Kazakhstan News Bulletin Released weekly by the Embassy of The Republic of Kazakhstan

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Vol. 1, No. 7, March 6, 2002

Politics

·Central Asian Cooperation Organization established

·CIS informal summit held at Almaty's ski resort on March 1

·Kazakhstan, Russia, Turkmenistan and Uzbekistan agree on strategic cooperation on natural gas

Economy

·Kazakhstan is committed to attracting foreign investment, says Tokaev

·Almaty gears up for Eurasian Economic Summit 2002

·Eni Chairman speaks of "enormous" reserves at Kashagan oil field

·ChevronTexaco: more Caspian export pipelines needed

·USAID sponsors Central Asian Small Business Conference

POLITICS

Central Asian Cooperation Organization established

Following their meeting in Almaty, the leaders of four nations - Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan  signed a treaty on the formal establishment of Central Asian Cooperation (CACO) organization on February 28.

The main goal of the new grouping would be to promote economic cooperation between its members, including the expedition of the establishment of free trade zones, modernizing transport infrastructure, rational use of water resources of trans-border rivers and reservoirs.

The organization will also work to increase cooperation between its members in the security sphere. During their Almaty summit, presidents Nursultan Nazarbayev, Askar Akayev, Imomali Rakhmonov and Islam Karimov discussed the situation in Afghanistan and the issue of illegal migration.

"The events of Sept. 11th and ensuing fight against terrorism have shown us what a powder keg we were living next to, that could have unraveled our perception of stability", said Mr. Nazarbayev at a press conference. "Secondly, if we are to fully open our markets, we will face major problems protecting local producers. These factors made us in the region think about them and the aim of the treaty (on CACO) is to address them", he added.

The CACO would also be aiming to promote humanitarian exchanges, including mutual sharing of TV programming. The four leaders also approved the agreement on Committee of CACO national coordinators and agreed that Uzbekistan will be holding a rotating chairmanship until the next summit.

CIS informal summit held at Almaty's ski resort on March 1

The presidents of 11 of the 12 CIS member states (Azerbaijan's Heidar Aliev stayed at home for health reasons) gathered in the Shymbulaq ski resort, near Almaty for an informal summit on March 1, where they discussed further economic integration within the CIS, joint efforts against terrorism and religious extremism, as well as joint activities in the energy producing and transportation sector, RFE/RL reported on March 4.

Kazakhstan, Russia, Turkmenistan and Uzbekistan agree on strategic cooperation on natural gas

On the fringes of the CIS informal summit in Almaty on March 1, the leaders of Kazakhstan, Russia, Turkmenistan and Uzbekistan agreed to develop long-term strategic cooperation in natural gas production and transportation. Presidents Nursultan Nazarbayev, Vladimir Putin, Saparmurat Niyazov and Islam Karimov signed the joint statement to that effect the same day.

"The objective interest in intensive large-scale cooperation in the field of the extraction and transportation of natural gas is conditioned not only by the historically established interconnection of the fuel and energy complexes of our countries, but also by the intensifying processes of globalization and internationalization of the world economy," the presidents stated.

"In order to develop the resource potential, to agree and coordinate national export-import and investment policies, to ensure energy security and to deepen the long-term ties and strategic partnership between our countries' gas companies, the Presidents of the Republic of Kazakhstan, the Russian Federation, Turkmenistan and the Republic of Uzbekistan consider it important to develop on a long-term basis strategic cooperation in this field," the statement said.

The presidents further said that "the promotion of cooperation in the gas field must serve to carry out reliable and stable deliveries of natural gas to world markets, the markets of the members of the Commonwealth of Independent States and of other European and Asian countries in the interest of supplying their growing requirements".

They agreed to work to create favorable conditions for the cooperation of gas companies, including through the conclusion of agreements both in the bilateral and multilateral formats and ensuring their implementation.

ECONOMY

Kazakhstan is committed to attracting foreign investment, says Tokaev

Speaking at a traditional briefing for Kazakhstan's diplomatic corps on March 4, Secretary of State  Minister of Foreign Affairs Kassymzhomart Tokaev said Kazakhstan was committed to further attracting foreign investment.

Mr. Tokaev, overseeing foreign economic relations and investment policies in the Government, said, "the Government and the Foreign Ministry will do everything possible to improve the investment climate in Kazakhstan". He confirmed that there would be no revision of contracts signed with major investors at the beginning of the 90s, particularly in oil and gas sector, and said any rumors on that matter were unfounded.

Since its independence in 1991, the republic has attracted USD 14.7 billion into various spheres, including oil and gas production and transportation, mining, ferrous and non-ferrous metals production, transport and communications and others. More than a third of it, USD 5 billion, came from the U.S. companies, including ChevronTexaco, ExxonMobil, Phillips Petroleum and others.

