As the United States is engaging in regime change in Iraq, the political turmoil in the Middle East is driving up the oil prices. Kazakhstan is flush with oil and gas revenues. 
However, without targeted government policy, the long term economic consequences of the hydrocarbon boom may lead to crowding out investment in the non-petroleum sectors and appreciation of the Kazakh currency, the tenge. If President Nazarbaevs administration will continue to preside over increases in income disparities and underdevelopment, it eventually may face political instability due to inflated popular expectations. Kazakhstan has done little to prevent the Dutch disease, despite warnings from  the World Bank. 

BACKGROUND
According to government statistics, Kazakhstan is boasting an impressive 9.8 percent economic growth rate in 2002. It further expects GDP to grow at annual rates of 6.3-8.6 percent in 2004-2006, with total growth of over  27 percent in the next four years. Whether this ambitious target is achieved depends on volatile energy prices and the quality of national economic  management in Astana.

According to President Nazarbaev, who spoke at the recent Kazakh-Italian business forum in Rome, Kazakhstans projected economic growth for the first quarter of 2003 is 9 percent. Italian investment in Kazakhstan reached $1.3 billion dollars. But this is barely a drop in the ambitious goal of $100 billion in investment funds Nazarbaev wants to attract in the next 10-12 years. Kazakhstan may be interested in working with the Italian state-owned ENI, the operator of Agip-led consortium in the Kazakh sector of Northern Caspian, and of the giant Karachanganak field, to export oil via Iran. If such investments materialize, experts say, they will flow overwhelmingly to the overheated oil and gas sector.

Oil revenues continue to remain in record territory for 2003. Kazakhstan has boosted oil production by 16.6 percent in 2002, to 42 million tons. International oil majors, such as Shell and Hurricane oil have significantly expanded their Kazakhstani holdings.
Natural gas production and downstream production will also grow: Kazakhstan has increased natural gas exports by 13.2 percent, and produced 30 percent more of gas condensate. 

Kazakhstan will be developing Phase Three of the Karachaganak gas condensate field, which will require a $2 billion investment. The Amangeldy field in southern Kazakhstan will be expanded, and ChevronTexaco will open a polyethylene plant in April 2003. 

ExxonMobil is planning to develop a strategic program for Kazakhstan jointly with the Energy Ministry for years 2003-2010. The first iteration of the program will be submitted to the government in the third quarter of this year. 

Kazakhstan is boosting its hard currency and gold reserves, which grew by 9.1 percent to $5.5 billion in January, and further increased the National Fund to $1.933 billion, while gold reserves grew by 14 percent to $627 million, according to the Kazakh Central Bank press release quoted in the February Interfax Central Asian Business Report. The Central Bank said that Tenge money supply tripled, foreign deposits rose by 32.8 percent, and bank deposits increased by 46.2 percent, while lending rose 37 percent in 2002. 

Using growing demand for energy, Kazakhstan announced plans to become the  worlds largest uranium producer by the year 2027. Its national nuclear corporation, Kazatomprom, has increased the ore production from 794,000 tons in 1998 to 2.4 million tons in 2002. As it currently produces only five percent of the global output, the goal to become number one seems excessively ambitious. Kazakhstan has increased uranium production by 34 percent in 2002, and is planning to expand export to China, Japan and Russia. 

Astana is also interested in boosting its coal production from 70 million tons in 2002 to 74 million tons in 2003. The January 2003 figures are higher than January 2002 by 21 percent. 

High-level corruption and capital flight may be the most difficult to resolve. 
Most  often perpetrated, or aided and abetted, by top government officials, it is a net  loss to the people of Kazakhstan. Police measures are in themselves not effective, as law enforcement is corrupt and controlled by the perpetrators. The fish is rotting from its head. The government is unlikely to crack down on organized crime and corruption which plague the economy. As long as the government is not prosecuting the most odious exporters of capital, even if they are politically connected insiders, the local economy will remain too  inhospitable and bureaucracies too corrupt to make investment in non-energy sector attractive. 

Second, it is the time for the Kazakhstani government to bring internal energy prices, including natural gas and coal, to world levels. Todays high oil prices will allow to provide subsidies to retired or laid off workers, while closing down inefficient, energy-guzzling enterprises and hiking railroad tariffs. Energy can be exported to increase revenue. Some of the workers in remote company towns can be relocated to more livable venues.

