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Politics and Macroeconomics

Volume Of Loans In Kazakhstan Increase By 21% In H1

The total amount of loans provided by Kazakhstani banks totalled KZT 1183.5 Billion as of July 1, 2004, and increased by 21% since the beginning of the year, the National Bank reported. This figure grew by 2.3 % in June compared with May, the National Bank’s press release distributed on Wednesday read.

According to the press release, loans in the national currency for the month grew by 1.1% and totalled KZT 546.2 Billion, and in foreign currency – grew by 3.5 % up to KZT 637.3 Billion. As a result, in June the share of loans in tenge compared with May dropped from 46.7% to 46.2 %.

According to National Bank data, long-term loans from national banks increased by 3.4%, and totalled KZT 775.6 Billion, and short-term loans increased by 0.3% up to KZT 407.9 Billion. Areas of the economy such as trade (28.2%), industry (24.6%), construction (10%) and agriculture (8.4%) were more active than others in receiving credit. (Interfax-Kazakhstan)

Kazakhstani ForEx/Gold Holdings Increases 0.5%

Kazakhstani forex/gold holdings (FGH), including gross reserves and assets of the National Bank accumulated in the Kazakhstani National Fund, increased 0.5% in July 2004 and reached USD 10,387.5 Million. Assets of the Kazakhstani National Fund for the end of July totalled USD 3,729.4 Million.

According to the National Bank press release, currency purchased by the National Bank in the domestic currency market and receipt of foreign exchange on the accounts of the Ministry of Finance in the National Bank resulted in the reinforcement of net currency reserves USD 26.5 Million.

As a result of operations performed by the National Bank, as well as reduced prices for gold on global markets, which fell 1.1%, assets in gold for the reporting month were reduced to USD 3.8 Million. Eventually, net ForEx/gold holdings of the National Bank increased by 0.3% or USD 22.7% up to USD 6,654,000 in July. (Interfax-Kazakhstan)

Mangystau Oblast Increases Natural Gas Production

The volume of natural gas production in the Mangystau oblast increased by 2.2 times within the first half of the year. The increase is related the production of gas from the new deposits, Tolkyn and Borankol launched in 2003. There are two companies, OJSC Tolkynneftegas and Kazakh- Moldavian JV KazpolMunay that produce gas, said Adilbek Kusherov, director of the Oblast Department of Economy, Industry and Trade.

The overall volume of gas production totalled 617.1 million cubic meters within the first half of the year. About 577.3 million cubic meters were extracted from the deposits last year.

Overall, according to Mr. Kusherov, gas production in the oblast is around 1174.6 million cubic meters or it is 2.2 times greater compared to the first half of the year in 2003. (Kazakhstan Today)

Equities

The KASE-Shares index increased by 0.33% to 196.37 by the end of period on August 10 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 August 4 and August 10 2004, the volume of equity trades at the KASE decreased to USD 13,490,568 from USD 16,416,726 in the previous period. The shares traded during the period were common shares of Almaty Kus (ALKS), Bank TuranAlem (BTAS), Bank CenterCredit (CCBN), Kazakhmys (KZMS), Ordabasy (ORD BILLION), ValutTransit Bank (VTBN), ValutTransit Zoloto (VTZL) and Zerde (ZERD) and preferred shares of Narodniy Bank (HSBKp), KazChrome (KZCRp) and ValutTransit Bank (VTBNp). (Irbis)

Company News

Oil & Gas

The Karachaganak Petroleum Operating Billion.V. (KPO) has announced the completion of the USD 20 MM Aksai Water Project, which has been implemented as part of the KPO social program.

The project was conducted in three phases from 2000 - 2004.

During the first phase, KPO built a water intake station in Bestau and a water tower in Aksay that holds 2,000 cubic meters of water. In addition, 11 wells and 3 holding tanks with a total capacity of 4,000 cubic meters and a transformer substation were repaired. In addition, 30 kilometers of new glass-reinforced pipes were laid.

The second phase involved the repair of the distribution systems in Aksai, including water pipelines, sewage pumping stations and collectors. During this phase, KPO also built a chlorination unit and completed the overhaul of 10-kV power lines.

