Politics and Macroeconomics
Foreign Minister: Kazakhstan Committed to
Attracting Foreign Investment
Kazakhstan is committed to a policy of
attracting maximum foreign investment to the country, Minister of Foreign
Affairs Kasymzhomart Tokaev declared this week at a regular briefing for
foreign diplomats stationed in Kazakhstan.
Tokaev particularly emphasized that contracts
signed with foreign companies in the mid-1990s, especially in the oil and gas
sector, would not be subject to changes or reviews. Tokaev denied what he
categorized as "rumors" to the contrary, though other state
officials, most recently Minister of State Revenues, have stated publicly that
the government would seek "clarifications" on some points of
The foreign minister declared,
"Attracting investment to the country is a definite policy" and
assured his audience that the government would "take every effort to
improve the investment climate in Kazakhstan."
Tokaev also revealed that the government has
plans to beef up the foreign ministry's investment committee by including a
seat on the committee for the economic policy department and implementing other
structural changes. Among the proposed changes: the department on bilateral
cooperation will be divided into two structures - a department on cooperation
with Asia, Africa and the Middle East and a department for Europe and America. (Kazakhstan
Minister of Energy, US Ambassador Meet
Kazakhstani Minister of Energy and Mineral
Resources Vladimir Shkolnik met with US Ambassador to Kazakhstan Larry Napper
Shkolnik and Napper focused on areas for
current and future Kazakhstan-US bilateral cooperation in the energy sector,
including the upcoming visit of US Special Advisor to the President and
Secretary of State for Caspian Energy Issues Steven Mann to Astana.
Shkolnik was positive on current
US-Kazakhstan cooperation on energy issues, noting the large number of joint
projects already underway.
The ministry of energy also noted that
Kazakhstan plans to propose deeper cooperation in four sectors - oil and gas,
power generation, atomic energy, and nuclear technology - as well as on nuclear
non-proliferation issues and environmental protection. (Interfax)
Kazakhstan Boasts Biggest Rise in Industrial
Output in CIS
As Commonwealth of Independent States leaders
gathered in Almaty last week, Kazakhstan received more good news on the
economic front. According to the CIS Interstate Statistics Community,
Kazakhstan reported the biggest growth in industrial output in the CIS for the
month of January 2002, with industrial production in the country up 13.2% from
Kazakhstan far outpaced its CIS allies in
industrial growth in January, with Armenia posting the second highest rate of
industrial growth at 7.1%. Moldova (6.1%), Georgia (5.0%), Belarus (2.9%),
Russia (2.2%), Tajikistan (2.1%), and Ukraine (1.7%) followed. Decreases in
production were registered in Azerbaijan (2%) and the Kyrgyz Country (21.5%).
Incidentally, the Interstate Customs
Committee did not receive economic data on two CIS member-states, both
Kazakhstani neighbors and trading partners in Central Asia: Turkmenistan, which
years ago ceased sending regular economic reports to the body, and Uzbekistan. (Golden
Gold, Currency Reserves up 1.1% in February
Kazakhstan's total international reserves,
which include the gold and foreign currency reserves as well as the National
Fund, rose by 1.1% during the month of February to total USD 3.864 billion, the
National Bank announced this week.
The National Bank's gold and forex reserves
rose by 0.6% in the second month of the year to total USD 2.576 billion. The
republic's net foreign currency reserves increased to USD 12.3 million due to
currency purchases on the domestic market. At the same time, state gold assets
increased by USD 2.7 million during the reported period as a result of a 5.3%
rise in world gold prices.
Kazakhstan's monetary base fell by 5.9% in
February and totaled KZT 536 billion as of March 1. (Kazakhstan
The KASE-Shares index increased by
0.94% to 110.7919 by the close of trading on March 6.
KASE-Shares index and weekly volume of trades
Note: KASE-Shares index is based on ask
prices for equities in A Listing
In the period between February 28 and March
6, 2002, the volume of equity trades at the KASE decreased to 550,200 USD from
1,693,434.46 USD in the previous period. The shares traded during the period
were common shares of Bank TuranAlem (BTAS), Bank Center Credit (CCBN)
and preferred shares of ATFB (ATFBp) and Mangistaumunaigas (MMGZp).
Number of Shares Sold
Closing Price USD
Oil & Gas
The rehabilitation of the Uzen oil field,
originally scheduled to conclude a year ago, has been extended to the year
2003, reported the press service of Uzenmunaygas, the owner of the
field. In part, the decision to extend the rehabilitation period stemmed from
Uzenmunaygas' difficulties in choosing an operator for the revitalization
The rehabilitation is to be financed in part
by a 17-year, USD 109 million loan from the World Bank that was granted in
1996. Uzenmunaygas is to provide co-financing for the project to the tune of
USD 27.1 million.
The aim of the project is to achieve a
"significant" boost in oil output at the Uzen field, where in 2001
Uzenmunaygas produced 4.169 million tons of oil and gas condensate. According
to Uzenmunaygas officials, the rehabilitation efforts are hoped to bring
"second life" to the field and prolong its term of development. (Interfax)
According to government regulation #248 of
February 25, 2002, new integrated national oil and gas company KazMunayGas
has been named the new full-authority department to represent the government in
the Production Sharing Agreements for the North Caspian and Karachaganak
According to the regulation, the ministry of
energy and mineral resources should form the charter capital of KazMunayGas by
handing over state-owned shares and other assets from the two former national
companies that merged to form the new company: Kazakhoil and TransNefteGas.
Along with other organizational and
registration tasks, the ministry was assigned to submit a proposal on a scheme
to represent the government's interests in oil production contracts and on the
precise division of power in oil sector operations between state departments
and the new national company.