Third, social sector reform is long overdue. While salaries are higher in the energy sector by a factor of at least two in Kazakhstan, most of the gigantic profits are not invested back home to create jobs outside of the oil and gas sector, nor are tax proceeds efficiently distributed to support the elderly, sick and poor. 

CONCLUSION
The Kazakh government can battle the Dutch disease by stimulating non-energy business development and job creation, by simplifying registration for new business and reducing corporate taxes and employment payments for these newly created entities. As USAID and a number of NGOs repeatedly demonstrated around the world, micro-lending to boost  entrepreneurship is yet another way to decrease unemployment and poverty.

In addition, some of the structural unemployment 20 percent in Kazakhstan, even higher in energy-poor Kyrgyzstan and Tajikistan can be alleviated by opening the doors of the oil and gas sectors to workers from the areas hit with particularly high unemployment. This can be achieved by loosening severe interior ministry residence registration rules, which are a hick-up of the old Soviet era propiska system, and by providing better living conditions in the company towns owned by the extracting industries. As World Bank Vice President Johannes F. Linn has suggested recently, regional cooperation is likely to alleviate some of the structural asymmetries and stimulate growth. Clearly, cooperation on water utilization, pipelines, transport, and commerce is the most logical.

Unequal income distribution in Kazakhstan, where average salary is barely over $1,000 a year, (and even more so in Kyrgyzstan and Tajikistan with only $200-$300 per capita incomes), may lead to economic dislocation, social conflict, and uncontrolled migration. Kazakhstani leaders were forewarned. Both Astana and international financial institutions should address these disparities while the energy bonanza lasts. 

AUTHORS BIO: Ariel Cohen, Ph.D., is Research Fellow in Russian and Eurasian Studies at the Heritage Foundation and author, with Gerald P. ODriscoll, of The    Road to Economic Prosperity for Post-Saddam Iraq (2003). His expertise includes international energy security. This piece was originally published on the Central Asia-Caucasus Institute  website.

The opening, or at least the beginning of the filling, of the oil pipeline of the Caspian Pipeline Consortium (CPC), from the Tengiz field in northwest Kazakhstan to  Novorossiisk on the Russian Black Sea coast, received deserved if extended -- indeed sensational -- publicity several weeks ago.   The CPC line is, after all, the first new pipeline to be built from the Caspian region since the demise of the Soviet Union. The pumping of oil into the pipeline began belatedly, but it is now expected that the first tanker will be filled in Novorossiisk in June. 

Yet all the attention paid to western Kazakhstan makes it difficult for most observers to gain an understanding of the overall energy balance in Central Asia. For example,  sight is often lost of Uzbekistan's regional role as an energy producer because of its two better-endowed neighbours, Kazakhstan and Turkmenistan. Yet as explained  below, Turkmenistan does not really come into play although it is certainly a regional actor; rather, Kazakhstan and Uzbekistan are the main players on the scene.
This article calls attention to overlooked aspects of the Central Asian energy balance, with special attention paid to Kazakhstan and Uzbekistan and the contrasts between  them and the significance of those contrasts. 

 1. The Caspian? Don't look where they're pointing 
One recent development widely noted was Kazakhstani President Nursultan Nazarbayev's statement of commitment -- in a Memorandum of Understanding  signed last month with Turkey, Georgia and Azerbaijan -- to pump Kazakhstani crude into the planned Baku-Tbilisi-Ceyhan (BTC) pipeline. (The crude may  come from the offshore Vostochny Kashagan field, which is still to be developed.)

However, other developments in the Kazakhstani energy sector have  attracted less notice.
Even though these developments are more modest than the CPC and BTC projects, their potential effects are no less wide-ranging.   For example, disputes between Kazakhstan and China over the management and development of the Aktobemunaigaz (AMG) and Uzenmunaigaz (UMG)  complexes have continued. As a result, it appears that plans to build a pipeline from western Kazakhstan into western China have been shelved, even  though those plans were in fact an integral part of the contract that the Chinese National Petroleum Company (CNPC) signed to acquire AMG and UMG  assets. Some of the oil produced by these two companies is taken by rail to the border between the two countries and then loaded for transport into China,  but this is a money-losing operation that Beijing is subsidizing only to keep its hand in the game. 