During the last phase, KPO completed an overhaul of central heating stations and built a new state-of-the-art wastewater treatment plant (WTP) with a daily capacity of 8,400 cubic meters. The plant meets all environmental standards and ensures the full biological treatment of wastewater through a reduction of suspended particles concentration to 15 mg/l.

KPO Social Projects Engineer Zhanibek Galiyev explained: “The plant is located on an area totalling 55 thousand square meters and consists of a reception chamber, filter building, tank module, pumping station, transformer substation and other process infrastructure and administrative facilities”. (Golden Eagle Partners)

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Gas supplies from the Karachaganak field to Orenburg Gas Processing Plant will increase from 7 billion cubic meters (bcm) to 8 bcm starting January 1, 2005, reported Orenburg GazProm JSV.

The press release specified that the company discussed technical issues connected with increasing supplies during a meeting with representatives from the Karachaganak Petroleum Operating, a Kazakh gas company.

"Both parties are interested in implementing this project, as it will make it possible to increase profits for both companies and, as a result, increase tax payments," the statement said.

The Orenburg Gas Processing Plant processed about 5.5 bcm of gas and 4.5 million tones of unstable gas condensate from Karachaganak in 2003, and plans to process 7 bcm and 3.1 million tones respectively in 2004.

The Karachaganak oil, gas and condensate reserves comprise of over 1.2 billion tonnes of oil and condensate and 1.35 trillion cubic meters of gas. Joint Venture Karachaganak Petroleum Operating (KPO), which is developing the Karachaganak field, includes BG Group, Eni (with 32.5% of participatory interest each), ChevronTexaco (20%), and LUKOIL (15%).

The Production Sharing Agreement (PSA), signed by the government of Kazakhstan and partner companies in November 1997, regulates KPO operations. The PSA has been designed for 40 years. During this time, starting in 1998, it has been planned to produce 320 million tonnes of liquid hydrocarbons and 797 billion cubic meters of gas from the Karachaganak field. (Golden Eagle Partners)

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Due to the depletion of gas reserves at four gas and condensate deposits and two gas deposits in the Mangystau Oblast, the OzenMunayGas Production Subsidiary of the JSC Exploring Extraction KazMunayGas, plans to launch a pilot commercial development of new gas deposit Kansu in late 2005 -early 2006, OzenMunayGas PS Innovation Technologies Department Director, Kaldybay Markabaev disclosed.

Previously, 40 appraisal wells had been drilled at the Kansu gas geological structure. These wells remain closed down. The exploration showed a presence 12 to 20 billion cubic meters of natural gas in Kansu. According to K. Markabaev, the deposit is a considerable distance from Uzen and currently, there is no infrastructure at Kansu. Therefore, by the end of 2004, JSC NC KazMunayGas plans to work out a feasibility study for the development of the Kansu gas structure in order to confirm its profitability. According to K. Markabaev, currently no one has a state license to develop the deposit. OzenMunayGas PS produces gas from the following deposits; Tenge (gas reserves total 10-12 billion cubic meters), Tasbulat, Aktas, Karamandybas (gas reserves are 5-6 billion cubic meters), Uzen, and South Zhetybay. Gas reserves are practically unavailable from the Zhetybay deposit and there is no production there.

K. Markabaev noted that OzenMunayGas PS has almost 80-85% of its total gas production from the South Zhetybay deposit only. Currently, some 60-70% of the natural gas has been extracted. According to the results of an investigation, the remaining reserves of gas within the deposits developed by PS OzenMunayGas total 20-30 billion cubic meters. (Kazakhstan Today)

***

According to specialists from LLP JV, since the beginning of 2004 the JV produced 7.8 million tonnes of oil with a daily output of 286 barrels. In addition, 477tonnes of propane and butane have been produced, and about 1.9 million net cubic meters of gas and 446tonnes of sulphur have been sold since the beginning of 2004. According to preliminary estimates, the production volume will total 13.3 million tonnes of crude oil by the end of the year.

