3 15 12-2011 kazakhstan_1624
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SPONSORED SECTION THURSDAY, DECEMBER 15, 2011 | 3 THE GLOBAL EDITION OF THE NEW YORK TIMES . OIL AND GAS | Rising production The fields where the United States, Europe and China meet A 2003 state oil and gas development study assessed Kazakhstan’s exist- ing and potential deposits and off- shore reserves under the Caspian seabed at around 8 billion tons of oil equivalent. These included 4.35 billion tons of crude oil, 518 billion cubic meters of natural gas and 61 million tons of gas condensate, or about two-thirds of Kazakhstan’s total acknowl- edged reserves of 12 billion tons of oil equivalent. Kazakhstan’s oil production, which has risen in the 20 years since independence to 1.4 million barrels a day, is centered on three major consortiums. Tengiz, the biggest, is a U.S.-led operation in the central- west of Kazakhstan. The second, named after the Karachaganak field where it oper- ates, is a European-dominated venture in the northwest. The third, on the southwest- ern peninsula of Mangistau, is operated by a Chinese-controlled venture, one of the many Chinese projects scattered throughout Kazakhstan. In the first half of this year, Kazakhstan produced 33.96 million tons of crude oil and 6.36 million tons of gas condensate, repre- senting increases of 3 percent and 5.4 per- cent year on year, respectively. In the same period, it produced 19.93 billion cubic me- ters of natural gas, a rise of 9.2 percent year on year. Associated gas totaled 10.14 billion cubic meters, up 8.5 percent from the first half of 2010. In terms of production and capacity, Ten- gizchevroil, operating on the Caspian shore, is considered the jewel in the crown of Ka- zakhstan’s oil industry. Led and 50 percent owned by Chevron of the United States, the consortium includes ExxonMobil (25 per- cent), KazMunaiGas (20 percent) and Lukoil (5 percent). In 2010, Tengizchevroil in- creased output by 15 percent, producing 567,000 barrels per day. Coming in second is Karachaganak, with reserves estimated at 1.2 trillion cubic me- ters of natural gas and 1 billion tons of gas condensate and associated oil. Discovered in 1979, the field began operating in 1984 under Karachaganakgazprom. After independence, it was handed over to Kazakhstan. The field is being exploited by Karachaganak Petroleum Operating, along with the joint operators British Gas of the United Kingdom and Eni of Italy, each with a 32.5 percent stake. Chevron and Lukoil own 20 percent and 15 percent, respectively. KazMunaiGas’s participation in the consorti- um is under discussion. As for the China National Petroleum Cor- poration, it operates five oil-field develop- ment projects. In 1997, CNPC acquired a 60.3 percent stake in AktobeMunaiGas, Kazakhstan’s fourth-largest oil company, and in 2003 it increased its shares with an additional 25.12 percent. Production of crude oil has more than doubled, from 2.65 million tons in 1997 to 5.9 million tons in 2006. In 2005, in Kazakhstan’s deep south, CNPC acquired PetroKazakhstan. According to an agreement with the Ministry of Energy and Mineral Resources, CNPC transferred 33 percent of its shares in PetroKazakhstan to KazMunaiGas in 2006, retaining the re- maining stake. In 2007, PetroKazakhstan produced 10.07 million metric tons of oil. Shymkent Refinery processed 4.07 million metric tons of crude oil. On the shore of the Caspian, in 2003 CNPC purchased 35 percent and 65 per- cent of shares in Chevron Texaco North Buz- achi Inc. from Nimir and Texaco, respective- ly. As a result, it owns 100 percent of the North Buzachi field. CNPC and Lukoil cur- rently have 50 percent holdings in North Buzachi and are jointly developing the field. In 2007, the second-phase construction project at North Buzachi addressed the problem of limited gathering and transporta- tion capacity, and oil production was in- creased to 35,000 barrels a day. South of Buzachi, on the Mangistau pen- insula, CNPC has acquired a 50 percent stake along with KazMunaiGas in the local operator MangistauMunaiGas, which is Ka- zakhstan’s third-largest producer after Ten- giz and Karachaganak. The purchase fol- lowed an earlier one in 2004, when CNPC and the China North Industries Corporation jointly acquired 50 percent of shares in the Konys and Bektas Oil Field (KAM Project), each taking 25 percent. Located in the Tur- gai basin, the field covers 431 square kilo- meters (166 square miles) and has 21.64 million tons of recoverable reserves. The Kazakhstan-China Crude Oil Pipeline, with an annual delivery capacity of 10 million tons, is jointly owned by CNPC and KazMun- aiGas, each with a 50 percent stake. Ac- cording to the CNPC: ‘‘The successful Sino- Kazakh oil and gas cooperation is highly ap- preciated by the Kazakh government and people, and is generally acknowledged as a successful model of economic cooperation between the two nations. CNPC AktobeMun- aiGas has been highly praised many times by both the Kazakh president and prime minister, as they have named CNPC the best foreign investor in Kazakhstan.’’ C.v.d.L. Multinationals helped Kazakhstan produce 33.96 million tons of crude oil in the first half of 2011. AGRICULTURE | Outstanding yields This year marks record grain harvest for a global leader in agriculture B esides being a major supplier of glob- al energy, Kazakhstan is among the leading countries in providing its people with food. This year’s grain harvest is almost a third of Russia’s, meaning that Ka- zakh farmers produce nearly three times the amount of grain per capita as their northern counterparts. On Nov. 11, President Nursultan Nazar- bayev hailed what he called Kazakhstan’s largest grain harvest in 55 years: close to 30 million tons, including more than 20 mil- lion tons of wheat. There is still considerable room for growth in the sector, though, to op- timize and stabilize agricultural productivity. With large markets such as China, India and the Middle East within reach, there are ex- ceptional opportunities for profitability in a sector that employs nearly a third of the population. Farming is still relatively re- cent in most of Kazakhstan, which has been breeding cattle for more than 6,000 years. The cultivation of grain has a long history only in the far south, tra- versed by the ancient Silk Road from China to the Mediter- ranean. In the vast plains in the north, Cossack settlers from central Russia first introduced farming in the late 15th century. A breakthrough came, however, with the Virgin Land campaign of the mid-1950s, initiated by the Soviet leader Nikita Khrushchev and later supervised by his successor, Leonid Brezhnev. The steppes were converted into huge crop-growing areas in the northern provinces of Kazakhstan and the southern regions of Siberia. This successful campaign propelled Ka- zakhstan into the ranks of global grain pro- ducers, a position it continues to hold today. For the first 10 months of 2011, with the harvest nearly completed, the value of Ka- zakhstan’s agricultural output was $13 bil- lion, according to the National Statistics Agency. For the year, Kazakhstan expects cereal output of 26 million tons, a record- breaking figure more than double that of the summer harvest of 2010. Last year, farm- ers throughout the Northern Hemisphere were hit by floods in the southern regions and by drought in the north. In 2011, climatic conditions have been much better, leading to solid reserves and stable prices on world markets. In early November, the ministry of agricul- ture reported an impressive output of 29.5 million tons of cereals for the summer har- vest. Favorable weather conditions and im- proved irrigation technology, particularly in the south, were the main reasons for the rise in productivity. While in previous years, Kazakhstan was at the bottom of the former Soviet Union’s productivity list, in 2011 its yield increased to 1.84 tons per hectare, up from 0.94 tons in 2010. The results put Ka- zakhstan among the world’s six largest grain producers. Deputy Agriculture Minister Marat Tole- bayev says that Kazakhstan’s grain export capacity for 2011 will be around 15 million tons, up from 10 million in 2010. According to Tolebayev, the country has the potential to double its output and triple its export capacity, provided the agricultural sector continues to modernize and new invest- ments flow in. Substantial reserves, main- tained since the mid-2000s, guarantee that increases in ex- ternal sales will not harm the do- mestic market and keep the price of bread, a sensitive issue around the world, affordable. As of Nov. 1, Kazakhstan had 25 million tons of cereal reserves, in- cluding 22.6 million tons of wheat, 1.64 mil- lion tons of barley and smaller quantities of rice, oats, rye and corn. The state agency that controls grain ex- ports also coordinates marketing and sales operations with two other grain-exporting countries, Russia and Ukraine. The agency purchases fixed quantities of grain from farms against guaranteed prices, allowing farmers to sell their surplus on the free market. Russia expects a harvest of 93.9 million tons of grain, including 55.1 million tons of wheat, for 2011, and aims to boost the fig- ure to an all-time high of 105 million tons in 2012. Ukraine is expected to produce nearly 53 million tons of grain through the year, with the target for 2012 set