Kazakhstan in World News: April to May 2007

General News

Iran and Kazakhstan discuss expansion of Mutual Ties
IRNA (April 20, 2007)
The Head of the International Institute for Dialogue among Cultures and Civilizations Mohammad Khatami and President Nursultan Nazarbayev discussed the expansion of Iran-Kazakhstan relations in various fields, as well as some political developments at mutual, regional and international levels… Appreciating Khatami’s participation in the Eurasian Media Forum Conference, Nazarbayev stressed his role in dialog among civilizations and understanding among world countries… Turning to his support for the development of bilateral ties during his presidential term, the Kazakhstan president expressed satisfaction with last year’s trade exchanges between the two countries, which reached two billion dollars and continues growing… Meanwhile, Nazarbayev announced his readiness for an official visit to Iran in the current year… For his part, Khatami urged that the present world situation, including the problems facing Iraq, can only be solved through detente… Iran’s former president is visiting Kazakhstan to attend the 6th Eurasian Media Forum Conference, which opened inAlmaty on Thursday… Khatami was the first lecturer at the inaugural ceremony of the ongoing event, which will continue for three days.

Oil and Gas News

KMG could participate in Russian IPO
RosBusinessConsluting, Russia
(April 14, 2007)
KMG might purchase additional shares in Russian power companies. Analysts have said that the national company’s strategy is a relatively sensible one. KMG now has large financial resources, and it believes that it obtain higher margins by diversifying its investment portfolio to include power firms, rather than solely oil and gas and mazut… KMG has sufficient resources to buy into companies such as Russian RAO United Electrical Stations… KMG Exploration & Production conducted an IPO in October 2006 on the LSE and the KASE. As a result, the company issued 40% of its shares for a total of $2.3 billion… KMG E&P’s market capitalization totaled $6.2 billion. …General Director Askar Balzhanov stated that the funds were earned would be used for “financing the further growth and development”… In late 2006, some sources reported that KMG intended to invest about one half of the money in Russian projects, at a little over $1 billion. KMG E&P Press Director Lyazzat Kokkozova refused to confirm or deny this information, however, according to RBK Daily… “Apparently, Russian electrical energy poses interest to all categories of strategic investors, including the national oil and gas company,” Semen Birg, an analyst of Finam Investment Company said.

Aker Kvaerner Unit wins Kazakhstan Oil Field Contract
AFX News, London
(April 16, 2007)
OSLO (Thomson Financial) – Norwegian engineering group Aker Kvaerner said that it has won together with ERSAI, a US $157 million contract for the first phase of the Kashagan oil field… Aker said the contract was awarded by Agip KCO, and early work by the Aker Kvaerner/ERSAI consortium had started for the hook-up and commissioning of the field… The Kashagan field is the first large-scale offshore petroleum development in Kazakhstan.

All Energy Contracts going under review
Resource Investor
(April 18, 2007)
All energy and mineral resources contracts in Kazakhstan will undergo an audit at the government’s behest… The vast Central Asian state has attracted tens of billions of dollars of foreign investment into its rapidly growing oil, gas and metals extraction industries. In recent years it has demanded terms more in its favor however, reflecting lower risks of investment…» Our subsoil policies should be aimed at diversifying the economy, so I am ordering the energy ministry to conduct an audit of all contracts in the subsoil sector, to see whether or not they solve the goals that we have set for ourselves», Prime Minister Karim Masimov told a government meeting… He gave no details, but the government has been seeking both to diversify the economy and to process raw materials inside the country where possible in order to maximize the economic benefit it gets from exports.

Energy Industry

Kazakhstan increases Nuclear Fuel Exports to Japan
Reuters (April 17, 2007)
Kazatomprom will take more than 40% of Japan’s nuclear fuel market after 2010. «Today, we deliver some 3-4% of the world’s uranium. We plan to occupy more than 40% of Japan’s market in the future,» President Mukhtar Dzhakishev said during a briefing on April 14. The demand for uranium in Japan is 8,500 tons per year, he said. «Kazakhstan will be delivering some four thousand tons per annum after 2010. We expect that we will be delivering uranium fuel,» he said… In 2007 the company will increase extraction to 6,937 tons, from 3,010 tons in 2006. …Dzhakishev said that at the end of April, the company expects to sign nearly 15 documents in Astana with a delegation of Japanese companies chaired by the Minister of Economics, Akira Amari and Director General of Japan’s Agency of Mineral Resources and Energy Harufumi Mochizuki… He said the documents would provide raw materials, help in the creation a future strategic partnership, establish fuel contracts, and engage in training and technology exchanges… “The expected visit opens new frontiers for engaging Kazatomprom in international cooperation,» Dzhakishev noted.

