Embassy of Kazakhstan

 
Kazakhstan
News Bulletin
Released by the Embassy of the Republic of Kazakhstan to the United States of America

No 28 October 14, 2008

POLITICS

• Newly appointed US Ambassador meets with top Kazakh officials
• New links forged with Kazakhstan oil industry city
• Iran’s health minister to visit Kazakhstan

ECONOMY

• Kazyna and Samruk merging into single national welfare fund
• UK's BG to pursue new gas projects in Kazakhstan
• Brief overview of investing and banking in Kazakhstan from Russia/Eurasia Executive Guide

OTHER NEWS

• A little slice of Scotland... in Kazakhstan

POLITICS

Newly appointed US Ambassador meets with top Kazakh officials

Kazinform

“Bilateral relations with the US develop dynamically”, Kazakhstan’s President Nursultan Nazarbayev said after receiving credentials from the newly appointed US Ambassador to Kazakhstan Richard Hoagland.

President Nazarbayev emphasized that the two countries have reached a high level of mutual understanding on the issues of international stability, energy security, nonproliferation, fight against terrorism, extremism, and support of political reforms.

“In the economic sphere we are working on implementing the new Kazakh-US initiative on public-private partnership. Its aim is to diversify Kazakhstan’s economy and attract American businesses to the non-extractive sector”, Kazakh President stressed.

He reminded that during the recent visit of the US State Secretary Condoleezza Rice to Kazakhstan a wide range of issues on bilateral, regional and global agenda were discussed.

At a press briefing Mr. Hoagland said that he was planning to build even more productive relations between the US and Kazakhstan that would meet the interests of both nations based on mutual respect, confidence and objective reality.

“Kazakhstan is a strategic partner in all aspects, particularly in nonproliferation. Due to a forward-looking financial reform Kazakhstan attracted foreign investments, thus reducing the poverty level and nurturing the middle class. The United States of America contributed to these developments through investments to the oil and gas sector. Today these investments make up to $11 billion. And this figure will grow”, he stressed.

Later this month Ambassador Hoagland met with Kazakhstan’s Secretary of State  Kanat Saudabayev. At the meeting the parties discussed the issues on the agenda of Kazakhstan-US relations. US ambassador expressed his confidence in further development of the strategic partnership between the two countries and noted that he would make every effort to help it develop. “Kazakhstan is a very important and global partner for America and other countries in nonproliferation and other areas. We expect our close cooperation to continue”, Ambassador Hoagland said.

New links forged with Kazakhstan oil industry city

Press and Journal

Aberdeen’s lord provost cemented new links with the Kazakh oil industry city Atyrau on Oct 10.

Lord Provost Peter Stephen and his counterpart, Salimzhan Nakpayev, the Akim, or Mayor of Atyrau, signed a landmark document laying the way forward for the relationship between the two cities.

Mr Stephen attended a trade mission in Kazakhstan this week with council officials and north-east business leaders.

A memorandum of understanding was signed between Aberdeen and Western Kazakhstan in October 2003 with the aim of strengthening ties.

The proposals agreed yesterday include more exchange visits by youngsters, businesses and public bodies, as well as encouraging Aberdeen residents to holiday in Atyrau, and wider promotion of Kazakhstan across Scotland.

The lord provost said: “The document I signed with the Akim today marks a major new contribution to the further development of friendship and co-operation between our two cities.

“Aberdeen and Atyrau are both major energy cities with clear mutual interests.

“We have much to gain from closer ties and the signing of the document underlines our commitment to see our business together grow and grow in the years to come.”

A delegation from Atyrau will be attending the World Energy Cities Partnership annual meeting in Aberdeen next month as observers.

Iran’s health minister to visit Kazakhstan

IRNA 
 
Iran's Minister of Health and Medical Education Kamran Baqeri Lankarani, heading a delegation, will visit Kazakhstan from October 14-15, to participate in a conference celebrating the 30th anniversary of the Declaration of Alma-Ata at the International Conference on Primary Health Care.

The minister is due to hold talks with some Kazakh officials during the visit.

The conference aims to express the need for urgent action by all governments, all health and development workers, and the international community to protect and promote the health of all people of the world.

