VZCZCXRO7728
OO RUEHIK
DE RUEHTA #2255/01 3640545
ZNR UUUUU ZZH
O 300545Z DEC 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7119
INFO RUCNCIS/CIS COLLECTIVE 2301
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1663
RUEHKO/AMEMBASSY TOKYO 2364
RUEHUL/AMEMBASSY SEOUL 1292
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 1858
RUEKJCS/SECDEF WASHDC 1708
RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/AMCONSUL ALMATY 2132

UNCLAS SECTION 01 OF 04 ASTANA 002255 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, EEB/ESC, S/EEE, S/CIEA 
STATE PLEASE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON EINV EPET SENV SOCI KZ
SUBJECT:  KAZAKHSTAN:  CASPIAN MARITIME TRADE AND TRANSPORTATION 
 
REF: (A) ASTANA 1539 
     (B) ASTANA 2138 
     (C) ASTANA 2233 
     (D) ASTANA 1105 
 
ASTANA 00002255  001.3 OF 004 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  This report summarizes international donor 
efforts to promote Caspian maritime trade and transportation, 
including projects to bring Kazakhstan's maritime legislation in 
line with international standards, improve vessel safety and 
security, increase oil transportation by tanker, and develop 
capacity and expertise in the government of Kazakhstan and 
Kazakhstani-flagged vessels.  END SUMMARY. 
 
CASPIAN MARITIME TRADE 
 
¶3.  (SBU) Kazakhstan's Caspian maritime trade is carried out via its 
only international commercial seaport in Aktau.  According to Talgat 
Abylgazin, director of the Aktau seaport, the port plans to ship 14 
million tons of goods in 2009, up from 10 million tons in 2008.  The 
current annual transshipment capacity of the Aktau seaport is 1.5 
million tons of general cargo and over 10 million tons of crude oil 
and petroleum products. 
 
KAZAKHSTAN CASPIAN TRANSPORTATION SYSTEM (KCTS) 
 
¶4.  (SBU) Donor and corporate interest in improving safety, 
security, and skills on Caspian maritime transportation is driven by 
the expectation that Kazakhstan will double its oil production over 
the next 10 years.  It thus must increase its oil-transportation 
capacity, including the use of oil tankers from Kuryk to Baku. 
 
¶5.  (SBU) KazMunaiGas-Transcaspian (KMG-TC), a wholly-owned 
subsidiary of national oil company KazMunaiGas (KMG) is responsible 
for the development of trans-Caspian maritime transportation of oil 
from Kazakhstan.  On December 9, its newly-appointed General 
Director Berik Tolumbayev described ongoing negotiations with the 
Kashagan consortium to build the trans-Caspian maritime 
transportation project (KCTS), including oil terminals in 
Kazakhstan's port of Kuryk and in Azerbaijan, at or near Baku. 
Tolumbayev said that KMG-TC will conduct an open tender in January 
2010 to select a company to conduct the feasibility study for the 
project.  He indicated that the leading candidates include U.S. 
company J. Ray McDermott.  KMG-TC and national maritime company 
KazMorTransFlot (KMTF) both expressed interest in a vessel-tracking 
system to monitor and manage the growing fleet of vessels plying the 
Caspian.  KMTF pressed the U.S. Trade and Development Agency (USTDA) 
for assistance to develop a national training plan to prepare 
Kazakhstani officers and crews. 
 
¶6.  (SBU) On December 11, Vasily Svistak, Kazakhstan Business 
Development Manager for the American Bureau of Shipping (ABS), told 
Energy Officer that "all options will be considered and the best 
option will be chosen (for KCTS).  It can be 60,000 deadweight (dwt) 
shuttle tankers, or 20,000 dwt barges, or any other vessel for oil 
transportation."  He mentioned the preference of KMG and the State 
Oil Company of the Azerbaijan Republic (SOCAR) to work with a large, 
experienced company or consortium, which could deliver a global 
solution to oil transportation issues, including the construction of 
two new oil terminals, shuttle vessels, shipbuilding facilities, and 
other related infrastructure.  Svistak asserted KMG would not want 
to work with a small company that could build vessels or terminals 
only. 
 
USDTA SUPPORT FOR MARITIME TRANSPORTATION 
 
¶7.  (SBU) USTDA has funded two grants for approximately $350,000 
each to increase maritime trade and transportation in the Caspian. 
Tenders have been announced for the selection of a U.S. company to 
carry out the terms of reference, and the projects are expected to 
begin by March 2010.  The first grant was awarded to KMG-TC to bring 
 
ASTANA 00002255  002.3 OF 004 
 
 
Kazakhstan's maritime legislation in line with international 
standards by defining the international treaty accessions, maritime 
laws, and regulations that Kazakhstan must implement. 
 