The government regulation also identifies the
members of the KazMunayGas board of directors; Deputy Minister of Energy and
Mineral Resources Uzakbay Karabalin will chair the board. The board of
directors also includes First Deputy Minister of Economy and Trade Alexander
Andryushenko, Prime Minister's office Deputy Director, Abdulak Nalibaev, State
Property and Privatization Committee Chairman Maksutbek Rakhanov, and
KazMunayGas President Lyazzat Kiinov.
State oil and gas company Kazakhoil
represented the state in PSAs and managed state-owned shares in international
oil projects until December 2000, when a government organization transferred
those responsibilities directly to the ministry of energy and mineral
Major Kazakhstani oil producer JSC
Mangystaumunaygas turned out over 708,630 tons of oil in the first two
months of 2001, beating January-February 2001 production of 678,350 tons.
The company produced 334,630 tons of
hydrocarbons in February, some 12,630 tons more than anticipated and 11,230
tons more than February 2001 output.
The rise in output was credited to the
efficiency of operations at the Zhetybay field and occurred in spite of the
fact that 264 wells at the Kalamkas field were suspended for several days last
month as a result of transport problems.
Mangystaumunaygas officials said that they
expect to turn out 362,900 tons of oil in March, an output target which would
require the company to ramp up daily production capacity to 12,200 tons. This
is considered a realizable goal, as the company averaged 12,500 tons of output
per day for much of late 2001, with daily output only falling off in the last
three months as a result of the difficult winter conditions at the fields. (Interfax)
Canadian oil company Hurricane
Hydrocarbons, owner of the Hurricane-ShNOS group in Kazakhstan, reported a
50% drop in fourth quarter 2001 earnings, as the company's rising output was
unable to overcome weak world oil prices.
Hurricane's Q4 2001 earnings fell to USD 23
million, or 27 cents a share, as compared to USD 46.3 million a year earlier.
The company's cash flow similarly plummeted
last year, falling from USD 52.2 million (62 cents per share) at year-end 2000
to USD 27.3 million at the end of 2001. The company's fourth quarter revenue
fell to USD 128.2 million in 2001 versus USD 134.4 million during that period a
Hurricane's fourth quarter 2001 output in
Kazakhstan stood at 110,000 barrels per day. The company expects average
production to rise to 150,000 bpd in 2002.
Despite the earnings report, Hurricane shares
closed up 26 Canadian cents on March 6 at CAD 19.01 on the Toronto Stock
Exchange. The company's strong overall performance in 2001, as well as rumors
that the company could be a takeover target, helped drive its stock up 76%
since the beginning of last year. (Reuters)
Banking & Finance
The volume of operations with state
securities during the first two months of the year increased three-fold in
comparison with the reported period in 2001; the volume of trading in
January-November 2001 reached KZT 408.5 billion (USD 2.6 billion).
Operations with corporate securities also
trebled during the reported period and totaled KZT 11.9 billion (USD 78.2
The Kazakhstani National Bank has
lowered the country's key refinancing rate from 9% to 8% as a result of
continuing low inflation, announced National Bank Chairman Grigoriy Marchenko
at a press- conference.
The refinancing rate, which is only an
indicative rate, has been steadily reduced in the last year, from 14% at the
start of 2001 to 9% by December.
In January Marchenko hinted that the
refinancing rate could be reduced 7-7.5% by year- end if the inflation rate
Kazakhstan posted a 6.3% rise in inflation in
2001. This year the bank is predicting just a 6.4% rise.
In February the National Bank announced plans
to gradually switch from the refinancing rate to an average weighted rate on
sale and repurchase deals (a "repo rate") as its key indicator in
monetary and economic policy. (Interfax)
Major Kazakhstani commercial bank Temirbank
expects its net profit to hit USD 2.5 million in 2002, five times higher than
the bank's profits in 2000, told Temirbank Managing Chairman Oleg Kononenko.
Among other moves under consideration,
Temirbank management is weighing the possibility of offering up a 63% stake in
the bank to foreign investors. The planned stock emission, which would be
placed on international markets, would help the bank realize its plan to boost
its charter capital by 2.6 times to USD 24.5 million.
According to Kononenko, Temirbank's assets
accrued to USD 146 million in 2001, a 58% increase over the previous year.
Asset growth of 50% or higher is expected over the next few years, Kononenko
Temirbank is committed to pursuing a more
transparent and open strategy in its banking activities, including more active
contacts with auditing companies. Kononenko noted that Temirbank was planning
to enlist international auditing and consulting firm PriceWaterhouseCoopers to
help draft a five-year strategic development program for the bank. (Golden
Specialized trading of the Kazakhstan
State Development Bank's first emission of tenge-denominated shares opened
on the Kazakhstan Stock Exchange (KASE) on March 2. The bank's current
announced charter capital is KZT 30 billion, of which KZT 27 billion has
already been paid. The stock emission consists of 600,000 simple shares with a
nominal value of KZT 50,000 per share.
According to a statement from KASE, the
issuer hopes to raise KZT 1.5 billion in the emission. The auction will accept
both competitive and non-competitive bids. The nominal price of the bonds will
be indexed to the tenge/dollar exchange rate in order to reduce devaluation
The State Development Bank was established by
a presidential decree in 2001 and was founded to provide medium and long-term
credits to the real sector of the economy. The bank has a charter capital of
KZT 30 billion, with the national government holding a 75% share and local
executive bodies of the cities of Astana and Almaty cities jointly holding a
25% interest in the financial institution. (Interfax)
KZT/USD market rate dynamics during the week
ForEx market rate 11.03.02
National Bank rate 11 March 2002
Note: Some of the information quoted in this issue has been provided to
us by Golden Eagle Partners. For more information on those
articles, please contact: Andrew Rearick