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From 03.11.2002

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 investment deals.

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 Today)

Minister of Energy, US Ambassador Meet

Kazakhstani Minister of Energy and Mineral Resources Vladimir Shkolnik met with US Ambassador to Kazakhstan Larry Napper in Astana.

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 January 2001.

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 Eagle Partners)

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 Today)

Equities

The KASE-Shares index increased by 0.94% to 110.7919 by the close of trading on March 6.

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). (Irbis)

Company News

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 project.

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 projects.

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 resources. (Interfax)

***

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 year earlier.

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 million). (KASE)

***

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 stays low.

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 noted.

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 Eagle Partners)

***

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 risks.

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)

Money Markets

KZT/USD market rate dynamics during the week

Currency Rates

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  or newswire@ges.kz 

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