¶8.  (SBU) The second USTDA grant was awarded to KMTF to facilitate 
clearance of vessels at Caspian ports by evaluating the technical, 
economic, and financial feasibility of implementing the Electronic 
Documentation Procedure or Early Departure Procedure (EDP). 
Implementation of this procedure will reduce time spent on 
documentation processes, thereby increasing efficiency at existing 
Caspian ports and reducing transportation costs. 
 
NORWEGIAN SUPPORT FOR MARITIME SAFETY 
 
¶9.  (SBU) The Norwegian Ministry of Foreign Affairs is funding a Det 
Norske Veritas (DNV) project to draft framework regulations related 
to health, safety, and environment (HSE) for offshore petroleum 
activities in Kazakhstan.  It aims to introduce a modern safety 
regime for petroleum activities related to exploration, development, 
operations, decommissioning, and removal in connection with sub-sea 
petroleum deposits in the Caspian Sea under Kazakhstan 
jurisdiction. 
 
¶10.  (SBU) The Norwegian Ministry of Foreign Affairs also may fund a 
gap analysis by DNV on Kazakhstan's maritime educational and 
legislative needs.  The Norwegian Embassy and DNV currently are 
discussing this project with the Ministry of Transportation and 
Communications.  The program would enable Kazakhstan to provide 
training programs that would lead to internationally-accepted 
certificates.  It would analyze Kazakhstan's legislative compliance 
with international conventions and International Maritime 
Organization (IMO) standards, including the quality of training 
programs, certification, and watchkeeping approved by maritime 
training institutions. 
 
OSCE WORKSHOPS ON OIL SPILL RESPONSE 
 
¶11.  (SBU) The Organization for Security and Cooperation in Europe 
(OSCE) is assisting a Kazakhstani government interagency commission 
on oil-spill preparedness.  The OSCE and Ministry of Emergency 
Situations held a regional workshop in October, which focused on 
national contingency plans.  The OSCE also organized a November 12 
workshop in Astana on IMO conventions to prepare for negotiations on 
the Oil Pollution Incidents protocol to the Teheran Convention (ref 
B).  The OSCE has financed a series of projects to support 
implementation of the Aarhus Convention (ref C), including training 
judges in the Caspian region on environmental issues.  On September 
21, the OSCE signed a Memorandum of Understanding with the Akimat 
(office of the governor) of Atyrau Oblast, the NGO Ecoforum, and the 
Ministry of Environmental Protection to open a new Aarhus Center in 
Atyrau, the first of its kind in Kazakhstan. 
 
THE EUROPEAN COMMISSION'S INOGATE PROGRAM 
 
¶12.  (SBU) As part of the enhancement of environmental protection 
measures in Central Asia's oil and gas industry, the European 
Union's INOGATE project is writing a revised national oil spill plan 
with the Kashagan consortium and the Oil Spill Preparedness Regional 
Initiative (OSPRI).  INOGATE also is using international examples of 
best practice to develop recommendations on environmental 
legislation for Central Asian states. 
 
¶13.  (SBU) The European Commission is funding a project to improve 
maritime safety and reduce ship pollution in the Black and Caspian 
Seas.  Mott MacDonald, Ramboll, Tethys Environmental Consulting, Oil 
Spill Training Company Ltd., and Milieu Ltd. Are implementing the 
project, which will provide technical support to Kazakhstan on the 
IMO convention implementation and will include 2010 training events 
in Aktau on ship inspection procedures and other issues.  The 
project will assess and support the organization of a National 
Maritime Administration.  It will also examine the needs and 
priorities for vessel traffic systems at ports.  Project experts 
 
ASTANA 00002255  003.3 OF 004 
 
 
will prepare and implement a training plan in coordination with the 
relevant training institutes in Kazakhstan.  They will provide 
additional training programs in port inspection, ship safety, ship 
and port security, waste management at ports, and oil pollution 
preparedness and response. 
 
DONOR COORDINATION EFFORTS 
 
¶14.  (SBU) UK government-funded Caspian maritime project brought 
together oil companies, shippers, classification societies, IMO, and 
the governments of Azerbaijan and Kazakhstan.  The project's results 
included endorsement of IMO rules for Caspian tanker traffic, 
commitments to fund crew training events and publish official 
Russian-language translations of international maritime manuals. 
The British Embassy also agreed to coordinate international donor 
support. 
 