Finance and Investment

KMG E&P plans $303 Million in Dividends for 2006
Reuters (April 19, 2007)
KMG E&P reported on April 17 that its board proposed to pay dividends for 2006 at KZT 500 per share, or $0.684 per GDR… The total payments will be KZT 37 billion, or $303 million… The annual company shareholders meeting that will consider the dividend-related issue will take place on May 18… The dividends will allow the company to distribute a portion of additional profit among the company shareholders received in 2006 without preventing the financing investment projects of KMG E&P, including the acquisition of new assets and geological exploration…KMG E&P’s net profit totaled nearly $1 billion in 2006. The company’s major shareholder is the state owned KazMunayGas.

Aureos launches $100 Million Fund for Kazakhstan and Azerbaijan
Baku Today (April 24, 2007)
Emerging markets private equity fund manager Aureos Capital has launched a new $100 Million Central Asia Fund, which will be focused primarily on Kazakhstan and Azerbaijan… Apart from Kazakhstan and Azerbaijan, the Central Asia Fund team will also consider investments in Kyrgyzstan, Georgia, Tajikistan, Turkmenistan and Uzbekistan. Investments will range from $2 million to $10 million… Sev Vettivetpillai, chief executive of London-based Aureos Advisers, which provides funds advisory services to Aureos Capital, said, “Central Asia’s economy is expanding rapidly, and medium-sized businesses are seeing more opportunities as a result, so we are excited about the fund”. Aureos provides expansion and buy-out capital to unlisted mid-cap businesses in emerging markets,

Mining and Metallurgy

Vale to get 85% of Scarborough Project
Bloomberg (May 11, 2007)
Cia Vale do Rio Doce, the world’s largest iron-ore producer, will acquire 85 percent of a Kazakhstan copper project currently owned by Scarborough Minerals Plc… Malvern, England-based Scarborough obtained necessary approval from Kazakhstan’s government to permit the agreement with Vale, according to a statement released yesterday… Vale, based in Rio de Janeiro, will spend $4 million over two years to develop the Vostok project in preparation for a feasibility study. Scarborough will be reimbursed all expenditures from Jan. 1, 2005, to the date Vale acquires the stake, according to the statement. Vale will have an option to retain its stake by paying $1 million to Scarborough and funding the feasibility study… Vostok may contain two million metric tons of copper, according to estimates from the Soviet era. The price of metal has quadrupled in the past five years as demand from China, the world’s largest user, expanded in line with the country’s economic growth… Vale has committed to spending a minimum of $1.6 million before it can withdraw from the project. If it pulls out before the feasibility study is done, it must give the 85 percent stake back to Scarborough, according to the statement… Shares of Scarborough rose 5 pence, or 9.3 percent, to 59 pence, the highest since Aug. 9. The stock has dropped 26 percent in the past year, valuing the company at 59.9 million pounds ($119 million)… Copper for delivery in three months dropped $170, or 2 percent, to $8,150 a ton as of 4:42 p.m. on the London Metal Exchange.

Transportation News

Azerbaijani, Kazakhstani and Georgian Transport Workers gather in Aktau
AzerTAg (May 7, 2007)
A meeting of transport workers from Azerbaijan, Kazakhstan and Georgia ended in Aktau on May 5.The event was also attended by Azerbaijan’s Ministry of Transportation officials, the State Caspian Sea Shipping Company, and the Azerbaijan State Railways. Participants discussed the coordination of transport infrastructure operations, raising the competitiveness of the Aktau-Baku-Poti/Batumi and Aksaray-Samur-Poti-Batumi routes, reduction of railway tariffs and other issues… They prepared joint proposals to increase oil shipped via Azerbaijan and Georgia, and discussed a draft Azerbaijan-Kazakhstan agreement on international sea shipping… In conclusion, a protocol on the development of transport cooperation among the three nations was signed.