The game may not go on much longer.
Towards the end of last month, a senior CNPC official was quoted as saying that the pipeline from Kazakhstan to China will not be built in the near future and that whether it was built at all would depend on the size of the hydrocarbon reserves found in the region.

Meanwhile, Kazakhstan's state oil pipeline operator KazTransOil announced that it has established another route for oil from the region. 
Like Tengiz oil,  AMG oil has high concentrations of sulphur compounds that require dedicated pipelines and make the use of shared pipelines impossible. Until very  recently, the crude was confined to a special pipeline from the Zhanazhol field to Russia's refinery in Orsk. But a "sweetening" refinery was put into  operation earlier this year at the Bestamak oil-loading rail terminal, the product of which goes to the Atyrau refinery for subsequent pumping into the  Atyrau-Samara pipeline and delivery to Black Sea ports. 

In addition, according to KazTransOil, AMG crude will now also be delivered through the oil-loading rack at Bestamak to the port of Aktau and then taken by  tanker to Makhachkala (in Dagestan) for pumping into the Makhachkala-Tikhoretsk-Novorossiisk pipeline. 

 2. Uzbekistan's regional energy lever 
Another neglected but important event is Kazakhstan's recently announced decision to develop the Amangeldy gas field in the south of the country. The  significance of this decision is that Uzbekistan's influence in Central Asia will diminish still further as Kazakhstan continues to be the motor not only of  multilateral diplomacy but also of energy development. 

The Amangeldy field is planned to supply customers in southern Kazakhstan, where current demand for roughly 1.5 bn cmpy of gas is satisfied by imports  from Uzbekistan. Amangeldy and the adjacent Airykty deposits are estimated to contain reserves of 22 to 25 bn cm and could provide southern Kazakhstan  with 600 mm cmpy of gas beginning in 2003. 

Although Uzbekistani energy resources are often overlooked in the focus on Turkmenistani gas and Kazakhstani oil, Uzbekistan has in recent years -- indeed  in recent months -- used its gas as a political lever against other countries in the region. In particular, Tashkent has successfully used gas for leverage in  seeking short-term economic fixes for its dire domestic situation. 
For example, Uzbekistan last fall agreed to deliver 850 mm cm of gas to southern Kazakhstan at a concessionary price of $ 40 per 1,000 cm in exchange for  the reconnection of telephone lines with Kazakhstan and the right to have its trains pass through Kazakhstan. It obtained this agreement even though it  owes a $ 4 mm debt to Kaztelekom and rail-transit debts of $ 2 mm. 

So it seems that Russia is not the only state in Central Eurasia that uses energy supplies and pipelines for political arm-twisting; it just is more able to do so  than most others. Uzbekistan too is using its gas supplies for leverage against its neighbours. Meanwhile, Tashkent's version of "Realpolitik" arm-twisting is  fuelling the growing perception in Central Asia that Uzbekistan is seeking to become a regional hegemony. 

As such, antipathy to Tashkent is on the rise in the region. For example, Uzbekistan made territorial demands on Kyrgyzstan last year concerning the ethnic  Uzbek enclave of Sokh while engaging in a temporary suspension of gas exports to Kyrgyzstan as winter was beginning.To make up for the gas shortages,  Kyrgyzstan increased output at its hydro-electric power plants, a move that diminished water levels in reservoirs on which Uzbekistan draws to irrigate  spring planting. This side-effect then led Uzbekistan to renounce its territorial claims and assert its adherence to international legal norms for the resolution  territorial disputes. 

The cultural geography of Central Asian energy 
There is a reason why in the Soviet era the five republics we now call "Central Asia" were called, in Russia, "Kazakhstan and Middle Asia." The  demography and especially the topography of Kazakhstanare split between those of Central Asia and those of southern Siberia. This split is becoming all  the more evident as centrifugal forces threaten to tear the country apart. 

