technical Assistance 
-- National Bank Reduces 2009 Inflation Forecast 
-- Kazatomprom News 
-- Agip KCO News 
 -- Energy Statistics 
 
 
KAZAKHSTAN WELCOMES IMF TECHNICAL ASSISTANCE 
 
¶2.  International Monetary Fund (IMF) Managing Director Dominic 
Strauss-Kahn expressed satisfaction with the current level of 
cooperation between the IMF and Kazakhstan during a June 15 visit to 
Astana.  "We work together on various issues, including 
restructuring of external debts of banks," said Strauss-Kahn.  Prime 
Minister Karim Masimov told reporters that Kazakhstan does not plan 
to borrow funds from the IMF, but that it would welcome the IMF's 
advice and technical assistance "to prepare a new conception for 
Kazakhstan's financial architecture." 
 
NATIONAL BANK REDUCESS 2009 INFLATION FORECAST 
 
¶3.  The National Bank of Kazakhstan reduced its 2009 inflation 
forecast from 11 to 9 percent.  "After the February devaluation of 
the tenge, we reviewed the inflation forecast and increased it to 11 
percent because we expected a sharp growth in retail prices. 
However, the situation after the devaluation has remained stable, 
and by now it is possible to say that inflation in 2009 will be 9 
percent" said National Bank Deputy Chairman Daniyar Akishev. 
 
KAZATOMPROM NEWS 
 
¶4.  On June 15, Canada's Uranium One Inc. bought a 50% stake in 
Karatau LLC from Russia's uranium holding company Atomredmetzoloto 
(ARMZ) in exchange for $90 million in cash and 16.6% of Uranium 
One's shares.  Kazakhstan's state nuclear company Kazatomprom owns 
the remaining 50% of Karatau LLC, which produced 653 tons of uranium 
in 2008.  The purchase agreement, which remains subject to 
regulatory approval by Kazakhstan and Australia, is expected to be 
finalized by December 15.  (NOTE: The Karatau mine is located in 
close geographic proximity to the Akdala and South Inkai mines, 
which are 70 percent-owned by Uranium One's Betpak Dala joint 
venture.  END NOTE.)  Jean Nortier, President and Chief Executive 
Officer of Uranium One, said, "The acquisition of a 50% stake in 
Karatau adds another long-life, large-scale, and high-margin asset 
to our portfolio and will significantly enhance Uranium One's 
production profile and cement its position of leadership in the 
Kazakh uranium mining industry." 
 
¶5.  According to a June 17 Presidential Administration press 
release, Ulba Metallurgical Plant, which is a Kazatomprom 
subsidiary, is considering purchasing a controlling interest in the 
Brazil-based tantalum producer Industrial Fluminense.  This sale 
would precede the establishment of a joint venture to develop a 
tantalum-niobium field in Brazil.  (NOTE:  Kazatomprom has long 
aspired to produce tantalum in Brazil, but had announced in summer 
2008 that it was abandoning its plans because of the high price of 
doing so.  END NOTE.) 
 
¶6.  Sergei Kiriyenko, the head of Russia's state nuclear company 
Rosatom, confirmed on June 19 that preparations for the construction 
of a nuclear power plant in Aktau could be completed in 2009. 
"Consultations are underway in Moscow with a working group from 
Kazakhstan," he said.  According to Kiriyenko, Russia would provide 
its "know-how" and technology, and Kazakhstan would be responsible 
for the funding.  The Aktau nuclear plant is to be equipped with 
VBER-300 reactors designed by Russia's Afrikantov Experimental 
Bureau.  "The reactor will be owned by a joint venture, which will 
have the right to sell it -- not only to Kazakhstan or Russia," he 
added.  (NOTE:  In February, Kazakhstan's Minister of Energy and 
Mineral Resources, Sauat Mynbayev, said that the funds allocated for 
the construction of the Aktau nuclear power plant had been returned 
to the budget because legal issues regarding the transfer of Russian 
 
ASTANA 00001088  002 OF 002 
 
 
intellectual property to Kazakhstan had not been resolved.  END 
NOTE.) 
 
AGIP KCO NEWS 
 
¶7.  Minister of Energy and Mineral Resources Sauat Mynbayev informed 
reporters on June 17 that Agip KCO, the operator of the Kashagan 
project, plans to build a shipyard that will construct tankers with 
63,000 deadweight ton capacity designed specifically for the 
Kazakhstan Caspian Transportation System (KCTS).  Mynbayev expects a 
Memorandum of Understanding to be signed by the end of June, a final 
contract to be agreed to in September, and construction launched in 
¶2010.  Agip KCO granted Oman's Topaz Energy and Marine Ltd a $100 
million contract to build and operate six tug boats for the Kashagan 
project in 2010. 
 
 ENERGY STATISTICS 
 
¶8.  According to the National Statistics Agency, from January to 
April, Kazakhstan produced 25.33 million tons of crude oil and 14.62 
billion cubic meters (bcm) of natural gas, marking a 3.9 percent and 
3.8 percent increases respectively over the same period in 2008.  In 
addition, Kazakhstan exported 21.81 million tons of crude oil and 
gas condensate, valued at $6.20 billion, from January to April, 
marking a 9.5 percent increase in export volume, but a 52.2 percent 
decrease in export value, over that period in 2008.  Similarly, 
Kazakhstan exported 5.74 bcm of natural gas, valued at $399.5 
million, during January to April, marking a 2.3 percent increase in 
volume and a 24.1 percent increase in value over the same period in 
¶2008. 
 
¶9.  From January to May, Kazakhstan's coal production was 38.86 
million metric tons, a 15.2 percent decrease from the same period in 
¶2008.  Also from January to May, Kazakhstan's power generation 
decreased 7.8 percent year-on-year to 33.01 billion kilowatt-hours. 
 
¶10.  Minister of Energy and Mineral Resources Sauat Mynbayev 
confirmed on June 17 that the forecast for total crude oil and gas 
condensate production for 2009 will remain at 77 million tons. 
Earlier in the year, Minister of Economy and Budget Planning Bakhyt 
Sultanov predicted that the forecast might be reduced by 3 million 
tons because of falling global oil prices. 
 
FAGIN