¶15.  (SBU) On July 16, the Ministry of Transportation and 
Communications established a coordination group to discuss 
Kazakhstan's maritime educational needs.  The Ministry agreed to 
invite international oil companies (IOCs), shippers, and 
classification societies to join this group.  Relevant authorities 
approved the Ministry's action plan for maritime personnel 
development, which then was sent to classification companies, IOCs, 
and shippers. 
 
TRAINING MARITIME CREWS IS THE NUMBER ONE PRIORITY 
 
¶16.  (SBU) On December 9, KMTF Deputy General Director Sherkhan 
Sugurbekov told USTDA that the shortage of qualified captains, 
officers, and crew members seriously concerns KMTF.  He said that on 
January 1, 2010, Article 25 of the Law on Maritime Shipping will 
come into effect, requiring that all crew members on 
Kazakhstani-flagged vessels must be Kazakhstani citizens.  KMTF said 
that currently only 40% of all crew members are residents of 
Kazakhstan, and only 17% of captains and officers are Kazakhstani. 
 
¶17.  (SBU) KMTF also reported that Chevron remains very much 
interested in funding a maritime academy in Kazakhstan, and has 
earmarked up to $25 million for the project.  Unfortunately, 
however, KMTF said the funds will not be released until resolution 
of pending sulfur fines and fees (ref D). 
 
STRIVING TO MEET INTERNATIONAL STANDARDS 
 
¶18.  (SBU) On January 14, 2010, Kazakhstan's parliament will host a 
roundtable on marine-transportation issues, with presentations from 
industry experts, such as Chevron's Kjell Landin and the UK's 
Caspian Energy Advisor Angus Miller.  This roundtable will review 
amendments to Kazakhstan's existing Law on Merchant Shipping.  These 
amendments are designed to ensure Kazakhstan full compliance with 
international norms, such as the IMO conventions.  Effects of the 
proposed changes include the regulation of shipping companies, 
hiring of crews, customs clearance of vessels, and sanitary 
inspections. 
 
¶19.  (SBU) KMTF's Sugurbekov relayed to Energy Officer his concern 
that members of parliament lack a clear understanding of, or vision 
for, the development of maritime transportation.  He said, "They 
find it difficult to make decisions, because they can hardly imagine 
the practical impact of changes to the Law."  He also highlighted 
members' numerous questions about the need to comply with 
international maritime conventions.  He attributed this situation to 
the fact that Kazakhstan is a "young maritime country," but he 
asserted it must improve its management of maritime transportation. 
 
SAFETY AND SECURITY 
 
¶20.  (SBU) On December 9, Kairiden Nurkenov, Director of Water 
Transportation at the Ministry of Transportation and Communications, 
told USTDA that the Ministry's top priority is to ensure that 
Kazakhstani crew members receive proper, internationally-recognized 
 
ASTANA 00002255  004.3 OF 004 
 
 
training courses.  Nurkenov expressed interest in a USTDA-funded 
feasibility study to implement a vessel-tracking system, and 
conveyed Kazakhstan's plans to deploy a basic system at the ports of 
Kuryk and Bautino.  Kazakhstan also has a regional rescue-operation 
system along its 800-kilometer shore line, which contains three 
stations and dozens of transmitters.  This system allows the 
Ministry to discover possible oil spills, but not to conduct actual 
rescue operations. 
 
¶21.  (SBU) Yerlan Jumashev, Director of Water Transportation Control 
at the Ministry of Transportation and Communications, expressed the 
Ministry's urgent need to evacuate sunken vessels in the Caspian 
Sea.  They pose a danger to current vessels and the new, larger oil 
tankers expected to be used after Kashagan begins production in 
¶2013. 
 
¶22.  (SBU) COMMENT:  Because the Caspian Sea represents Kazakhstan's 
only access to international maritime trade, the government greatly 
appreciates donor assistance to address gaps in maritime 
legislation, skills, and expertise, as well as environmental safety. 
 The wide range of existing and planned projects demonstrates 
Kazakhstan's commitment to work with U.S. and European donor 
organizations to bring its maritime operations in line with 
international standards and increase maritime trade activity. 
However, given the need to develop entirely new laws, procedures, 
equipment, vessels, and crews from scratch, it may take years before 
the land-locked country of Kazakhstan becomes a world-class maritime 
trading partner.  END COMMENT. 
 
HOAGLAND