The economic life of the western part of the country, especially the northwest (and as typified by energy pipeline flows), is becoming more closely linked  with the West via trans-Caspian trade and communications flows. Likewise, western Kazakhstan's links with the South Caucasus, which is geographically  part of Europe (a fact that the European Union has recently recognized publicly), are increasingly direct. The north and northeast sections of the country,  meanwhile, remain connected to southern Siberia also through trade in raw materials. And the south is economically and even culturally separate from  both of the other sections. 

By contrast, Uzbekistan, because of its geographic situation, does not suffer so much from those types of problems. Indeed, Uzbekistan's  "periphery-periphery" problems are of a wholly different sort. Simply put, the population is exploding most rapidly in areas where jobs are least likely to be  created, even if the entire system became more receptive to foreign direct investment overnight. Five of the eight most densely populated provinces in the  former Soviet area are in Uzbekistan. (Besides the region in which the capital Tashkent is located, these are Andijan, Ferghana, Namangan and Khorezm.)
Yet, Uzbekistan is perhaps the most Central Asian of all five countries in the region. It is, for example, the one most affected by incursions of Islamic militants  based in Kyrgyzstan and supported by Afghanistan. Yet none of the geopolitical questions most pressing to Tashkent are directly energy-related. They might  be easier to handle if they were. 

For the sake of completeness, mention must also be made of Turkmenistan, which, with a population of close to 5 mm, is more easily held under the iron  grip of President Saparmurad Niyazov. He experiences no political "periphery-periphery" problem simply becausethe opportunities for social mobilization of  popular discontent have much less chance of reaching critical mass. For his development strategy, Niyazov had hoped to be able to export part of his  country's huge gas reserves to India by way of Pakistan, but for that an export pipeline would have to traverse Afghanistan. 

The lack of international recognition of the Taleban regime in Kabul has made financing for such a pipeline impossible to find. Meanwhile, Niyazov also has  unrealised dreams of a pipeline to China. However, as it now stands, Turkmenistan's pipelines mainly feed Russia by way of Uzbekistan.   Thus Turkmenistan is not really a player in the energy balance of Central Asia proper. With its distinctive history and ongoing "Turkmenisation" of the  national culture, it stands apart from both Kazakhstan and Uzbekistan (although it is in conflict with the latter over border demarcation and related issues).  So Uzbekistan is more clearly Central Asian than Kazakhstan, and Turkmenistan's profile verges at times on being South Asian. But Kazakhstan is Russian,  European and Asian all at the same time. 

4. Conclusion: Development in Uzbekistan and Kazakhstan contrasted 
The contrast between Kazakhstan's success in developing its energy resources and Uzbekistan's failure to develop its own can be traced back to 1994, when  Uzbekistan (now sinking ever deeper into the mire of economic stagnation), imposed currency-exchange restrictions in an effort to protect the national  economy during a year when the cotton crop was disastrous. Those restrictions were never lifted, and they have choked the country's development to this  day. The controls are quite severe and make for a very discouraging foreign-investment environment. 

Recent reports from Uzbekistan to the effect that the country's banking system has made some progress on the reform front are belied by the more recent  decision by the International Monetary Fund (IMF) not to replace its resident representative because of the failure to reform the exchange-rate system. The  IMF has not provided assistance to Tashkent for some time but had maintained a mission there in order to facilitate communication between the two sides.  Meanwhile, other reports suggest that the World Bank will reduce the value of its next three-year lending program in the country to an extremely modest 150 mm.

By contrast, Kazakhstan accepted basically all recommendations made to it by the IMF throughout the 1990s.
The country completed its banking system  reform program and is set to experience real economic growth, notwithstanding the immiseration of significant segments of the population. The two clouds  on the horizon for Kazakhstan are illegal immigration and domestic migration on the one hand, and, on the other hand, militant Islamic fundamentalism.  Kazakhstan in general and Almaty in particular are actually a pole of attraction for economic refugees from other countries in the region. 

Indeed, Kazakhstan is relatively stable, and it is actually possible to make a living in the capital. For this reason, internal population shifts are also occurring  because of the absence of work in towns and villages throughout the country. The threat from militant fundamentalism -- and this will probably be the first  year that it actually manifests in Kazakhstan -- comes mainly in the south of the country. That is why moves towards energy self- sufficiency in Kazakhstan,  especially in that part of the country to be supplied by the Amangeldy field, are potentially so significant. 