at 54 million. This brings the combined export capacity of the three former Soviet Union grain produ- cers close to 50 million tons in the current July-to-June marketing period. C.v.d.L. Kazakhstan’s grain export capacity for 2011 will be around 15 million tons IN HIS OWN WORDS | Timur Kulibayev, head of the National Welfare Fund Samruk-Kazyna Stimulating private enterprise as an engine of growth T his year, Kazakhstan celebrates its 20th anniversary as an independent state. With the fourth-largest subsoil deposits in the world, totaling 133 million tons, Kazakhstan needs to extact the maxi- mum benefits from these reserves. Its main tool for doing so, the National Welfare Fund Samruk-Kazyna, manages state-held as- sets worth $60 billion, representing around half of the country’s annual gross domestic product and some 320,000 jobs. Though controlled by the state, Samruk-Kazyna is not a state company in its own right. Its core mission is to stimulate private enterprise as an engine for economic development. To facilitate and encourage private initiative, Samruk- Kazyna creates, maintains and develops opportunities for private operators and investors to contribute to a dynamic business sector in Kazakhstan. During its two decades as a sovereign nation, under the administration of Presi- dent Nursultan Nazarbayev, Kazakhstan has transformed from a derelict former re- public of the Soviet Union with a stagnant, centrally planned economy marked by soar- ing inflation and unemployment to a country of strong economic performance and pro- gress, with growth rates among the highest in the world. Over this period, Kazakhstan’s GDP per capita has increased more than tenfold, from $700 in the early 1990s to $10,000 as of this year. Kazakhstan has implemented drastic reforms, including introducing a market economy and large-scale privatization in vir- tually all economic sectors. These have pumped a large amount of investment, both domestic and foreign, into the economy. Di- rect foreign investment since independence totals $150 billion. Investors include such leading multinational corporations as Chev- ron, Royal Dutch Shell, Arcelor Mittal, RusAl and many others. Attractive fiscal conditions in Kazakhstan have played a large part in these investments. According to a study by Ernst & Young, Kazakhstan is today one of the world’s three fastest- growing economies, with strong macroeconomic fundamentals to sustain this growth. Just a few weeks ago, Standard & Poor’s upgraded Kazakhstan’s sovereign credit rating from BBB to BBB+. Fitch followed suit, upgrad- ing Kazakhstan’s long-term foreign and local currency issuer default ratings from BBB- to BBB and from BBB to BBB+, respectively. The outlooks on the ratings are positive. In the aftermath of the global financial crisis, which affected Kazakhstan deeply, GDP growth for this year, predicted to reach about 7 percent, has almost returned to its precrisis level. Kazakhstan’s main challenge lies in maintaining its strong economic perfor- mance while shifting its chief source of rev- enues from commodity sales to manufac- turing and services. Samruk-Kazyna is playing a fundamental role in this process. Currently, the fund has 20 large-scale, high- profile industrial investment projects under development, representing total invest- ments of $14 billion. The projects are being carried out by Kazakhstan’s blue-chip indus- trial corporations, including the state-con- trolled national oil and gas company, KazMunaiGas; the national railroad com- pany, Kazakhstan Temir Zholy; the state nu- clear company, Kazatomprom; and others. Sectors include oil and gas refining, petro- chemicals, transportation and nuclear energy. Foreign partners include global multinationals. Today, Samruk-Kazyna is preparing a porfolio of new investment projects worth $15 billion. It is open to partnerships with in- ternational companies in such areas as ag- riculture, electricity generation, petrochemic- als, chemicals, offshore oil and gas services, mining and metallurgy. Energy-based resources continue to be the main focus for industrialization projects. Since independence, Kazakhstan has in- creased oil output by 300 percent and gas output by 400 percent. In 2010, Kazakh- stan was responsible for 2.1 percent of all oil supplies in the world. Hydrocarbon output in Kazakhstan has not yet reached its peak. In 2012-13, com- mercial production at the offshore Kashagan field in the Caspian is set to take off. Initial output is scheduled to reach 300,000 barrels a day, to be increased in stages to a million barrels a day later in the decade. Kashagan is among the world’s richest oil deposits, with recoverable re- serves of 1.5 