It was the first international declaration underlining the importance of primary health care. The primary health care approach has since then been accepted by member countries of World Health Organization (WHO) as the key to achieving the goal of health for all.

ECONOMY

Kazyna and Samruk merging into single national welfare fund

Interfax-Kazakhstan

Samruk Sustainable Development Fund and Kazyna State Holding announced a merger into a single National Welfare Fund Samruk-Kazyna, Kazakhstan president Nursultan Nazarbaev announced.

"In order to consolidate all states assets I signed a decree to merge Kazyna and Samruk into a single fund,” he said at the governmental meeting on Monday in Astana.

Prime Minister Karim Masimov will be the chair of the board of directors of the newly established fund. Kairat Kelimbetov, prior head of the president’s administration, has been named the chair of the management board.

The President pledged to provide 5 billion dollars for the capitalization of Samruk-Kazyna from10 bl dollar stabilization assets of the National Fund.

In a month’s time public blocks of shares in Kazatomprom, Kazakhmys, ENRC, Kazakhstan Mortgage Company, Kazakhstan Mortgage Loan Guarantee Fund and Zhilstroybank will also be transferred to the new amalgamated organization.

UK's BG to pursue new gas projects in Kazakhstan

Reuters

Britain's BG teamed up with Kazakh state oil and gas company KazMunaiGas on Wednesday to jointly develop new gas projects in Kazakhstan including power generation and production of gas powered vehicles.

BG is co-leading the development of the huge Karachaganak oil and gas field in Kazakhstan along with Italy's Eni. The British company said earlier this week it was eyeing ways to expand its presence in Central Asia's biggest oil producer.

Clare Young, commercial manager of BG Kazakhstan's downstream business, said BG had signed an agreement with KazMunaiGas  earlier in the day to form a joint working group to explore opportunities in the natural gas market.

"KMG (KazMunaiGas) asked us two years ago to develop the gas markets in Kazakhstan," she told an annual oil and gas conference in the Kazakh financial capital Almaty.

"In 2007 BG produced a study with a number of opportunities to produce natural gas in Kazakhstan. These opportunities include the development of natural gas vehicles, natural gas trains, natural gas power and co-generation."

BG was one of the first Western energy majors to enter the Kazakh market in the 1990s shortly after the Central Asian nation gained independence from the Soviet Union.

Brief overview of investing and banking in Kazakhstan from Russia/Eurasia Executive Guide

Extract from an article by Aset Shyngyssov, Bakhytzhan Kadyrov and William Partlett (Dewey & LeBoeuf LLP)

Since gaining independence, Kazakhstan has been an attractive destination for foreign capital.1 However, the Kazakh government has continued to redraft aspects of its investment law.2 This Article will trace recent developments, seeking to determine the continued attractiveness of the Kazakh legal environment.

As a civil law country, Kazakh legislation on foreign investment is grounded in both the Civil Code and individual laws. Despite inconsistent judicial implementation, this legal framework plays an important role in deter-mining investment risk for foreign investors. Indeed, investment provisions represent the starting point for investment disputes and provide a rough set of rules that foreign investors, domestic investors, and the government must follow.

This article will draw on enacted laws, draft laws, and governmental proclamations to argue that Kazakh investment law is moving in the direction of increasing the formal role of the government in key parts of the Kazakh economy (see Table 1). Part 2 will demonstrate how the government has enacted laws and issued draft laws that increase its formal role in ensuring legal compliance in the extractive industry sector. Part 3 will show how the government is signaling that it will simplify tax regulations in the new tax code, hoping to ensure more effective tax collection from an enlarged tax base. If these trends continue and are embodied in Kazakh legislation, this new legal system will increase the risk that foreign investors will face state interference in strategic sectors such as oil and gas, but should improve the risk profile in other sectors.