Robert M. Cutler was educated at the Massachusetts Institute of Technology and the University of Michigan and holds a Ph.D. in political science. He has worked in European and Eurasian affairs for 20  years, specializing in Euro-Caspian and post-Soviet energy. His management specialties include organizational analysis and design and organizational learning under complex systems of information and  cross-cultural communication.   Source: NewsBase

Three years have passed off after KazTransGas Co. was given functions of the national operator, wholesale purchaser and seller of gas. The Government made this decision to provide gas supply to all remote regions and bring to order import-export flows. As gas production was rising, it became necessary to concentrate entire  management of the branch in the hands of the Government.

 In future gas production will amount to 75bn cubic meters a year against 10bn in 2001-2002. 

Needs of our economy demanded this step too. Specialists forecast demand of RK economy may rise up to 15-16bn m3 by 2010.

A strict term of establishment of KazTransGas was also construction of local distributing networks to supply gas to consumers, establishment of distributing companies, whose principal functions would be gas supply and collection of payments. 

Today we can already consider advisability of this decision. Experts think return to state regulation afforded to lead the branch from impasse and overcome negative aftereffects of the USSR collapse. Those changes were to make the branch a manageable and stably working economy. 

The work was implemented in few stages according to special strategy. In the late 2000 KazTransGas purchased RK gas 
transport business from Belgian Tractebel C.A. This was an important step demanding big capitals to reanimate pipelines, which were badly destroyed.

Capability of main gas pipeline the Middle Asia - Center (MAC), being the shortest international rout for Turkmenian and Uzbek gas through Kazakhstan to Russia and Western Europe, was some 30bn m3 a year. 3939 km of the pipeline are situated in Kazakhstan; total length is 9155 km. Electrolytic protection at lines was badly disturbed and protection of underground lines was less than 70 per cent. Hundreds of km of operating gas lines were disconnected from the general system; gas-pumping units were not repaired. Therefore the company allotted over 230mn USD for repair in 2001-2002. 

Now protection of the pipes and underground lines is completely restored. 29 gas-pumping units are repaired. The company is ready to launch a pumping unit at pipelines Orenburg-Novopskov and "Souz", compressor stations "Uralsk" and "Chizha". The company's crews replaced 12 km of pipes and contractors - 20 km. Capability of MAC was increased to 50bn m3 a year thanking to parallel work of two lines at Beineu-Makat part. 

For the first time in the last years the company purchased heavy road-building machinery for regional branches. The company continues implementing diagnostics of the most destroyed sections. Managers introduce advanced techniques of repair. For example, this year the company replaces a siphon at passing across the Ural River near "Redut", by applying technique of horizontal-directional drilling under the bottom of the river. This technique is applied in Kazakhstan for the first time; its advantage is preservation of flora and fauna in Ural's flood-lands. 

The company reanimates its economy, applies new technologies, gradually restores capital assets and raises capability of the pipeline. According to forecast of specialists, by 2005, when the company will finish repair, annual volumes of transported Turkmen gas through MAC will increase to 50bn m3, Uzbek one - to 3bn m3, and Kazakh one - to 7bn m3. 

Cost of the total 10-year modernization of MAC is estimated at 1,3bn USD. In addition, for 2003-2005 the enterprise intends to invest over 500mn USD to modernization of main pipelines. These will be own means of the company plus domestic and foreign investments. 

KazTransGas has found principal decision of the problem of gas supply to southern regions of Kazakhstan, which completely depends upon Uzbek gas and its transit through Kyrghyzia. Demand of RK southern regions on gas amounts to 1,5bn m3 annually. In February 2002 the company signed contract with Uztransgas and in 2002 and 2003 purchased gas at 40 USD for a thousand m3.

KazTransGas has always executed terms of contracts, hasn't had debts to the Uzbek side and always protected interests of Kazakhstan in the gas market of the region. 
Therefore, to allay dependence from Uzbek supply and Kyrghyz transit the company launched prospecting of Amangeldy gas field of Zhambyl region. Total cost of the project is 132,4mn USD; republican budget  allots 51mn of those. Now the company is conducting negotiations with potential investors on financing issues and joint  development of the field. KazTransGas' experts forecast Amangeldy field will yield 600mn-1bn m3 of gas annually for 20 years. 

