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


No 5, August 29, 2007

CEC officially declares “Nur Otan” winner of Kazakh elections
Kazakh President to participate in the UN General Assembly session

Kazakh environmental minister: Operations at Kashagan may be suspended because operator violates environmental laws
KazMunayGas and Rompetrol Holding SA announce the acquisition of a 75% interest in the Rompetrol Group NV by the Kazakh company
US intends to back Central Asian states’ WTO membership

CFO Summit Kazakhstan to be held in Almaty, from 6th – 8th November 2007
Global interest in Kazakh oil & gas market reflected in largest ever KIOGE,   15th Kazakhstan International Oil & Gas Exhibition and Conference to be held October 2- 5, 2007


CEC officially declares “Nur Otan” winner of Kazakh elections

Ruling “Nur Otan” party has won the parliamentary elections in Kazakhstan with 88.41 per cent of votes, according to a resolution of the Kazakh Central Electoral Commission (CEC).
Only “Nur Otan” has passed the 7 per cent threshold for representation in the Majilis, securing 98 seats, reads the resolution.

According to the official results, the Nationwide Social Democratic Party has won 4.54 per cent of votes, “Ak Zhol” has won 3.09 per cent, “Auyl” has won 1.51 per cent, the Communist People's Party has won 1.29 per cent, the Party of Patriots has won 0.78 per cent, and “Rukhaniyat” has won 0.37 per cent.

The CEC has also approved the choice of nine MPs elected by the Assembly of People of Kazakhstan.

After the recent elections the new Majilis has twice as many women as the old Majilis, first deputy chairman of “Nur Otan” Bakytzhan Zhumagulov told journalists in Astana on Friday.
According to Zhumagulov, while nominating members of the Majilis the political council of the party has taken in to account the interests of all regions in the republic.

Kazakh President to participate in the UN General Assembly session

Kazakhstan’s President Nursultan Nazarbayev will take part in the annual session of the United Nations General Assembly on September 24-26 in New York. The news was announced during the meeting between Kazakhstan’s Secretary of State, Mr. Kanat Saudabayev, and the Permanent Representative of the UN Development Program in Kazakhstan.

Mr. Saudabayev said that last time President Nazarbayev participated in the UN General Assembly’s session in 2000. “We hope that this will be a fruitful visit, meeting of Kazakh President with the UN leadership will add a new impetus to the development of our relations”, he said.

Nursultan Nazarbayev will deliver a speech at the session’s plenary sitting and hold talks with other leaders.


Kazakh environmental minister: Operations at Kashagan may be suspended because operator violates environmental laws

The operations at Kashagan (on oil field in the Kazakh sector of the Caspian Sea) may be suspended because Eni, the operator of the project, violates the environmental legislation.

“I would like to say that the operations at Kashagan may be stopped. We are conducting a regular audit and have every reason to believe that the operator does not follow the requirements contained in the environmental laws of Kazakhstan,” Environmental Minister Nurlan Iskakov told a meeting of the government in Astana on Tuesday.

“We have notified the Prosecutor General’s Office accordingly,” he added.

“Furthermore, taking into account the fact that Agip has failed to fulfil the obligations earlier assumed, we must follow the law and withdraw the permit because the company’s further operations may cause an irreparable damage to the environment,” Iskakov said.

He also mentioned that the required documents will be sent to the Ministry of Energy and Mineral Resources in order to suspend the operations.

Prime Minister Karim Massimov instructed Minister of Energy Baktykozha Izmukhambetov at the meting “to look into the situation today and take measures in accordance with the legislation of the Republic of Kazakhstan.”

Prime Minister Massimov earlier said that the Kazakh government might change the operator of the Kashagan project.

“We are very disappointed with the progress of the project. If the operator does not succeed in resolving these problems we may be forced to change him," Massimov said.

According to Izmukhambetov, Eni earlier officially notified the Kazakh Energy Ministry of changing the date of the commercial production start at Kashagan from 2008 to the second half of 2010.

