Kazakhstan
News Bulletin
Released weekly by the Embassy of the Republic of Kazakhstan
November 21, 2002 Vol. 4, No. 9
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In this issue:
Houston Initiative launched in U.S.
Kazakhstan says TCO suspension caused by financial dispute of "economists and accountants"
Oil and gas production up 16% and 26.4% in January-October
Kazakhstan produces 16.2 million tons of grain
Courts and media work to ensure better cooperation
Houston Initiative launched in U.S.
Astana and Washington aim to develop SME ties beyond oil and gas, strengthen middle class
Kazakhstan and U.S. officials launched the Houston Initiative on Wednesday with presentations at a major gathering of investors in Washington. They said the initiative, providing for joint Kazakhstan-U.S. government funding for the Small and Medium-sized businesses, would be key to establishing a solid middle class in the republic.
Deputy Prime Minister Karim Massimov of Kazakhstan, and Deputy Secretary of Commerce Sam Bodman and Deputy Assistant Secretary of State Lynn Pascoe, made their presentations to more than 100 business and academia people at the U.S. Chamber of Commerce on November 20.
Kazakhstan has got "a tremendous potential", which needs to be developed, and although energy is important, "it is more important to diversify" its economy, Deputy Secretary Bodman said. He called for cooperation to promote favorable investment climate and more business ties between the two countries, adding that the Houston Initiative will help achieve that. Mr. Bodman said the DoC is standing ready to provide assistance through its BISNIS program, business internship training and a good governance program in Kazakhstan.
"Our relationship with Kazakhstan is of strategic importance", said Ambassador Pascoe, adding that the two nations are working "to establish a diversified economy and a large middle class".
To that end, the two governments will jointly finance the Houston Initiative in the range of $11 million and $ 5.5 million respectively, he said, with additional resources in the range of 75 million being attracted from private sources. The money will be spent on financing initial feasibility studies and seminars with a view on promoting partnerships between companies in America and Kazakhstan that can be profitable and competitive.
"Houston Initiative will be important in establishing an environment for the successful development of small and medium-sized businesses in Kazakhstan," Deputy Prime Minister Karim Massimov said.
Kazakhstan says TCO suspension caused by financial dispute of "economists and accountants"
While state budget at stake, solution lies within contract, ministers say
Kazakhstan's ministers announced this week in Astana and in Washington that the suspension of expansion projects at giant Tengiz oil field announced last week, was a matter of financial dispute between the partners of the joint venture. They said the revenues of the state budget were at stake. However, they confirmed the Government's commitment to resolving the issue within the contract signed with the foreign partners in the Tengizcheroil (TCO) consortium that includes ChevronTexaco at 50% and ExxonMobil at 25%.
At a news conference in Astana on November 19, Minister of Energy Vladimir Shkolnik said foreign partners in TCO had insisted on financing the ambitious $3 billion project by reinvesting their profits into expansion works, which would mean Kazakhstan's state budget would lose out heavily due to unpaid profit taxes. The minister said the government was proposing that the venture should attract external borrowing, to maintain the current system of payments to the state budget.
A press release issued by the Ministry of Finance the same day said the budget would be losing on average $200 million per year until 2006 if the venture went ahead and reinvested profits into expansion works.
With TCO, the largest foreign investment project in Kazakhstan, being one of the largest contributors to the budget, local experts say these losses would have amounted to a significant blow to Kazakhstan as it works to improve the lives of its 15 million people in only the second decade of its independence.
The 40-year oil venture, set up in 1993, announced last week it was halting work on the expansion project. The plan to boost output to 22 million tons (440,000 barrels per day) of crude from 2005, up from this year's expected 12.7 million tons (254,000 bpd), consists of Sour Gas Injection (SGI), originally estimated at around $800 million, and a Second Generation Project (SGP) worth some $2.2 billion.
The ministers said the solution was possible through the mutual agreement of all the partners of the consortium within the contract. Kazakhstan's national oil and gas company KazMunaiGaz has a 20% stake in the consortium, which allows it to be a voting partner.
"All partners are in favor of the expansion project", the issue is how to finance it, Deputy Prime Minister Karim Massimov told reporters in Washington today. He said he was confident partners will find a solution.
Mr. Massimov, in Washington to discuss ways to expand bilateral trade and economic ties, met U.S. Commerce Secretary Donald Evans November 20 and said the Government is committed to improving the investment climate, and in particular to resolving the issue within the contract.
Mr. Evans confirmed the United States' commitment to long-term economic and strategic partnership with Kazakhstan. He said the republic's role in the global economy would expand, including through the development of its energy resources.