Construction of gas wells at Amangeldy field is planned to complete in 2003. 17 wells will be exploited. Three wells are tested, one well is conserved. The fifth well is drilled. 65% of equipment is produced and ready to ship. 2100 tons of pipes and gas pipeline equipment has been delivered. The works are conducted in day and night regime, KazTransGas specialists believe 193-kilometer Amangeldy-Taraz gas pipeline constructed by mid summer of 203. The gas field is expected to launch in upcoming  August. The specialists hope 700-million cubic meters of natural gas, 40 thousand tons of condensed gas and the same amount of liquefied gas pumped from Amangeldy field to allow them to resolve gas supply problem southern Kazakhstan has faced. 

Moreover, governmental commission presented "KazTransGas" the right to develop hydrocarbons exploration at gas deposits of Moyinkumski and Talasski districts of Zhambyl region. The area of the deposits' territory makes 8 810,7 square kilometers. The work of the company resulted in the trend to stabilize inside republic gas supplying, especially the one of its southern region. In mid ninetieth gas distribution networks of the region appeared in the ownership of different private companies. But their majority faced the problem of nonpayment. It rendered a negative influence upon the state of the networks. The systems sank into degradation. Debts grew. There appeared gas-supplying problems. Bad debtors were cut off. 

To resolve all the problems the responsibility for gas supplying of southern regions was laid on KazTransGas. Its affiliate KazTransGas Distribution company  was created for the purposes. The enterprise is a wholesale supplier of natural gas to regional consumers. Much was done; the market got free from different intermediate structures, the prices grew stable, discipline of payments improved, technological losses of gas decreased. Everything aforementioned influenced upon the growth of tariffs, there appeared a trend of annual three percent increase in the amounts of gas shipments to internal market. In 2001 the amount made 5,1 billion cubic meters. The same growth in amounts was registered in the first half of 2002. 

Work with suppliers and consumers, severed approaches and huge funds invested resulted in obvious successes.

KazTransGas allocated 5 million dollars to restore gas distribution system of Shymkent and repaid the debts of its predecessors. In February of 2002 KazTransGas Distribution started supplying Taraz with gas. At present 75% of the city's private sector are supplied with gas. 

In early current year the situation with Aktobe region gas supplying aggravated. The region is known to consume 36% of total amounts of natural gas imported in Kazakhstan. Local enterprise Aktobegas sank in 1,7 billion tenge debts. The region appeared at stake to be cut off gas supplying. On October the 1st KazTransGas Distribution started supplying Aktobe region and the city of Aktobe with gas. Despite of significant debts of population, the company did not cut anyone off. 

Successful resolution of current problems and implementation of new promising projects, stable development of the company itself prepared the grounds for its international rating growth. Recently international rating agency Standards and Poor's allocated " BB" crediting rating to KazTransGas group and to Intergas Central Asia company. The forecast of ratings is stable. Such a high rating means the activity of the companies, their places at gas transportation market, stability of their financial state and high trustability recognized. 

The fact is strengthening the companies' positions at the negotiations with foreign investors, suppliers, financial institutions. It allows them to count for lower interest rates when attracting local and foreign funds. So, the rating works for the companies. The contracts signed recently with foreign partners showed the work successful. 

ASTANA.KAZINFORM. As Kazinform has earlier informed, on these days blue fuel of Amangeldy gas field is to be supplied to Taraz. The final testing of the gas transportation system before launching has been carried out on the fifth compressor station. 

This is the very place where the Amengeldy line incises into the main gas pipeline. 

According to head of Taraz manufacturing gas pipeline management Nazhentai Bukharbayev, Amangeldy gas has been accepted. The system, which has been transporting gas for many years is absolutely orderly.

While Amangeldy complex builders are getting ready for the launch of its first line, the brigades of Kazburgaz-Taraz are opening up new vistas. Out of 13 wells taken for tunneling one is fully ready and three more are to be ready soon. 

On October 23 president Nazarbayev inaugurated the first production line at the Amangeldy gas field (Zhambyl oblast), Interfax reported. 