According to Eni's new proposal, the costs associated with the project will grow considerably - from 57 up to 136 billion dollars, said Izmukhambetov.

One issue for discussions may be an increase in the Kazakh profit oil share from 10% up to 40%, according to the minister.

This is not the first delay. Under SPA the international consortium Agip KCO, working on the Kashagan field, should have started the commercial production at this field back in 2005. As this date happened to be unrealistic the parties started negotiating on a delay in the commencement of the field development and agreed that Agip KCO would start commercial operations at Kashagan in 2008.

In February 2004 Agip KCO reached an agreement with Kazakhstan government whereby the commencement of commercial oil production at Kashagan would be postponed till 2007-2008. In addition, in accordance with the documents signed by the parties, Agip KCO was to pay Kazakhstan a compensation for the delayed commencement of commercial oil production in an amount of $150 million.

AGIP KCO was created to implement the North-Caspian project after a respective Production Sharing Agreement (PSA) for the period of 40 years was signed in 1997. Under PSA the licensed area will also include the three oil-bearing structures Kalamkas, Aktoty, Kairan in addition to Kashagan. These 4 structures consist of 11 marine blocks, which occupy an area of about 5,600 square kilometres.

According to Agip KCO the recoverable oil reserves at Kashagan are estimated at a minimum of 7-9 billion barrels and the total oil in-place - at 38 billion barrels.

Currently Agip KCO is owned by Eni (the single operator of the North-Caspian Project), Total, ExxonMobil, Royal Dutch/Shell which have 18.52 per cent each, ConocoPhillips - 9.26 per cent, Inpex and KazMunayGas - 8.33 per cent each.

KazMunayGas and Rompetrol Holding SA announce the acquisition of a 75% interest in the Rompetrol Group NV by the Kazakh company


KazMunayGas ("KMG", LSE: KMG, KASE: RDGZ) announced it has signed a binding share purchase agreement to acquire from Rompetrol Holding SA (Switzerland) a 75% equity interest in Netherlands-based The Rompetrol Group NV ("TRG", BVB: RRC, PTR), assessed at an enterprise value of 3,616 million US$. Rompetrol Holding will continue to hold the remaining 25% equity in TRG. The sale was the culmination of a 7 month private auction process conducted by Morgan Stanley's London-based Energy Group. The sale is conditional upon approval of the European Commission and other relevant competition authorities. The two shareholders anticipate that their agreement will be approved with enthusiasm as they are confident that it meets all the regulatory requirements and that the company will significantly contribute to the security of European energy supplies. The agreement was signed in Almaty on 24th of August.

TRG will be managed jointly by its two shareholders, KMG and Rompetrol Holding. KMG will appoint a majority of TRG's Board, which will reflect the new ownership structure. The two shareholders have decided to appoint Dinu Patriciu as Chairman and CEO of the company to secure continuity of vision and strategy in the management of the company. Mr. Patriciu enjoys the full confidence and support of the shareholders.

This agreement will bring about significant advantages to both shareholders and their respective clients. With this acquisition, one of the largest in its history, KazMunaiGas effectively doubles its refining capability by acquiring access to two TRG's refineries in Romania and significantly increases its retail infrastructure in European markets by acquiring access to 630 gas stations in seven European countries from Georgia to France. TRG has more than four million tons of refining capacity and the capability to distribute more than 7 million tons of oil products annually through its own wholesale and retail networks. Through this agreement, TRG secures long-term access to oil supplies.

TRG CEO Dinu Patriciu stated: "KMG's investment provides TRG with the access to raw materials and finance that the company needs to continue implementing its expansion plans, both through investments in refinery improvement, logistics and sensible well-priced acquisitions. The vision we have for TRG's growth is understood, shared and encouraged by our new partners."

The President of KazMunayGas JSC NC, Uzakbay Karabalin, stated: "The acquisition of a majority stake in TRG provides us with a footprint in important downstream markets in Europe, including France, Romania, Moldova and Bulgaria, as well as the ability to utilize TRG as a platform for future expansion. The company will focus its activities in the high-growth markets of the Black Sea, Balkans and Mediterranean regions. It effectively builds an energy bridge between the oil resources of Kazakhstan and the growing demand for refined products in Central, Eastern and Western Europe."