Oil and gas production up 16% and 26.4% in January-October
President sees oil production totaling 100 million tons by 2010
Kazakhstan's oil and gas condensate output rose by 16% from January to October to total 38.683 million tons. Total gas condensate produced by Kazakhstan's companies was estimated to total 4.179 million tons, up 33.1% from gas output in 2001. In the next two or three years, oil and condensate extraction will be increasing roughly five million tons each year. Production plans for this year are for around 45 million tons against last year's 40 million tons.
Gas production in Kazakhstan totaled 9.272 billion cubic meters from January to October of 2002, a 26.4% increase over the same period last year. Natural gas production reached 4.848 billion cubic meters, a 22.2% increase over last year, the Kazakhstan's government reported to the Oil Information Agency.
Speaking at a congress of Kazakh youth in Astana on November 13, President Nazarbayev said "oil production will reach 60 million tons by 2005, 100 million tons by 2010," adding that the country will be looking "with hope" at its energy sector. This industry, however, is to become only the basis and not the substitute for the diversified economy.
Kazakhstan produces 16.2 million tons of grain
Exports it to 32 countries, ships humanitarian aid to Afghanistan
Kazakhstan's 2002 grain harvest reached a net weight of 16.2 million tons after processing, the Ministry of Agriculture reported in a press release. According to earlier reports, 18 million tons of gross weight grain was harvested in Kazakhstan this year, a 2.1 million-ton increase over 2001 and a 6.7 million-ton increase over 2000 volumes. A total of 14 million hectares of land were cultivated in Kazakhstan this year, 24,000 hectares greater than last year.
According to the Ministry of Agriculture, from January 1 to October 31 of this year Kazakhstan exported 3.4 million tons of grain to 32 countries, including 776,000 tons to Iran, 400,000 tons to Azerbaijan, 272,000 tons to Russia, 195,000 tons to, and significant amounts to Tajikistan, Tunisia, Uzbekistan, Turkey, Kyrgyzstan and Jordan. The ministry also noted that Kazakhstan exports small shipments of grain to the European Union, the Baltic States, Africa and the Persian Gulf. In the summer of 2002 Kazakhstan also sent 3,000 tons of grain as humanitarian assistance to the Afghan people, and said it would be ready to ship more on commercial basis.
Courts and media work to ensure better cooperation
Number of media outlets grows to more than 1,700 in 2002, minister says
Kazakhstan's courts and media decided this week it was time for some reciprocal movement toward each other in order to provide the public with the best, and correct, treatment while in the courts, as well as with the information about the way judges do their job.
On November 19, two Supreme Court Justices, Mr. Serik Abdrakhmanov and Mrs. Marzhan Baltabayeva, and journalists from a number of media outlets signed a resolution outlining recommendations for the rules of relations between the media and the courts of the country. Journalists, media lawyers, and judges from the Supreme Court and regional courts attended the seminar in Almaty on November 19 that resulted in the resolution.
The document says the courts in Kazakhstan recognize the rights of journalists to receive and impart the information, undertake obligation to ensure access to publicly important information and to grant access to journalists to court hearings.
The media pledged to respect the courts, meaning journalists will not forestall the courts' decisions or try to influence the justice in any other way. They are expected to respect ethical and legal norms, be competent and objective.
A Supreme Court press secretary announced on Tuesday that the justices would hold hearings in December to review how courts in the country observe principles of operations transparency.
In an unrelated public statement at the national Parliament on November 18, Minister of Culture, Information and Public Accord Mukhtar Kul-Mukhammed announced that the number of media outlets in Kazakhstan has increased by 14% in 2002.
"As of November 1, Kazakhstan had 1,754 mass media outlets, including 1,167 newspapers, 451 magazines, 121 television and radio stations and 15 news agencies," the minister said. Newspapers and magazines account for 92% of the media market, television and radio account for 7% and news agencies represent 1%, he said. Some 80% of media outlets in Kazakhstan are non-governmental. Public associations own 159 media outlets, eleven publications belong to political parties and movements, and ten are owned by religious associations. Kazakhstan's media release their products in 11 languages.
Mr. Kul-Mukhammed denied reports about numerous instances of licenses being revoked from television and radio stations. "In fact, this year, the courts have revoked licenses of four television and radio stations", including one government-owned, "instead of the allegations of 'tens of hundreds'," he said.
"In several instances, it was proven in courts that those companies did not meet the commitments that they had assumed in getting broadcast frequencies, and thus violated license terms," the minister noted.
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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