The Tengiz deposit was discovered in 1979 and is considered one of the world’s largest oil deposits. The partnership, LLP was formed on April 6, 1993 on the basis of an agreement signed between Kazakhstan and the Chevron Corporation. Currently, the owners of the partnership are the “Chevron Overseas Company” (50%), “KazMunayGas” (20%), and “ExxonMobil Kazakhstan Ventures Inc.” (25%) and JV “LukArco” (5%). (KazInform)

Banking and Finance

Adjustments of the national currency entail not only losses of exporters’ incomes but also billions of losses in the Kazakhstani National Bank. Thus, for the first half of the year the National Bank’s income increased 7.8% - up to KZT 17 Billion, whereas costs increased 60% - up to KZT 22.4 Billion.

The Chairman of the National Bank, Anvar Saidenov, explained the increase in expenses by the fact that the National Bank must regulate the exchange rate by buying up currency in order to control undesirable adjustments of Tenge. For the first half of the year, the National Bank purchased about USD 1.2 Billion. The expenses related to the purchase of foreign currency and issuance of notes to withdraw the “surplus” of tenge totalled KZT 7.6 Billion. “It was the growth of notes’ volume in circulation by 57% - up to KZT 311.8 Billion, which the National Bank issues, that turned out to be the reason for the losses, and as a result increased expenses for their service”.

Overall, the macro economy has had a positive influence on the balance of payments. The surplus of the current payment account balance totalled USD 349 million. At the same time, exports comprised of USD 4.1 Billion with a record growth of 29%.

According to Saidenov, during the second half of the year, the National Bank will continue the second phase of liberalizing the currency policy. The aim is to create an environment with no limits in currency transactions operations and transmission to total convertibility of Tenge. (KazInform)

Metals and Mining

In the first six months of 2004 the Aksu Ferroalloy Plant (AFP), a subsidiary of “TNC KazChrome” JSC, produced more than 5660.7tonnes of special coke, the press-service of AFP reported.

An experimental unit for the processing of Shubarkol coal was commissioned at AFP in December of 2003. The new unit would allow for the use of Shubarkol coal to manufacture a special type of coke with a high reactivity as well as low capital and operational expenses. This special variant of coke is used to improve the smelting technology for all kinds of alloys.

“Considering profitability and approved tariffs, profit from the unit’s operations will amount to over KZT 2 MM annually”, the AFP press-service reported. “In addition to the special coke, the new unit will produce heat in large volumes, which can be used for operational and household needs”. The Aksu Ferroalloy Plant is part of TNC KazChrome JSC. The AFP employs more than 6,000 people. (Kazakhstan Today)

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The Krasnooktyabrskiy Bauxite Mining department of Alyuminiy Kazakhstana JSC is the largest investor in Lisakovsk, Kostanai Oblast.

The main supplier of raw products for the domestic aluminium industry reached an annual production of 4 million tonnes of bauxite in 2003.

The results of the first half of the year showed that planned figures were met and production grew by 2% compared with the same period last year. Bauxite is deposited as separate ore bodies in complicated forms, which is why it is necessary to build a separate quarry for one or two ore bodies. Currently there are 10 quarries. One quarry has already been used up, and two new facilities were launched in the first half of the year in order to make up for production capacity. One more quarry is being prepared for launching in the second half of the year.

A new deposit, Vostochno-Ayatskoe, is being prepared for development. A re-assessment and additional studies of bauxite reserves in other deposits on the territory of Kostanay, Akmola and Aktobe Oblasts have begun. Joint efforts with the D. Kunaev Mining Institute were initiated to determine the development strategy of the Kazakhstani aluminium industry up to 2020. (KazInform)

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The Akim of Zhambyl Oblast, Boribay Zheksembin, visited the Akbakay Mining and Enrichment Plant (MEP) during a business trip to the Oblast. MEP processes 250,000tonnes of gold-containing ore annually. According to the oblast Akim’s press-service, the production capacity of MEP is 221,000 tonnes of ore annually; ore extraction is carried out by open-pit method in the deposits of Samorodkovoe and Kariernoe.

Last year, Akbakay MEP’s sales were KZT 1.3995 Billion, including 1107 kg of gold and 283 kg of silver. The plant already produced 602 kg of gold and 98 kg of silver for the first half of 2004. MEP paid KZT 183.5 MM in taxes.

MEP uses progressive production technologies, and is building a new facility that will use an updated, modern method to process gold-containing ores.

