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Politics and Macroeconomics

Second Caspian Summit To Be Held No Earlier Than 2005

The second Caspian summit will take place no earlier than 2005, experts announced at the 14th session of the group to determine the legal status of the Caspian Sea in Astana on June 9-10. Iran’s special representative for Caspian affairs Mehdi Sarafi told a press conference that Iran has proposed to hold a summit in December 2004 but said that other countries have proposed January 2005. Sarafi hopes to learn of the exact date for the next summit by January 2005.

The heads of state of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan held their first summit in Ashgabat in April 2002.

The experts agreed to hold the 15th session of the special working group in Moscow in September.

According to Ambassador Ravel Cherdabayev of the Kazakhstani Foreign Ministry, the 14th session enabled members to come closer to an understanding of the Caspian Sea’s legal status.

The convention will lay the foundation for cooperation in the region and consider all aspects of life there. (Interfax-Kazakhstan)

Supreme Court Cancels Municipal Court’s Decision To Veto Bid Of “DCS” 1800 Vehicular Communication Services

The Kazakhstani Supreme Court cancelled the Astana capital court’s decision to veto the bid to provide mobile communication services of “DCS 1800” standard. The tender was suspended due to a suit filed by a private company against the Agency for Information and Communication. Agency employees said that the distribution of the new frequency is likely to be performed by the end of summer.

After the competition, the winner should be granted a license to supply DCS 1800-standard cellular communication. Specialists from the Agency for Information and Communication said that eventually each Kazakhstani citizen that uses cellular communication will be able to choose the operator himself by selecting quality connection and the tariffs that will drop should new competitors appear. (Khabar)

Elections To Kazakhstani Majilis To Be Held On September 19, 2004

The Majilis elections will take place on September 19, 2004 Kazakhstani President Nursultan Nazarbaev announced at an Otan party congress in Astana. Nazarbaev spoke about increasing the number of Parliament representatives.

Nazarbaev also said that the number of representatives in both houses should increase in order to make it more representative of the Kazkahstani population. Nazarbaev added that the parliament must reflect the Kazakhstan’ s significant national and ethnic diversity and that for the first time parliament elections will be held during a time of stable economic growth and improved living standards.

The Kazakhstani parliament consists of two houses and includes 116 representatives. The Senate, the upper house, includes 39 representatives and the Majilis, the lower house, consists of 77 representatives. (Kazakhstan Today)

Oil Production In Kazakhstan Increases By 11.4% In January-May 2004

Oil and gas condensate production in Kazakhstan in January-May 2004 totaled 23, 272,859 tons, 11.4% more than the same period in 2003, according to current data. According to the Petroleum Information Agency (PIA), gas condensate production volume comprised 3. 65.978, a 122.5% increase as compared to 2003.

In May, oil and gas condensate production in Kazakhstan totaled 4,769,246 tons, 3.8% above projected amounts, including 638,539 tons of gas condensate. (Interfax-Kazakhstan) 

Astana To Host Vth International Conference “Transeurasia -2004”

Astana will host the 5th International conference entitled “TransEurasia -2004” on June 17th- 18th, the Kazakhstani Minister of Transport and Communications press service disclosed.

Among the forum members were heads of transport departments from 40 countries and representatives of 15 international organizations and financial institutions. They expressed interest not only in the conference theme “Eurasia– Competitive Transit”, but also in plenary meetings including the “Integration and Coordination of Transport Policies of Europe and Asia,” and the “Implementation of Almaty Action Program” that was adopted at the UN International Conference of the Ministries of Developing and Landlocked Countries on Transit Transportations.

The conference plans to also conduct the 24th CIS Coordination Transport Meeting and the 6th meeting of the Council on Eurasian Economic Community Transport Policy, as well as a number of bilateral meetings involving delegation heads. (KazInform) 

Equities

The KASE-Shares index increased by 1.19% to 193.38 by the end of period on June 15 2004.           