billion tons of crude oil. Offshore production is poised to place Kazakhstan among the world’s largest oil suppliers. Along with higher production, Timur Kulibayev, head of the National Welfare Fund Samruk-Kazyna. Kazakhstan is today one of the world’s three fastest- growing economies Kazakhstan is increasing its market distribu- tion with the construction of oil and gas ex- port facilities in every direction. Special at- tention is being paid to China and other fast- growing markets in East and South Asia. Be- sides geographic diversification, Kazakh- stan is seeking to expand its market share not just in crude oil and gas, but also in oil and petrochemical products. With an eye toward increasing invest- ment, production and exports, Kazakhstan has played a vital role in the formation of the Customs Union with Russia and Belarus, which has been in place since summer 2010. As of next year, the organization will become a Single Economic Space, with free movement of goods, people, skills and cap- ital within its borders along with uniform con- ditions for external trade. This development, given Kazakhstan’s position as a tax- friendly host for investors, will provide it with free access to a market of 170 million people, thereby increasing investment value and return prospects. Kazakhstan has earned its place as gateway to the Single Economic Space. Its road map for growth is steadily taking shape in a stable social, political and economic en- vironment, benefiting from a legal regime that keeps pace with ever-changing and shifting international conditions and, most important, from its people, who are dedic- ated to hard work and personal and com- munal achievement. Within this framework, Samruk-Kazyna’s task will be to continue to develop these advantages for the maximum benefit of all. ALMATY | Urban transport Almaty opens first line of underground rail system O n Dec. 1, Kazakhstan’s main me- tropolis, Almaty, saw the opening of its first underground rail line, the second in former Soviet Central Asia after the network in Tashkent. The line is 8.5 kilo- meters, or just over five miles, long and runs northeast to southwest along two of the main avenues in the city center, serving The new subway line, serving seven stops in the city center, will be extended toward the west. seven stations. The new line is expected to relieve pressure on Almaty’s busy roads and shorten traveling time for its passengers. The plan for the network was first con- ceived and adopted in 1985, when Almaty was still the capital of Kazakhstan. Con- struction started three years later, following a local government decree signed by present-day President Nursultan Nazar- bayev, who at the time was the chairman of the cabinet of ministers of the Soviet Repub- lic of Kazakhstan. The Soviet breakup, which cut off all funding from Moscow and caused major economic havoc for the newly inde- pendent Soviet republics, disrupted the work. Only in 2003 did sufficient funding be- come available to resume construction. The seven new stations have been dec- orated with panels depicting different stages of Kazakhstan’s history and aspects of traditional daily life. The line is to be exten- ded toward the western suburbs of Almaty in years to come, and a second line will be constructed toward the northern parts of the city, including the airport. The first line has cost around a billion dol- lars so far, financed by the state. This in- cludes seven trains supplied by South Ko- rea’s Hyundai. The entire structure has been thoroughly tested and proven to be earth- quake-proof. Automatic signaling and warn- ing systems make the overall control net- work the most advanced in the entire former Soviet area. C.v.d.L. KAZENERGY ALIYA NURMAGAMBETOVA SAMRUK-KAZYNA PRESS SERVICE Kazakhstan’s 20th anniversary Looking back, thinking ahead We congratulate the people of Kazakhstan with the 20th Independence Anniversary These years have defined the future of the country with a strong and prospering economy, where united efforts have changed the lives of millions of citizens for the better, ensuring confidence in tomorrow. Along with Kazakhstan, JTI (Japan Tobacco International) has developed equally fast. We have achieved impressive growth and contributed to the economy by increasing the number of employees to 1,000 highly-qualified professionals, and by investing over 120 million USD into Kazakhstan’s development. We have proved ourselves a reliable partner to the state and are looking forward to continue working on this progress together. www.jti.com
Transcript of 3 15 12-2011 kazakhstan_1624
SPONSORED SECTION THURSDAY, DECEMBER 15, 2011 | 3THE GLOBAL EDITION OF THE NEW YORK TIMES.