KMG's advisors included ABN Amro Bank, PriceWaterhouseCoopers, the law firms of Norton Rose (for Dutch and French law) and Wolff Theiss (for Romanian law), technical consultants Purvin & Gertz and environmental consultants ERM. TRG's advisors included Morgan Stanley, AKD Prinsen Van Wijmen (for Dutch law) and Salans (for French and Romanian law).

US intends to back Central Asian states’ WTO membership


Text of article by Aleksandr Zhelenin entitled: Invitation to trade: USA intends to lobby for WTO membership of Central Asian states, published by the Russian newspaper Nezavisimaya Gazeta on 13 August:

The states of Central Asia are getting the support of the United States in accession to the World Trade Organization [WTO]. The initiative was announced by US Deputy Assistant Secretary of State for South and Central Asian Affairs Evan Feigenbaum. Experts associate this with the disappearance of such a negative factor for the region as the Andijon syndrome.
"We have spoken out in favour of granting membership in the WTO to all five countries of the region," announced Deputy Assistant Secretary of State Evan Feigenbaum.

For the present day, out of the five Central Asian states, only Kyrgyzstan is a member of the WTO, having joined that organization in 1998. To say that this gave the mountain republic any particular advantages would be an exaggeration. Over the past nine years, the country has remained the poorest state in the region, just as it was before. In the opinion of the head of the Central Asia and Kazakhstan Department of the Institute of CIS Countries, Andrey Grozin, Feigenbaum’s words are an attempt to seize the initiative from Russia in Central Asia - "a desire to win over new capacities for influencing the domestic policy of the post-Soviet Asian republics." Then again, Grozin told Nezavisimaya Gazeta, the elite of the four Central Asian republics have varying attitudes towards the idea of joining the WTO. For example, the most economically developed state in Central Asia, Kazakhstan, has long declared accession to the WTO to be one of the main priorities of its foreign policy.

"For Turkmenistan, with its neutrality, or for Tajikistan with its numerous economic problems, membership in the WTO, on the contrary, is not a first-priority task," believes the expert. In these two countries, he believes, in speaking about the WTO, the Americans have in mind first and foremost the creation of opportunities for influencing the local elite. As for Uzbekistan, in Grozin’s opinion, the idea of membership in the WTO for this state on the part of the USA is a certain attempt to build bridges in hopes for the future. "The United States and their allies gained nothing from Tashkent’s international isolation," says the political analyst, "and therefore the new US initiative is oriented towards the future."

Moscow Carnegie Centre expert Aleksey Malashenko told Nezavisimaya Gazeta that the statement by the State Department representative corresponds to the position of the USA, which may be characterized in the following words: "The world of Central Asia must be accepted such that it is." This position, in his opinion, has prevailed for the past year-and-a-half in regard to the countries of the region, ever more greatly intensifying. This includes also in regard to the Uzbek regime. Attempts to exert pressure on Uzbekistan after the bloody events in Andijon in May of 2005 led nowhere. "The shock of Andijon has already passed long ago, and there is nothing surprising about the new initiative of the United States," believes Malashenko. It is another matter, he continues, that the accession of Uzbekistan or Turkmenistan to the WTO on general principles would hardly evoke any particular enthusiasm in these countries, because this would lead to "weakening of the economic and political leadership there."

However, in reality, as Malashenko believes, the Central Asian leaders will think long and hard before making the decision to join or not to join the WTO, "if this is not financially supported by the West and if some measures are not adopted to ease the process of accession to the World Trade Organization." It is unlikely that anyone would want to voluntarily repeat the sad experience of the neighbouring Kyrgyzstan.



6th – 8th November 2007, InterContinental, Almaty

CFO Summit Kazakhstan to be held in Almaty, from 6th – 8th November 2007

After the great success of  the Kazakhstan Growth Forum held annually in London with over 600 participants, CFO Summit Kazakhstan is set to be the key event in the 2007 calendar for finance professionals in Kazakhstan.

