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Vol. 4, No. 49, November 21, 2001

The Embassy wishes you Happy Thanksgiving!

Let this holiday season be a time of true peace, harmony

and reunion for you, your family and friends.

During this thought-provoking holiday,

we all have a lot to be thankful for.

Politics

Presidents Nazarbayev and Karimov sign border treaty

US purchases Kazakhstan grain for Afghanistan

Kazakhstan to boost exports of new harvest grain to 3.5 million tons

Economy

Official opening of CPC scheduled for November 27

Agip KCO to build hydrocarbons processing plant on Caspian Sea

Kazakhstan continues "blue-chip" privatization

ADB report suggests long-term economic prospects for Central Asia remain positive

POLITICS

Presidents Nazarbayev and Karimov sign border treaty

After the talks in Astana on November 16-17 Presidents Nursultan Nazarbayev and Islam Karimov signed the Treaty on Kazakhstan-Uzbekistan border, delineating 96% percent of the over 1,200-mile border between the two states. The presidents promised to find a solution in relation to the remaining 4 percent within the next half-year.

"For the first time in history, Kazakhstan and Uzbekistan defined their common border as two independent states," Mr. Nazarbayev told a joint press conference November 17 in the capital Astana. "By signing this agreement, we state that there are no 'so-called border problems' between Kazakhstan and Uzbekistan, as well as no territorial claims to each other."

By settling the border issue between the two largest Central Asian states, experts believe, the agreement, as well as a number of government-level documents signed during the visit, sets the stage for broader regional cooperation in various spheres. Increased cooperation between the states of the region is important for the continuing international antiterrorist campaign in Afghanistan. In expressing full support for the anti-terrorism campaign in Afghanistan, both Messrs. Nazarbayev and Karimov suggested that the threat posed by radical Islam in Central Asia was far from removed.

US purchases Kazakhstan grain for Afghanista

The United States bought 15,000 tons of Kazakhstan grain for USD 6 MM to send to war-torn Afghanistan as humanitarian aid. The United States Agency for International Development, which financed the purchase of the aid, plans to buy an additional 5,000 tons of Kazakhstan grain for delivery to Afghanistan in upcoming weeks.

Kazakhstan to boost exports of new harvest grain to 3.5 million tons

Kazakhstan could export up to 3.5 million tons of this year's new harvest grain, a spokesman for the Ministry of Agriculture told Reuters on November 15. "Taking into account the expected demand, 2001 harvest grain exports may be 2.5 million tons to the Commonwealth of Independent States and, regarding the countries outside the CIS, they may be up to 3.5 million tons", he told Reuters.

Kazakhstan exported about three million tons of grain last year, but with this year's bumper 18.3 million ton bunker weight wheat harvest (compared to 12.9 million tons last year), that number seems inevitably poised to rise. Kazakhstan has a surplus of 9.5 million tones of grain this year

ECONOMY

Official opening of CPC scheduled for November 27

The official opening of the Caspian Pipeline Consortium's new Tengiz-Novorossiisk pipeline is now scheduled to be held November 27 at the route's Black Sea terminal in Novorossiisk. Deputy Prime Minister and Minister of Energy and Mineral Resources Vladimir Shkolnik will be representing Kazakhstan, while Secretary of Energy Spencer Abraham is expected lead the U.S. governmental and business delegation.

The $2.6 billion 935-mile CPC pipeline, built over a period of two years, is a unique example of successful cooperation between the Governments of Kazakhstan, Russia, Oman and private interests from the U.S., Britain, Russia and Italy. It was launched into operation on October 15, 2001 with the loading of the first tanker in Novorossiisk.

"It's an important milestone in US-Kazakhstan and US-Russian cooperation," Commerce Secretary Donald Evans said during a press conference in Moscow last month, adding that "the CPC sends an important message to the world that the United States, Russia and Central Asian states are cooperating to build prosperity and stability in this part of the world."

Agip KCO to build hydrocarbons processing plant on Caspian Sea

Agip KCO (formerly OKIOC), the consortium of seven major international oil companies carrying out exploration on the Kazakhstan's Caspian shelf, plans to build hydrocarbons processing facilities on or near the sea as soon as oil production starts in 2005, Agip KCO Pipeline Manager Sergio Gariboldi announced at a briefing with journalists this week.

Gariboldi said the consortium was considering two main options for the location of the processing plant: on an artificial island in the sea or on shore. Speaking at a press conference dedicated to the unveiling of Agip KCO's plans for early oil production at the Kashagan field, reputed to be the largest oil find in the world since Alaska's Prudhoe Bay in 1968, Gariboldi also said that initially the consortium intends to produce some 100,000 barrels of oil per day and 3 billion cubic meters of associated gas a year. Oil production would eventually be increased to 300,000 bpd.

Kazakhstan continues "blue-chip" privatization

Major Kazakhstan oil producer Mangystaumunaygas was announced as the winner in the tender for the 33.3% state-owned interest in Halyk Savings Bank of Kazakhstan (HSBK), the second largest commercial bank in Kazakhstan. A group called United Oil and Trade Companies, in which Mangystaumunaygas was said to be the lead company, agreed to pay USD 41 million for the Halyk stake, making it a privately owned bank, the Ministry of Finance said on November 20. The starting price at the most recent tender for the state's Halyk share was USD 35 million, more than twice the asking price originally planned by the government for a canceled auction in June.

Representatives of "Kazakhstan's Investor", one of the two other groups who took part in the tender, said "there was no need to challenge the results of the tender that was carried out in a just and transparent manner". They believe the resulting sum is "an excellent compliment to the bank, since it was priced 4 times higher than its nominal value". Mangystaumunaygas' major shareholder is Indonesia's Central Asia Petroleum, which holds a 60% interest in the company. The Kazakhstan government owns a 30% stake in the oil producer.

ADB report suggests long-term economic prospects for Central Asia remain positive

A report of the Asian Development Bank (ADB) said the economic consequences of the September 11 terrorist attacks would be felt mostly over the near- and medium-term. The bank's long-term forecast for the region, especially for Kazakhstan, remains upbeat.

The ADB report, published November 9, examines the economic effects of the terrorist attacks on developing countries in the Asia-Pacific region. According to the report, the economies of the Central Asian Republics and Azerbaijan, examined together as one subregional unit, will register a stronger than expected performance this year, but will probably slow down in 2002.

"The September 11 attacks are likely to adversely impact fourth quarter economic performance in the subregion; their effects are likely to be more pronounced in the short to medium term,'' the ADB said in the report, called the Asian Development Outlook 2001. "This is on account of a probable slowdown in export earnings as oil, cotton, and other commodity prices remain depressed as a consequence of slower global economic activity."

The economies of the Central Asian Republics and Azerbaijan are expected to grow by 7.7 percent in 2001, slightly below last year's average growth rate of 7.8 percent. The current forecast for 2001 is significantly higher than the ADB's previous estimate of 3.3 percent, made in April.

The greater than expected subregional growth in 2001 has been supported by the strong performances of Kazakhstan and Turkmenistan, the report said. Kazakhstan's economy was helped by the buoyant oil and gas sector that has benefited from new pipeline capacity. Consequently, "in view of the international prices for oil and gas remaining depressed until the global economic recovery takes hold in the latter half of 2002", the ADB now sees a 2002 GDP growth marginally slower than this year, The bank expects a GDP growth of 5.5 percent in the region, up from 4.8 percent forecast in April.

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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