OIL AND GAS | Rising production
The fields where the United States, Europe and China meet
A 2003 state oil and gas developmentstudy assessed Kazakhstan’s exist-ing and potential deposits and off-
shore reserves under the Caspian seabedat around 8 billion tons of oil equivalent.These included 4.35 billion tons of crude oil,518 billion cubic meters of natural gas and61 million tons of gas condensate, or abouttwo-thirds of Kazakhstan’s total acknowl-edged reserves of 12 billion tons of oilequivalent.
Kazakhstan’s oil production, which hasrisen in the 20 years since independence to1.4 million barrels a day, is centered onthree major consortiums. Tengiz, thebiggest, is a U.S.-led operation in the central-west of Kazakhstan. The second, namedafter the Karachaganak field where it oper-ates, is a European-dominated venture inthe northwest. The third, on the southwest-ern peninsula of Mangistau, is operated by aChinese-controlled venture, one of the manyChinese projects scattered throughoutKazakhstan.
In the first half of this year, Kazakhstanproduced 33.96 million tons of crude oil and6.36 million tons of gas condensate, repre-senting increases of 3 percent and 5.4 per-cent year on year, respectively. In the sameperiod, it produced 19.93 billion cubic me-ters of natural gas, a rise of 9.2 percent yearon year. Associated gas totaled 10.14 billioncubic meters, up 8.5 percent from the firsthalf of 2010.
In terms of production and capacity, Ten-gizchevroil, operating on the Caspian shore,is considered the jewel in the crown of Ka-zakhstan’s oil industry. Led and 50 percentowned by Chevron of the United States, theconsortium includes ExxonMobil (25 per-cent), KazMunaiGas (20 percent) and Lukoil(5 percent). In 2010, Tengizchevroil in-creased output by 15 percent, producing567,000 barrels per day.
Coming in second is Karachaganak, withreserves estimated at 1.2 trillion cubic me-ters of natural gas and 1 billion tons of gascondensate and associated oil. Discoveredin 1979, the field began operating in1984 under Karachaganakgazprom. Afterindependence, it was handed over toKazakhstan.
The field is being exploited byKarachaganak Petroleum Operating, alongwith the joint operators British Gas of theUnited Kingdom and Eni of Italy, each with a
32.5 percent stake. Chevron and Lukoil own20 percent and 15 percent, respectively.KazMunaiGas’s participation in the consorti-um is under discussion.
As for the China National Petroleum Cor-poration, it operates five oil-field develop-ment projects. In 1997, CNPC acquired a60.3 percent stake in AktobeMunaiGas,Kazakhstan’s fourth-largest oil company,and in 2003 it increased its shares with anadditional 25.12 percent. Production ofcrude oil has more than doubled, from 2.65million tons in 1997 to 5.9 million tons in2006.
In 2005, in Kazakhstan’s deep south,CNPC acquired PetroKazakhstan. Accordingto an agreement with the Ministry of Energyand Mineral Resources, CNPC transferred33 percent of its shares in PetroKazakhstanto KazMunaiGas in 2006, retaining the re-maining stake. In 2007, PetroKazakhstanproduced 10.07 million metric tons of oil.Shymkent Refinery processed 4.07 millionmetric tons of crude oil.
On the shore of the Caspian, in 2003CNPC purchased 35 percent and 65 per-cent of shares in Chevron Texaco North Buz-achi Inc. from Nimir and Texaco, respective-ly. As a result, it owns 100 percent of theNorth Buzachi field. CNPC and Lukoil cur-rently have 50 percent holdings in NorthBuzachi and are jointly developing the field.In 2007, the second-phase construction
project at North Buzachi addressed theproblem of limited gathering and transporta-tion capacity, and oil production was in-creased to 35,000 barrels a day.
South of Buzachi, on the Mangistau pen-insula, CNPC has acquired a 50 percentstake along with KazMunaiGas in the localoperator MangistauMunaiGas, which is Ka-zakhstan’s third-largest producer after Ten-giz and Karachaganak. The purchase fol-lowed an earlier one in 2004, when CNPCand the China North Industries Corporationjointly acquired 50 percent of shares in theKonys and Bektas Oil Field (KAM Project),each taking 25 percent. Located in the Tur-gai basin, the field covers 431 square kilo-meters (166 square miles) and has 21.64million tons of recoverable reserves.