 KASE-Shares index and weekly volume of trades

Note: KASE-Shares index is based on ask prices for equities in A Listing

In the period between June 9 and June 15 2004, the volume of equity trades at the KASE increased to USD 11,486,694 from USD 8,394,251 in the previous period. The shares traded during the period were common shares of Almaty Kus (ALKS), Bank CenterCredit (CCBN), Kazakhmys (KZMS), Ordabasy (ORDB), Temirbank (TEBN), ValutTransit Bank (VTBN), ValutTransit Zoloto (VTZL) and Zerde (ZERD) and preferred shares of Almaty Kus (ALKSp and ALKSp3), Bank TuranAlem (BTASp), KazChrome (KZCRp), Ordabasy (ORDBp), ValutTransit Bank (VTBNp), ValutTransit Zoloto (VTZL). (Irbis)

Company News

Oil & Gas

A second round of negotiations between Azeri and Kazakhstani working groups concerning Kazakhstan’s accession to Baku Tbilisi-Ceyhan (BTC) pipeline construction project will take place in the near future, according to SOCAR president Natik Aliev. The negotiations will draft an agreement between Azerbaijan and Kazakhstan concerning the transport of Kazakhstani oil to the BTC pipeline. A transport agreement and agreements between the investors of Aktau-Baku system and Azeri and Kazakhstani governments are expected to be signed.

The construction of the Aktau-Baku system envisions the construction of an oil storage and transshipment terminal in Kuryk, located southeast of Aktau, along with junction lines. A 20 million ton oil-capacity system will be commissioned and will begin to transport oil from “Kashagan.”

A separate company has been established for the Aktau-Baku system management, the main investors of which are ENI, TotalFinaElf, ConocoPhilips and Inpex. These companies are involved in the development of the Kashagan deposit and hold a 15% share in the BTC Company, the pipeline construction and maintenance operator.

The BTC pipeline, with an annual carrying capacity of 50 million tons, is 1762 km-long, with 443 km in Azerbaijan, 249 km in Georgia and 1070 km in Turkey.

BTC Co includes BP with a 30.1% share, SOCAR a 25% share, Unocal an 8.9%, Statoil an 8.71%, TPAO 6.53%, Eni 5%, Itochu 3.4%, ConocoPhillips 2.5%, In?ex 25%, TotalFinaElf 5% and Amerada Hess 2.36%. BTC pipeline construction costs amount to USD 2.95 Billion. (Kazakhstan Today)

***

CanArgo Energy Corporation Company announced its purchase of a share in the BN Munai LLP Company in Kazakhstan. CanArgo now holds 45% of the branch company Tethys Petroleum Investments Limited. Tethys Petroleum Investments Limited through its 100% affiliated company Tethys Kazakhstan Ltd. Now officially holds 70 % of BN Munai, which has been working in the Akkulov exploration site and Kyzyloi gas deposit west of the Aral Sea.

The company is currently negotiating with the Kazakhstani authorities for the re-registration of the exploration license at Akkul site into a subjacent production license. (RusEnergy)

***

The Canadian-based company Nelson Resources Limited has announced an agreement with creditors to finance the operations of the North Buzachi deposit development in Kazakhstan.

Credits totaling USD 70 MM would be obtained from the group as part of BNP Paribas and Vitol. Vitol will pay off bank debts by selling their products.

A portion of the assets would be spent to refinance the previous loan that the company obtained to purchase a 50% share in the project. (RusEnergy)

***

The Karachaganak Petroleum Operating Billion.V. (KPO) in the West-Kazakhstan oblast plans monthly oil transports of 550,000 tons by July 2004 using the Caspian Pipeline Consortium system (CPC). The company’s press release announced that transport levels could reach seven million tons per year.

The press release also said that with the transport of Karachaganak oil, KPO will become the second largest CPC oil transporter after TengizChevroil. The first oil belongs to Italian company Agip, a subsidiary of Eni, one of the Karachaganak field developers.