Extract from an article by Joseph С. Carter, Ш (McGuireWoods Kazakhstan LLP)

Kazakhstan's commercial banking sector has grown dramatically in recent years. While the sector, like that in many other countries, is currently stressed as a result of the credit and liquidity crises that have rippled around the globe since the Fall of 2007, the longer term prospects of Kazakhstan's banks remain bright primarily because of Kazakhstan's very positive economic outlook associated with its vast oil, gas and mineral resources. In addition, Kazakhstan's Government took relatively quick action in response to the crises by establishing a large program to deposit State reserve fund moneys with certain large banks to be used to support the country's real estate, construction and small and medium sized business sectors that began to experience difficulties toward the end of 2007. The Government's action appears to have helped most of the country's top banks, although international rating agencies continue to express concern about the banks' asset quality and levels of foreign borrowings. Despite near term issues connected to the crises, Kazakhstan's banking sector presents an attractive investment opportunity for foreign banks.

For more please see Russia/Eurasia Executive Guide Number 9, volume 18 of September, 2008

OTHER NEWS

A little slice of Scotland... in Kazakhstan

Reuters

In a smoke-filled bar in the Kazakh financial capital Almaty, the laughter of Scottish ex-pats is loud and boisterous.

More than three thousand miles (5,491 km) separate the Scottish Highlands and the Central Asian steppe, but a mutual interest in oil and gas has created a surprising alliance.

Residents estimate that around 400 Scots live in ex-Soviet Kazakhstan, a resource-rich country roughly the size of western Europe.

Most come from Aberdeen, Britain's northeastern oil hub, and they bring with them their technical expertise.

"We're going to try attract Kazakhs to Aberdeen over the next few years and look at initiatives, and create further investment in Scotland from Kazakhstan," Lord Provost Peter Stephen of the Aberdeen City Council told an energy conference last week in Almaty.

He said over 100 companies from in and around Aberdeen are active in Kazakhstan, and the Scottish oil town even has a Kazakh consulate to serve the hundreds of Kazakhs who go to Scotland to train up for the oil business.

The Kazakh-British technical university, set up by a group of Scottish universities seven years ago, occupies a grandiose columned building in the centre of leafy Almaty, which housed parliament before the capital was moved to Astana.

Students attend study placements in Scotland.

"The oil industry here in Kazakhstan is expanding," said Aberdonian Ian Ross, an engineer who has been living in Almaty for two and a half years. He works at German consultancy firm ILF, which is advising on the construction of oil and gas pipelines to China from Kazakhstan.

"We have many schools of every oil field technology in Aberdeen. They should send people to enhance their knowledge of the oil industry," he said, puffing on a Kazakh-made Sovereign cigarette with a pint of lager in his other hand.

Dressed in a check shirt, blue jumper and faded jeans, Ross said he feels at home in Kazakhstan, where the number of Scots has swelled over past years as projects increased in size.

He regularly visits the 'Guns & Roses' pub on weekends, where a group of Aberdonians and other foreigners are served steaks and beers in dim lights to live music.

The Scottish-Kazakh relationship is one that makes sense, Provost Stephen from the Aberdeen council said.

"The history of nomadic tribes in Kazakhstan can even be likened to the clan system which existed in Scotland for hundreds of years... there are many similarities between us."

On Kazakh business Internet blog www.azoo.livejournal.com, one viewer wrote a post saying Scottish traders were beginning to use Kazakh lingo.

"Our Edinburgh broker recently said 'He's a bit of a kotakbas' about a local trader," the post said, highlighting the slang word 'kotakbas', which means 'dickhead' in Kazakh.

DIRECT FLIGHT?

The Aberdeen council says 98 percent of traffic between Britain and Kazakhstan's western oil city of Atyrau, which lies on the cusp of the Caspian Sea, goes through Scotland.

A memorandum of understanding, signed by Aberdeen and Kazakhstan in 2006, has helped oil major Royal Dutch Shell and gas firm BG enter the Kazakh energy sphere.

The council is now putting pressure on Kazakh state-controlled airline carrier Air Astana, which flies to London, to set up a direct route between Aberdeen and Atyrau.

"This would show the rest of the world that Kazakhstan and Scotland are fully open for business," Stephen said.

Air Astana has no plans to start a direct link, its European manager in London said, adding that the carrier has instead increased its Amsterdam-Atyrau service.

But perhaps for Scots living in the dusty Central Asian steppe, Scotland is not so far away.

News Bulletin of the Embassy of the Republic of Kazakhstan
Contact person: Zhanbolat Ussenov
Tel.: 202-232-5488 ext 104; Fax: 202-232-5845
E-mail: zhan@kazakhembus.com