Gold reserves in the Zhambyl Oblast are estimated in the hundreds of tonnes. The estimations might increase when new deposits are explored. (KazInform)

Energy and Power

According to the resolution of Kazakhstani National Bank management, the largest energy station in East Kazakhstan OJSC AES Ust-Kamenogorsk TETS was assigned the status of first-rate emitter, energy station press service disclosed. The 3-month bill circulation volume limit was fixed at the amount of KZT 225 million. The annual overall potential of the enterprise enables it to increase the amount of issues up to KZT 900 million. OJSC AES Ust-Kamenogorsk TETS has had a positive experience in participating in the Kazakhstani stock market. In the autumn of 2003 the plant issued nominal coupon bonds for KZT 612.78 Million. At that time, the Kazakhstani Stock Exchange (KASE) included TETS into the “A” listing, and according to the management of the energy station, this fact is evidence of its stable financial position and production stability.

The attracted funds would be spent to develop and upgrade TETS production. It is the first enterprise in the energy sector that gained the status of a first-rate emitter is CJSC NAC KazAtomProm. (Kazakhstan Today)

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Creative group of the JSC Kirov Factory, chaired by Senior Designer Nikolay Pegov, developed an energy block for mobile drilling rigs produced by the JSC Petropavlovsk, Heavy Machine Building Plant (PHMBP). Two energy blocks have been shipped while the third is on its way.

By the end of 2004, the factory expects to build two more blocks, which is the number of drilling rigs that will be produced by the JSC PHMBP. This accounts for 27% of the total production volume of the JSC Kirov Factory.

The Petropavlovsk plant has redesigned its overall production line from radio technical equipment to electro-technical. This change has already enabled the plant to increase the number of orders from NC Kazakhstan Temir Zholy. There are more than 40 various products that are being prepared for this company by the JSC Kirov Factory. Moreover, the plant executes large orders for the energy sector and agricultural manufacturers.

This conversion has improved the company’s production volumes. The plant enjoyed KZT 17 million profit for the first half of 2004, whereas its losses totalled KZT 22 million for the first half of 2003. Sales for the entire year of 2003 were KZT 121 million. Sales for the first 6 months in 2004 are KZT 215 million. (Kazakhstan Today)

Transport and Telecommunications

The state enterprise, Aral Plastic Kaiyk was opened for the manufacture of plastic boats in the Kyzylorda Oblast. According to the Aralsk Regional Akim Nazhmadin Mysabaev, the government has allocated KZT 65 MM to Aralsk as part of the small cities support program, and KZT 50 MM are to be used for this operation.

Empty workshops of the Aralsk Railway-Carriage Repair Factory are being reconstructed, where the boats are to be manufactured. The enterprise is to be launched at the end of the year. The enterprise will employ 100 people.

During recent years, manufacturing of fishing boats on the Balkhash, Aral, Zaisan, Alakol and Kapchagai was neglected. The enterprise will provide Kazakhstani fishermen with plastic boats, as well as for the overhaul of existing boats, and will also produce fishing equipment. The factory will import components and raw materials from Russia. (Kazakhstan Today)

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The launching of the first Kazakhstani tanker “Astana” took place at Vyborg Ship-Building Plant in Russia on August 5. The tanker was manufactured under orders of the National Sea Transportation Company (NSTC) KazMorTransFlot, which is owned by National Company KazMunayGas JSC (50%) and the Ministry of Transportation and Communications of the Republic of Kazakhstan (50%), the press-service of NSTC reported.

In the near future, the plant will equip the tanker, and conduct mooring and sea trials. The final commissioning of the first Kazakhstani tanker is scheduled for the 4th quarter of 2004.

The forerunner tanker Astana, designed for crude oil transportation, was developed by the Russian design bureau Vympel, in Nizhniy Novgorod. The main specifications of the tanker are: dead weight – 12,000tonnes, length – 149 meters, width – 17.3 meters, speed – 10 knots. This tanker is planned to be the first of three to be built at the Vyborg plant.

The vessel will be used to ship Kazakhstani oil on the Caspian Sea. It is supposed that the European Bank for Reconstruction and Development is to be the main source of financing for the tankers’ construction. (Kazakhstan Today)

Money Markets

KZT/USD market rate dynamics during the week

Currency Rates as of 10 August 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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