CFO Summit Kazakhstan promises to be a unique opportunity for the finance heads of the leading companies in Kazakhstan to come together to benchmark, network and share experiences. Amongst the key issues that have been highlighted in the course of our extensive research and which will be addressed in detail at the Summit are:

The role and functions of the CFO
Compliance with international accounting and book-keeping standards
Management of Joint Ventures in Kazakhstan
Effective budgeting, tax-planning, cost reduction and reporting techniques
A review of fund raising strategies: M & A, loans, bonds, project finance, private equity and debt                      financing
Preparing for an IPO and carrying it out
Corporate restructuring and the CFO

To find our more about the summit please visit http://www.adamsmithconferences.com/bkc1kzema
For general information about the programme and how you may get involved, please contact Anna Morozova on +44 20 7017 7452 or at: amorozova@adamsmithconferences.com
To learn how you can promote your products and services to this targeted audience of senior Kazakh finance professionals, please contact Lubo Stefanoff on: +44 20 7017 7439 or at lubo@adamsmithconferences.com
To learn about media partnership and press accreditation, please contact Giedre Klimaviciute on +44 20 7017 7432 or at Giedre@adamsmithconferences.com

Global interest in Kazakh oil & gas market reflected in largest ever KIOGE

15th Kazakhstan International Oil & Gas Exhibition and Conference to be held October 2- 5, 2007

Kazakhstan’s leading oil and gas industry exhibition and conference, KIOGE, celebrates its 15th Anniversary in October 2007. The event continues to reflect the industry’s growing interest in the Kazakh market with a record 600 companies exhibiting at Almaty’s Atakent Exhibition Centre. The Conference, held at the Intercontinental Almaty Hotel is likely to again attract over 1,000 delegates.

The 600 exhibiting companies come from 32 countries and will include 10 ‘National Stands’. 120 companies are exhibiting for the first time and 40% of all exhibitors come from outside the CIS.

KIOGE is attended by the biggest names in the global oil and gas industry and the Platinum Sponsor of KIOGE 2007 is Chevron. Throughout its history, the event has been supported by Ministry of Energy and Mineral Resources of Kazakhstan and JSC National Company ‘КаzМunaiGas’. The Minister of Energy & Mineral Resources, Mr Baktikozha Izmukhambetov and KazMunaiGas President, Mr Uzakbai Karabalin, will open KIOGE this year.

The exhibition will benefit from additional space in 2007 with the new Pavilion (10-B) being erected in time for the start of the event. This takes the size of the KIOGE exhibition to a total of 22,000m², a massive 15,000m² more than at the same event in 2000.

The KIOGE Exhibition and Conference is the focal point of a week long programme of events that attract the biggest gathering of oil and gas industry professionals in the country. This includes pre-conference work-shop, technical seminars, corporate presentations, hosted lunch meetings, drinks receptions, Gala Dinner Evenings, even a Golf Day.

A popular addition to KIOGE has been the Job Fair that was first featured in 2006. There is a huge amount of pressure on the job market for skilled and experienced workers in Kazakhstan’s oil and gas industry and the Job Fair brings together prospective candidates with participating companies who are looking to recruit additional staff.

This year’s Conference will include three days of presentations and debate that will explore Kazakhstan’s   growing importance in the global petroleum industry; key projects, players and prospects; investment opportunities in the petroleum sector; global markets and oil and gas transportation issues.

KIOGE’s International Conference Director, Matthew Moss commented. “A combination of favourable market conditions and the careful management of a successful exhibition and conference are helping to generate considerable momentum for KIOGE. The first week in October is now firmly established as an important date not just for the Kazakh oil and gas sector but the global industry as a whole.”

News Bulletin of the Embassy of the Republic of Kazakhstan
Contact person: Askar Tazhiev
Tel.: 202-232-5488 ext 106; Fax: 202-232-5845
E-mail: info@kazakhembus.com
Web-site: www.kazakhembus.com  

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