Astana to host Belarusian-Kazakhstan business forum 9 November

The second Belarusian-Kazakhstan Business Forum will be held in Astana on 9 November, spokesperson for the Foreign Ministry Andrei Savinykh told journalists.

“Prime Ministers of Belarus and Kazakhstan are expected to attend the plenary meeting of the forum. A business matchmaking session will be held as part of the business forum,” said Andrei Savinykh.

He also said that on 9 November Astana will play host to a meeting of the Belarus-Kazakhstan intergovernmental commission for trade and economic cooperation. The Belarusian delegation is headed by Deputy Prime Minister Mikhail Rusy, the Kazakh one by Emergencies Minister Vladimir Bozhko. “During the meeting the parties will consider the joint action program for economic cooperation between the Republic of Kazakhstan and the Republic of Belarus,” said the spokesman.

The meeting participants will discuss promising cooperation areas in 2013. “The meeting will focus on cooperation in the manufacturing, agricultural and energy sectors, transport and logistics. Particular emphasis will be placed on the development of interregional and technical and scientific cooperation,” Andrei Savinykh. Attending the meeting will be representatives of the business communities of Belarus and Kazakhstan.

Article sourced from Belarusian Telegraph Agency

Online retail starts to take off in Kazakhstan

As a country with steadily rising incomes and low population density, Kazakhstan is an obvious location for online retail. So far, the sector has been slow to develop, but a handful of early movers are investing, confident of the future growth potential.

Staking its claim in the Kazakh market, Russian online clothing retailer Lamoda, one of the Rocket Internet sites, entered Kazakhstan in March. Six months later, the company secured an investment – said to be between $50 and $80m – from JP Morgan, which will be used to grow its business in Kazakhstan and other Commonwealth of Independent States countries.

According to Lamoda’s Kazakhstan country manager, Alexios Shaw, the company was looking to benefit from the lack of competition in Kazakhstan’s online retail market and the appetite for international brands not yet available in the country. “Retail is waking up with international players such as Saks Fifth Avenue entering in the market, but internet retail is primitive. Low competition was an obvious reason why the market was attractive for us,” Shaw tells bne. “E-commerce also has a natural advantage in a country like Kazakhstan, provided you have on the ground infrastructure or a good delivery partner.”

Almaty-based Chocolife, which at present mainly offers discounts on events, is increasingly active in retail, with sales of goods now accounting for around 25% of transactions. Chocolife plans to transform itself into a fully-fledged online retailer and is set to launch an online store, Choco-Mart, by the end of 2012. The company is also mulling expansion into Azerbaijan and Ukraine. “The market potential is significant. Now that internet penetration has passed the 50% threshold, we expect an e-commerce boom. We expect that by 2015, the volume of e-commerce transactions will reach 10-times their current level,” Chocolife spokesperson Latina Satarova tells bne.

Splash the cash

Drivers for Kazakhstan’s online retail market include the steady growth in incomes. By 2010, income per capita had reached $10,000, 15 times higher than in 1994, and Astana is targeting $15,000 by 2015, putting Kazakhstan among the world’s high-income countries.

Kazakhstan’s membership of the Customs Union (together with Russia and Belarus) is also helpful. “Since the launch of the Customs Union, we almost think of Russia and Kazakhstan as a single market,” says Shaw. “We hope to turn the Kazakhstan market into a mini Russia for Lamoda.”

Despite the crisis, the last five years have been a period of dramatic growth for Kazakhstani retail, with international mass-market brands including Zara, Monsoon and Gap entering the market. However, as Shaw points out, international retailers are mostly just active in Almaty and Astana, and many brands are still not available in Kazakhstan. Other regional centres including the western oil towns of Aktau and Atyrau and industrial towns such as Karaganda, have relatively high incomes, but are too far off the beaten track for foreign retailers.

Internet penetration has advanced rapidly. Back in 2007, the country held the dubious honour of having the world’s most expensive internet; today with a larger number of fixed-line providers and the launch of mobile broadband, getting online is much more affordable. About 53% of the population are internet users.

According to Yandex, the operator of Russia’s largest search engine, Kazakhstanis are increasingly active online. “In our view, the potential of e-commerce in Kazakhstan is great, and it is gradually being realised – more and more people carry out everyday tasks through the internet, including purchases. Our data shows that around 1% of requests to Yandex from Almaty and Astana are associated with the desire to buy or sell something,” Vladimir Isaev, manager of international media relations at Yandex, says.