Following his meeting with U.S. business executives in Astana during the December 2001visit, U.S. Secretary of State Colin L Powell said he was "particularly impressed" with "the amount of money they are looking at investing in Kazakhstan."

"They were talking in the range of $200 billion over the next 5 to 10 years," Secretary Powell said, "because they see that kind of potential."

Almaty gears up for Eurasian Economic Summit 2002

Asian heads of state, top officials from world financial institutions, and business executives from throughout the world will gather in Almaty on April 8-9 for the second Eurasian Economic Summit, the theme of which will be «Sustaining Growth in Uncertain Times."  The summit, held under the aegis of the World Economic Forum in Davos (Switzerland), was first held in Almaty in April 2000.

To date, confirmed attendees at the summit include Kyrgyzstan President Askar Akaev, the heads of the World Bank and European Bank for Reconstruction and Development, the Secretary General of the Organization for Security and Cooperation in Europe and the head of the Commonwealth of Independent States executive committee.  Top officials from other major international financial institutions as well as from Armenia, India, Pakistan, Iran, Georgia have also expressed interest in participating at the summit.

The Eurasian Economic Summit is expected to be organized by sector, featuring sessions on transport and infrastructure, oil and gas, power generation, mining, consulting services, tourism, information technologies, banking, finance and other categories.

Kazakhstan is expected to announce up to 40 new investment projects at the forum, according to Mr. Vadim Zverkov, Chairman of the Foreign Ministry's Investment Committee.

(For more information about the summit visit www.weforum.org )

Eni Chairman speaks of "enormous" reserves at Kashagan oil field

The head of Italy's Eni SpA, parent company of Agip, the operator of Kashagan oil field in the Kazakhstan sector of the Caspian Sea, spoke last week about "enormous" reserves at the offshore field, Reuters reported. "We are approaching the issue with caution. We need to collect more information to determine exact figures.  But we can already talk about enormous oil reserves," Eni Chairman Vittorio Mincato said on February 27.

Agip is the operator of the Agip KCO consortium, which includes Eni, ExxonMobil, Phillips Petroleum, British Gas, Royal Dutch/Shell, TotalFinaElf, and Japan's Inpex. 

Kashagan has been called the most significant oil discovery of the last thirty years and is poised to catapult the republic to the top of the world's oil producing nations.

          

ChevronTexaco: more Caspian export pipelines needed

Even with the recent launch of the Caspian Pipeline Consortium's Tengiz-Novorossiisk pipeline, the Caspian Sea basin will require more new pipelines in the next two decades to export crude oil produced in the region, a top official from ChevronTexaco told Reuters news agency.

Officials at ChevronTexaco, a 50% shareholder in Kazakhstan's major Tengizchevroil venture and the largest corporate shareholder in the CPC project (with a 15% stake), believe that despite the launch of the USD 2.5 billion Tengiz-Novorossiisk route, more pipeline capacity will be needed over the next twenty years in anticipation of sharp production rises throughout the Caspian region.

According to ChevronTexaco Eurasia Managing Director Guy Hollingsworth, the company is poised to join the planned second major export route for Caspian crude, the 1,730-kilometer, one million barrel per day, USD 2.9 billion Baku-Tbilisi-Ceyhan project.  But even the addition of that pipeline may not be enough to accommodate the rising output from the Caspian region. "There is going to be between three to five million bpd of crude in Kazakhstan within the next 10 to 15 years," Hollingsworth told Reuters in an interview on the sidelines of an international energy conference in Istanbul. "CPC's ultimate capacity is 1.6 million bpd. Baku-Ceyhan is one million bpd. That makes 2.6 million bpd," he added.

"Baku-Ceyhan and CPC in the next 15 years will not handle all the oil that will be coming out of Caspian. You are going to need three, maybe four, pipelines," Hollingsworth said. He cited Iran as a possible third outlet for Caspian crude, despite current US government law prohibiting American companies from investing in the Iranian energy sector. "I personally hope that sanctions will be lifted by that time so that US-based firms can participate in an Iranian outlet," he said.

USAID sponsors Central Asian Small Business Conference

Pragma Corporation's Enterprise Development Center, Counterpart International and the United States Agency for International Development are jointly organizing and sponsoring a conference on advocacy for Central Asian business and professional organizations.

The conference "Improving the Environment for Small and Medium Enterprises through Business Associations," will boast participants from all five Central Asian republics as well as Russian and the United States. The event will take place on March 11-13, 2002 in Almaty. It will address the advocacy needs of business associations for small and medium sized enterprises.

The conference will take place as Kazakhstan is promoting further expansion of SMEs as the widest basis for sustainable and multifaceted social development.

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News Bulletin of the Embassy of the Republic of Kazakhstan

(Compiled from own sources and various agencies' reports)

Contact persons: Roman Vassilenko, Aibek Nurbalin

Tel.: (202) 232- 5488 ext. 104, 115

Fax:  (202) 232- 5845