The Kazakhstan-China Crude Oil Pipeline,with an annual delivery capacity of 10 milliontons, is jointly owned by CNPC and KazMun-aiGas, each with a 50 percent stake. Ac-cording to the CNPC: ‘‘The successful Sino-Kazakh oil and gas cooperation is highly ap-preciated by the Kazakh government andpeople, and is generally acknowledged as asuccessful model of economic cooperationbetween the two nations. CNPC AktobeMun-aiGas has been highly praised many timesby both the Kazakh president and primeminister, as they have named CNPC the bestforeign investor in Kazakhstan.’’
C.v.d.L.
Multinationals helped Kazakhstan produce 33.96 million tons of crude oil in the first half of 2011.
AGRICULTURE | Outstanding yields
This year marks record grain harvestfor a global leader in agriculture
B esides being a major supplier of glob-al energy, Kazakhstan is among theleading countries in providing its
people with food. This year’s grain harvest isalmost a third of Russia’s, meaning that Ka-zakh farmers produce nearly three timesthe amount of grain per capita as theirnorthern counterparts.
On Nov. 11, President Nursultan Nazar-bayev hailed what he called Kazakhstan’slargest grain harvest in 55 years: close to30 million tons, including more than 20 mil-lion tons of wheat. There is still considerableroom for growth in the sector, though, to op-timize and stabilize agricultural productivity.With large markets such as China, India andthe Middle East within reach, there are ex-ceptional opportunities for profitability in asector that employs nearly a third of thepopulation.
Farming is still relatively re-cent in most of Kazakhstan,which has been breeding cattlefor more than 6,000 years. Thecultivation of grain has a longhistory only in the far south, tra-versed by the ancient Silk Roadfrom China to the Mediter-ranean. In the vast plains in thenorth, Cossack settlers fromcentral Russia first introduced farming in thelate 15th century. A breakthrough came,however, with the Virgin Land campaign ofthe mid-1950s, initiated by the Soviet leaderNikita Khrushchev and later supervised byhis successor, Leonid Brezhnev. The steppeswere converted into huge crop-growing areasin the northern provinces of Kazakhstan andthe southern regions of Siberia.
This successful campaign propelled Ka-zakhstan into the ranks of global grain pro-ducers, a position it continues to hold today.For the first 10 months of 2011, with theharvest nearly completed, the value of Ka-zakhstan’s agricultural output was $13 bil-lion, according to the National StatisticsAgency. For the year, Kazakhstan expectscereal output of 26 million tons, a record-breaking figure more than double that of thesummer harvest of 2010. Last year, farm-ers throughout the Northern Hemispherewere hit by floods in the southern regionsand by drought in the north. In 2011, climaticconditions have been much better, leading
to solid reserves and stable prices on worldmarkets.
In early November, the ministry of agricul-ture reported an impressive output of 29.5million tons of cereals for the summer har-vest. Favorable weather conditions and im-proved irrigation technology, particularly inthe south, were the main reasons for therise in productivity. While in previous years,Kazakhstan was at the bottom of the formerSoviet Union’s productivity list, in 2011 itsyield increased to 1.84 tons per hectare, upfrom 0.94 tons in 2010. The results put Ka-zakhstan among the world’s six largest grainproducers.
Deputy Agriculture Minister Marat Tole-bayev says that Kazakhstan’s grain exportcapacity for 2011 will be around 15 milliontons, up from 10 million in 2010. Accordingto Tolebayev, the country has the potential
to double its output and triple itsexport capacity, provided theagricultural sector continues tomodernize and new invest-ments flow in.
Substantial reserves, main-tained since the mid-2000s,guarantee that increases in ex-ternal sales will not harm the do-mestic market and keep the
price of bread, a sensitive issue around theworld, affordable. As of Nov. 1, Kazakhstanhad 25 million tons of cereal reserves, in-cluding 22.6 million tons of wheat, 1.64 mil-lion tons of barley and smaller quantities ofrice, oats, rye and corn.
The state agency that controls grain ex-ports also coordinates marketing and salesoperations with two other grain-exportingcountries, Russia and Ukraine. The agencypurchases fixed quantities of grain from farmsagainst guaranteed prices, allowing farmersto sell their surplus on the free market.