The international consortium Karachaganak Petroleum Operating Co. began supplying crude oil from the Karachaganak field through the CPC system in mid-May, and by the end of May it planned to transport 100,000 tons of Karachaganak crude oil. Initially there were plan to begin transporting Karachaganak crude to the CPC system through the new 635-km Karachaganak-Bolshoi Chagan-Atyrau pipeline in September 2003, but one of the first consignments of liquid hydrocarbons did not meet technical standards.

CPC currently transports 1.6 million tons of oil per month. With the inclusion of Karachaganak crude, volumes should increase to two million tons per month over the next few months or about 24 million tons per year – over 500,000 barrels per day. Since it started operating in October 2001, the CPC pipeline has transported over 33 million tons of oil, including nearly seven million tons since the start of this year. (Interfax-Kazakhstan)

***

Russia's Gazprom is looking to sign a long-term deal of from 7-10 years to supply gas produced at the Karachaganak gas condensate field in Kazakhstan to the Orenburg refinery in Russia, the Gazprom Deputy CEO Alexander Ryazanov said at a news conference in Moscow.

Ryazanov added that Gazprom would be prepared to play a role in the third phase of a project if asked, but said that as of yet no such invitation has been received.

The third phase of the project involves the construction of a gas refinery and export pipeline along with a liquefied gas plant. Ryazanov said the refinery could cost as much as $1.3 billion and the gas it produces costs $49. But Ryazanov sees such a project as unprofitable and proposes instead to expand the Orenburg plant capacity by eight billion cubic meters.

Last year, the Orenburg refinery processed about 5.5 bcm of gas and 4.5 million tons of unstable gas condensate produced at Karachaganak. This year, the refinery aims to produce seven bcm and 3.1 million tons respectively.

The Karachaganak gas field is among the world’s largest, containing more than 1.2 billion tons of oil and condensate and 1.35 trillion cubic meters of gas. The international Karachaganak Integrated Organization (KIO) is developing the field. The KIO is owned by the BG Group and ENI (32.5% each), ChevronTexaco (20%) and Russia's Lukoil (15%). (Interfax-Kazakhstan)

***

More than 500 Kazakhstani companies received contracts to supply materials and services for “Karachaganak Petroleum Operating Billion.V, during the main phase of the Karachaganak project (KPO), the KPO public relations and communication manager Sergey Pushkarev reported. According to Pushkarev, contracts concluded between KPO and Kazakhstani enterprises totaled USD 1.3 Billion.

In addition, representatives of 18 local enterprises in the West Kazakhstani oblast improved the quality of planning and management projects in the seminar organized by KPO and “McGregor Energy Services,” an engineering and consulting company well known in the oil and gas industry. Among the seminar participants were representatives of KPO companies “Intergasstroi”, “Temirali”, “Burlingasstroi”, “Aksaigasstroi”, “Kazburgas”, “BKKS”, and “Gidromet,” among others.

According to KPO’s development and suppliers’ qualification manager Howard Barrows, who has headed that department since 2002, representatives of over 150 companies improved quality in the planning and management projects field with KPO support. During the seminars on the program developed by "McGregor Energy Services,” members studied the concept of design management and modern business technologies and learned additional practical skills required for further work. (Kazakhstan Today)

***

The LLP "Kazakhoil Aktobe” and the Kazakhstani consortium "Alibekmola Neftestroi " signed a contract on Tuesday worth over USD 61 MM for the construction, design, and furnishing (???) of the new facilities at the Alibekmola oil deposit in the Aktubinsk oblast. The "Kazakhoil Aktobe " company is developing the deposit. “KazMunayGas” and private petroleum company Nelson Resources Ltd own equal shares in the joint venture.

According to the LLP "Kazakhoil Aktobe " general director William Daily, the contract also includes three key projects that include water injection, a new oil treatment plant, a demercaptanization plant and a gas-processing plant.

According to Nelson Resources Limited president Bolatbek Kuandykov, LLP "Kazakhoil Aktobe " is one of the first companies in Kazakhstan to sign a contract of such scale with a Kazakhstani supplier. The JSC "Kazakh Oil and Gas Institute " president Serik Burkitbaev said the project completion date is expected for autumn 2005.