The ceremony marked the end of the first stage of field development, with         completion of five of seventeen gas wells, a gas treatment plant, and construction of a 193-kilometer pipeline connecting Amangeldy field with the Bukhara -Tashkent-Bishkek- Almaty gas pipeline in area of Taraz. The second development phase (timeline not mentioned) will include bringing on line there remaining twelve wells and completion of all associated infrastructure.

The development of Amangeldy will cost usd 131 million, with usd 51 million coming from the national budget and the remaining usd 80 million provided by Kaztransgaz and other investors. 

Amangeldy field holds 22.4 Billion cubic meters of gas and is expected to produce 600 million - 1 billion cubic meters of gas a year for twenty years at a cost of usd 22 per 1,000 cubic meters. (Interfax - Kazakhstan, October 30)

 The field is in a good location. The development of the field will allow energy independence for region of Southern Kazakhstan, the most densely populated region of the country, through connection of the new Amangeldy-Taraz main gas pipeline to the Gazli-Almaty network. 
Existing power transmission lines and a motorway to the field, will reduce the cost of the project (a high Kazakhstan Government official stated, however, that if the Uzbekistan Government followed a consistent and fair price policy for gas, it would be easier for Kazakhstan to continue to purchase Uzbek gas, rather than developing a new field). 

Today the government remains the first and the only investor in AGF.
In an April 11, 2001 investment presentation it outlined its development strategy. It plans to allocate USD 50 million to develop the field. Of this amount, USD 18 million is to be spent during 2001, including prospecting, complete works to develop the field, and geological engineering prospecting works.  According to independent experts, the total amount required to finance the development of the entire group of fields may come to USD 700-750 million. 

U.S. Companies interested in the project of Amangeldy field may contact KazTransGas directly as shown below:   KasTranGas 142 Bogenbay Batyra Almaty 480091, Kazakhstan Tel.: [7] (3272) 62-30-09, 66-11-30 Fax: [7] (3272) 58-82-80 E-mail: Administrator@Kaztransgas.kz Contact: Aydarhan Kusainov, Vice-President   U.S. EMBASSY CONTACT INFORMATION   U.S. Embassy Commercial Service Almaty, Kazakhstan 531 Seyfullin Street, 3d Floor Almaty 480091, Kazakhstan Tel.: [7] (3272) 58-79-18, 58-79-20 Fax: [7] (3272) 58-79-22 E-mail: almaty.office.box@mail.doc.gov Contact: James Fluker, Senior Commercial Officer Rita Kan, Commercial Assistant Andrey Chursov, BISNIS Representative
INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2001. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. 

Exxon Mobil Corporation (NYSE:XOM) today announced that its subsidiary, ExxonMobil Kazakhstan Inc., has participated in two discoveries in new prospects on the North Caspian Production Sharing Agreement (NCPSA) contract area. 

The first exploration wells on each of the Aktote and Kashagan Southwest prospects were completed successfully and encountered hydrocarbon-bearing intervals. Additional evaluation will be required to determine if the hydrocarbon accumulations are commercially viable.

Aktote-1 and Kashagan Southwest-1 are the third and fourth discoveries on the NCPSA following Kashagan and Kalamkas. The world-class Kashagan discovery was announced in 2000 and declared commercial in June 2002 with estimated resources of more than nine billion barrels of oil.

Drilling of Kashagan Southwest-1 was also performed on an artificial island. The well was drilled to a total depth of 19,275 feet (5,875 meters) and was tested at a rate of 2,100 barrels per day on a 32/64-inch choke.

"The Aktote and Kashagan Southwest discoveries provide further encouragement that the North Caspian can become an important resource base to help supply the world's growing energy demands," said Jon Thompson, president of ExxonMobil Exploration Company.

The North Caspian PSA covers almost 1.4 million gross acres. Companies involved in exploration and development of this area are Eni (Operator - 16.67 percent), ExxonMobil (16.67 percent), BG (16.67 percent), Inpex (8.33 percent), Phillips (8.33 percent), Shell (16.67 percent), and Total (16.67 percent). Upon completion of the sale of BG International's interest in the NCPSA, ExxonMobil's interest will become 20.37 percent. In addition, ExxonMobil affiliates have a 25 percent interest in the Tengiz field, one of the world's largest oil fields, located on the Eastern shore of the Caspian Sea, and a 7.5 percent interest in the Caspian Pipeline Consortium.