Russia expects a harvest of 93.9 milliontons of grain, including 55.1 million tons ofwheat, for 2011, and aims to boost the fig-ure to an all-time high of 105 million tons in2012. Ukraine is expected to produce nearly53 million tons of grain through the year,with the target for 2012 set at 54 million.This brings the combined export capacity ofthe three former Soviet Union grain produ-cers close to 50 million tons in the currentJuly-to-June marketing period. C.v.d.L.
Kazakhstan’sgrain exportcapacity for2011 will bearound 15
million tons
IN HIS OWN WORDS | Timur Kulibayev, head of the National Welfare Fund Samruk-Kazyna
Stimulating private enterprise as an engine of growth
T his year, Kazakhstan celebrates its20th anniversary as an independentstate. With the fourth-largest subsoil
deposits in the world, totaling 133 milliontons, Kazakhstan needs to extact the maxi-mum benefits from these reserves. Its maintool for doing so, the National Welfare FundSamruk-Kazyna, manages state-held as-sets worth $60 billion, representing aroundhalf of the country’s annual gross domesticproduct and some 320,000 jobs.
Though controlled by thestate, Samruk-Kazyna is not astate company in its own right.Its core mission is to stimulateprivate enterprise as an enginefor economic development.To facilitate and encourageprivate initiative, Samruk-Kazyna creates, maintains anddevelops opportunities forprivate operators and investorsto contribute to a dynamic business sectorin Kazakhstan.
During its two decades as a sovereignnation, under the administration of Presi-dent Nursultan Nazarbayev, Kazakhstanhas transformed from a derelict former re-public of the Soviet Union with a stagnant,centrally planned economy marked by soar-ing inflation and unemployment to a countryof strong economic performance and pro-gress, with growth rates among the highestin the world. Over this period, Kazakhstan’sGDP per capita has increased more thantenfold, from $700 in the early 1990s to$10,000 as of this year.
Kazakhstan has implemented drasticreforms, including introducing a market
economy and large-scale privatization in vir-tually all economic sectors. These havepumped a large amount of investment, bothdomestic and foreign, into the economy. Di-rect foreign investment since independencetotals $150 billion. Investors include suchleading multinational corporations as Chev-ron, Royal Dutch Shell, Arcelor Mittal, RusAland many others. Attractive fiscal conditionsin Kazakhstan have played a large part inthese investments.
According to a study by Ernst& Young, Kazakhstan is todayone of the world’s three fastest-growing economies, with strongmacroeconomic fundamentalsto sustain this growth. Just afew weeks ago, Standard &Poor’s upgraded Kazakhstan’ssovereign credit rating fromBBB to BBB+.
Fitch followed suit, upgrad-ing Kazakhstan’s long-term foreign and localcurrency issuer default ratings from BBB- toBBB and from BBB to BBB+, respectively.The outlooks on the ratings are positive. Inthe aftermath of the global financial crisis,which affected Kazakhstan deeply, GDPgrowth for this year, predicted to reachabout 7 percent, has almost returned to itsprecrisis level.
Kazakhstan’s main challenge lies inmaintaining its strong economic perfor-mance while shifting its chief source of rev-enues from commodity sales to manufac-turing and services. Samruk-Kazyna isplaying a fundamental role in this process.Currently, the fund has 20 large-scale, high-profile industrial investment projects under
development, representing total invest-ments of $14 billion. The projects are beingcarried out by Kazakhstan’s blue-chip indus-trial corporations, including the state-con-trolled national oil and gas company,KazMunaiGas; the national railroad com-pany, Kazakhstan Temir Zholy; the state nu-clear company, Kazatomprom; and others.Sectors include oil and gas refining, petro-chemicals, transportation and nuclearenergy. Foreign partners include globalmultinationals.
Today, Samruk-Kazyna is preparing aporfolio of new investment projects worth$15 billion. It is open to partnerships with in-ternational companies in such areas as ag-riculture, electricity generation, petrochemic-als, chemicals, offshore oil and gasservices, mining and metallurgy.
Energy-based resources continue to bethe main focus for industrialization projects.Since independence, Kazakhstan has in-creased oil output by 300 percent and gasoutput by 400 percent. In 2010, Kazakh-stan was responsible for 2.1 percent of alloil supplies in the world.