The "Alibekmola Neftestroi " consortium includes JSC “Kazakh Oil and Gas Institute,” JSC “Kazchimmontazh holding,” CJSC "KazStroiService ", and LLP “Temir Pipe.” LLP "Kazakhoil Aktobe " was established in 1999 and currently develops the Alibekmola and Kozhasai deposits located in the Aktubinsk oblast. (Interfax-Kazakhstan)

Banking and Finance

JSC “Nauryz Bank Kazakhstan” (Nauryz BK) announced that it is not responsible for statements made by Majilis member Tolen Tokhtasynov on Wednesday in Parliament. Tokhtasynov referred to a letter allegedly written by the “Nauryz Bank” chairman and addressed to the Kazakhstani president that the Presidential Administration head Tasmagambetov jointly with OJSC “Kazakhstan Temir Zholy” president Erlan Atamkulov agreed to participate in JSC “Nauryz Bank Kazakhstan” and made an initial installment. Tasmagambetov later demanded the return of the USD 10 MM deposit he made to secure the partnership.

According to JSC «Nauryz BK» chairman of the board Orazaly Erzhanov, nothing interferes with the bank’s ability to perform and that it does not respond to political insinuations. Erzhanov emphasized that “Nauryz BK” functions normally and is financially stable.

Some Kazakhstani parliament representatives said that the Majilis member Tokhtasynov uses his power to disseminate unverified information to draw attention to himself (Kazakhstan Today)

***

The European Bank for Reconstruction and Development (EBRD) and the State JSC "Kazakhstani Development Bank" (KDB) agreed to cooperate on the joint financing of infrastructure and investment projects in Kazakhstan and abroad, the KDB press release announced.

KDB was founded in the spring of 2001 as a joint stock company with 100%-state share of the start-up capital. The bank’s founder is the Kazakhstani government, which acts on behalf of the Finance Ministry and local executive bodies in 14 oblasts and in Astana and Almaty. In May 1, 2004, KDB assets totaled KZT 86.6 Billion and the amount of owner capital amounted to KZT 50.3 Billion.

In 2003, the bank obtained net profits of KZT 1.2 Billion. For May 1, 2004, the bank approved the implementation of 38 investment projects and export operations with bank participation amounting to over USD 320 MM. Such activity will create approximately 50,000 jobs.

KDB’s share totaled 23.6% of Kazakhstani banks’ investment in legal entities. Currently EBRD’s total investment portfolio in Kazakhstan amounts to EURO 1 Billion. (Interfax-Kazakhstan)

***

Over a period of three years, the Business Support Fund under the Karaganda oblast akim granted loans totaling approximately USD 2 MM. According to the fund’s board chairman Kairat Nurgaliev, some 40% of the sum was allocated to support new businesses.

Loans from KZT 100.000 to 1.5 MM were allocated during the Fund’s period of activity. Nurgaliev said that in three years, the Fund’s assets increased from KZT 130 MM to KZT 170 MM. OJSC «Ispat Karmet » made the Fund’s first installment. Currently the Fund cooperates with such international organizations as the World Bank, and the U.S. Agency for International Development (USAID). (KazInform) 

Metals and Mining

The Romanian-based company JSC «Petromservice» will develop a marble deposit in Karaganda oblast. The decision was discussed in a recent meeting held between the Karaganda oblast akim Kamaltin Mukhamedzhanov and the Romanian Ambassador to Kazakhstan Vasile Soare.

The company applied for the tender to obtain the right of subsoil use and marble production at the Spasskoe deposit. The tender will be held in June 2004.

The marble deposits are used as raw materials for artificial stone production. According to estimates, marble reserves at the deposit located 40 km southeast of Karaganda total 117,000 cubic meters.

In addition, JSC «Petromservice» plans to participate in the tender to develop the Kilzhirsk marble deposit located in the Zhahaarka district of the Karaganda oblast. The company also plans to construct a marble processing plant in Zhairem village. (KazInform)

***

By July of this year, the Aktubinsk Ferroalloy Plant JSC TNK “KazChrome” will commission a new section to produce rutile, zircon and ilmenite concentrates, the plant senior engineer Aman Esenzhulov said.

According to Esenzhulov, these concentrates are used in special metallurgy and are required for the production of submarine boats, space ships, high-speed hover trains, electricity station turbines and other equipment. It is expected that the concentrates would be produced for export.

Representatives of the Finnish company OUTOKUMPU arrived in Aktobe to install the equipment in the new section. The new plant will create approximately 120 jobs. (Express K)

Energy and Power

The American-based “AES” enterprises in Kazakhstan have increased their electricity sales in January-March 2004 to 4,844 billion kW/h as compared to 4,383 billion kW /h for the same period 2003, according to the company’s press release.

“AES-Ekibastuz,” formerly Ekibastuz GRES-1, in the Pavlodar oblast ensured sales growth due to the energy consumption boost. One can observe that the production in Kazakhstani regions is being developed. Thermal energy sales increased from January – March 2004 to 1,315 billion kW/h compared to 1,247 billion kW /h for January-May 2003, a 5.4% increase.

AES is currently working on a growth and development plan and is consulting with the Kazakhstani government on macro economic factors. In 2004, is expected to raise its electricity sales volume by 11,370 billion kW/h as compared to 11,045 billion kW/h in 2003, a 2.9% increase, and thermal energy, up to 2,321 billion kW /h compared to 2,302 billion kW /h, a 0.8% increase.

“Kazzinc”, Ust-Kamenogorsk Titan Magnesium integrated plant, “Kazfosfat” among others are AES energy’s customers in Kazakhstan. A number of neighboring country plants, notably RAO EUS of Russia, has used the services provided by AES Kazakhstan. (Interfax-Kazakhstan)

***

The Kazakhstani government will privatize several regional electrical-grid companies, pursuant to the resolution adopted by the government on June 10. The government intends to sell 100% of its charter capital in the following companies: the joint stock company “Taldykorgan joint-stock transport and electrical grid company” in Southeast Kazakhstan, the West Kazakhstani distribution electric grid company “Uralsenergo” and the “Kyzylorda distribution electrical grid company” in South Kazakhstan, and 93,78% of the charter capital in "Mangistau distribution electrical grid company " (West Kazakhstan) -, and 90% of the charter capital in the "Zhezkazgan distribution electrical grid company " (Karaganda oblast in Central Kazakhstan.)

The Finance Ministry’s state property and privatization committee has been committed to sell state shares of the above-mentioned companies in a commercial tender. Vice Prime Minister Sauat Mynbaev has been charged with the execution of the resolution. (Interfax-Kazakhstan)

Transport and Telecommunications

The construction of the first part of the special economic zone (SEZ) “Informational Technologies Park” (ITP) in the Alatau village near Almaty Kazakhstan is expected to be completed by July 2005. Initially, 340 hectares were allocated for the construction for the Alatau village park near Almaty. Of those 340 hectares, 14 were used for to construct the park, the JSC "Engineering and Technologies Transfer Center” (ETTC) department manager Baurzhan Abdrasilov said on Wednesday in Almaty.

The ETTC was founded on August 2003 primarily for the creation and development of the ITP. Abdrasilov said that the design and landscape work is currently being done. Within the next five months, ETTC and the Turkish MTG-KZ, plan to begin constructing the park’s infrastructure. It is expected that the state will allocate KZT 2 Billion in the first phase of the project, which will be used to build offices and several industrial facilities. (Interfax-Kazakhstan)

Money Markets

KZT/USD market rate dynamics during the week

Currency Rates as of 22 June 2004

Note: Some of the information quoted in this issue has been provided for us by Golden Eagle Partners. For more information on those articles, please contact: zhanar@maverick.kz

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