Hydrocarbon output in Kazakhstan hasnot yet reached its peak. In 2012-13, com-mercial production at the offshoreKashagan field in the Caspian is set to takeoff. Initial output is scheduled to reach300,000 barrels a day, to be increased instages to a million barrels a day later in thedecade. Kashagan is among the world’srichest oil deposits, with recoverable re-serves of 1.5 billion tons of crude oil.
Offshore production is poised to placeKazakhstan among the world’s largest oilsuppliers. Along with higher production,
Timur Kulibayev, head of the National WelfareFund Samruk-Kazyna.
Kazakhstanis today one of
the world’sthree fastest-
growingeconomies Kazakhstan is increasing its market distribu-
tion with the construction of oil and gas ex-port facilities in every direction. Special at-tention is being paid to China and other fast-growing markets in East and South Asia. Be-sides geographic diversification, Kazakh-stan is seeking to expand its market sharenot just in crude oil and gas, but also in oiland petrochemical products.
With an eye toward increasing invest-ment, production and exports, Kazakhstanhas played a vital role in the formation of theCustoms Union with Russia and Belarus,which has been in place since summer2010. As of next year, the organization willbecome a Single Economic Space, with freemovement of goods, people, skills and cap-ital within its borders along with uniform con-ditions for external trade. This development,given Kazakhstan’s position as a tax-friendly host for investors, will provide it withfree access to a market of 170 millionpeople, thereby increasing investment valueand return prospects.
Kazakhstan has earned its place asgateway to the Single Economic Space. Itsroad map for growth is steadily taking shapein a stable social, political and economic en-vironment, benefiting from a legal regimethat keeps pace with ever-changing andshifting international conditions and, mostimportant, from its people, who are dedic-ated to hard work and personal and com-munal achievement. Within this framework,Samruk-Kazyna’s task will be to continue todevelop these advantages for the maximumbenefit of all.[
ALMATY | Urban transport
Almaty opens first line of underground rail system
O n Dec. 1, Kazakhstan’s main me-tropolis, Almaty, saw the opening ofits first underground rail line, the
second in former Soviet Central Asia afterthe network in Tashkent. The line is 8.5 kilo-meters, or just over five miles, long and runsnortheast to southwest along two of themain avenues in the city center, serving
The new subway line, serving seven stops in the city center, will be extended toward the west.
seven stations. The new line is expected torelieve pressure on Almaty’s busy roads andshorten traveling time for its passengers.
The plan for the network was first con-ceived and adopted in 1985, when Almatywas still the capital of Kazakhstan. Con-struction started three years later, followinga local government decree signed by
present-day President Nursultan Nazar-bayev, who at the time was the chairman ofthe cabinet of ministers of the Soviet Repub-lic of Kazakhstan. The Soviet breakup, whichcut off all funding from Moscow and causedmajor economic havoc for the newly inde-pendent Soviet republics, disrupted thework. Only in 2003 did sufficient funding be-come available to resume construction.
The seven new stations have been dec-orated with panels depicting differentstages of Kazakhstan’s history and aspectsof traditional daily life. The line is to be exten-ded toward the western suburbs of Almatyin years to come, and a second line will beconstructed toward the northern parts ofthe city, including the airport.
The first line has cost around a billion dol-lars so far, financed by the state. This in-cludes seven trains supplied by South Ko-rea’s Hyundai. The entire structure has beenthoroughly tested and proven to be earth-quake-proof. Automatic signaling and warn-ing systems make the overall control net-work the most advanced in the entire formerSoviet area.
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Kazakhstan’s 20th anniversaryLooking back, thinking ahead
We congratulate the people of Kazakhstanwith the 20th Independence Anniversary
These years have defined the future of the country with a strong and prosperingeconomy, where united efforts have changed the lives of millions of citizens for thebetter, ensuring confidence in tomorrow.
Along with Kazakhstan, JTI (Japan Tobacco International) has developed equally fast. Wehave achieved impressive growth and contributed to the economy by increasing thenumber of employees to 1,000 highly-qualified professionals, and by investing over 120million USD into Kazakhstan’s development.
We have proved ourselves a reliable partner to the state and are looking forward tocontinue working on this progress together.
www.jti.com