However, the Kazakhstani online retail market is still tiny compared to that in Russia, which is worth over $10bn, according to East-West Digital News. Chocolife’s research shows that as of 2011, e-commerce transactions worth $133m were carried out in Kazakhstan. The survey shows a steady increase in online trading volumes, with the number of transactions almost tripling from 115,952 in 2010 to 330,602 in 2011; this continued in the first half of 2012, when a total of 204,237 transactions were completed.

However, the lion’s share of transactions in Kazakhstan, some $95m, were in the transport sector, in particular airline tickets, whose customers are mainly well-off Kazakhstanis and foreigners. By contrast, Kazakhstan’s railways are far less hi-tech; in 2009, when national railways operator Kazakhstan Temir Zholy launched its online ticket sales site, just 500 of approximately 12m tickets sold during the year were purchased online, Assylkhan Kaldykozov, executive director, strategic development and new technology implementation at KTZ, told the Digital Communications Kazakhstan conference in Astana. While there has been a steady increase since then, the government’s target of bringing 40% of railway ticket sales online is looking over-optimistic.

According to Satarova, the main problem for the market is the lack of e-commerce entrepreneurs, with other barriers including service standards and the low level of credit card usage. Unlike Russia, which has spawned numerous domestic e-tailers – including the “Russian Amazon” Ozon.ru and KupiVIP, many of which have gown with venture capital backing – Kazakhstan has not yet seen a similar phenomenon.

Cash on delivery

Kazakhstan, like Russia, requires a much higher level of investment than markets such as the US or Western Europe, due to a combination of the lack of courier services and the continuing preference for cash payments. Lamoda’s Shaw says the company has had to invest in substantial on the ground infrastructure. “Entering the market properly requires a huge amount of effort and investment, and as a result we are easily the market leader,” says Shaw. “Logistics – getting goods into Kazakhstan and around Kazakhstan – are a huge challenge for e-commerce, and in some ways it’s as difficult for us as for an on-the-ground retailer. The big issue is online payment, which has not really taken off in the CIS because of low penetration of credit and debit cards, and high levels of credit card fraud. We therefore do cash on delivery.”

But this investment is already yielding results, according to Shaw, who points out that while some Kazakhs buy from Russian and international retailers, the long delivery times (usually around three weeks for European retailers) and the inability of buyers to try and send back goods, make this problematic. While the market is lagging behind that of Russia – and even further behind Europe – for early investors, it has the potential to pay off big time.

Article sourced from Business News Europe 

First oil nears Kazakhstan’s supergiant field

Copyright Peter Leonard — AP Photo

In this Oct. 11, 2012, photo, a technician stands on one of several helicopter pads on D-Island at the Kashagan offshore oilfield in western Kazakhstan. The supergiant field, which is believed around 13 billion tons of recoverable oil, is expected to begin producing its first crude in 2013 after many years of delays.
Copyright Peter Leonard — AP Photo

The manmade islands that are home to Kazakhstan’s mammoth Kashagan oilfield project

rise like a mirage to the boats churning through the shallow waters of the Caspian Sea.

Creating them has been a gargantuan feat but the real test is yet to come, as uncertainty persists on when the first oil will actually be drawn, although that’s expected sometime next year.

When surveyors confirmed in 2000 that Kazakhstan had a new supergiant oil reserve, the world’s energy companies reacted with glee. It was the type of find that had no longer seemed possible. Nothing that big had been seen in four decades.

Kazakhstan’s President Nursultan Nazarbayev branded the Kashagan field, which some believe holds up to 13 billion barrels of recoverable oil, as the great hope for the future of his fledgling Central Asian nation.

Yet developing a remote offshore site half the size of Delaware that is blighted by weather ranging from blazing to glacial has proven difficult. The northern section of the landlocked Caspian Sea is extremely shallow compared to most offshore energy projects. That makes transporting heavy equipment a problem, as deep-hulled vessels can’t be used. The area’s fragile ecosystem is also the site of spawning grounds for endangered sturgeon, birthing habitat for the rare Caspian seal and migratory sites for numerous birds.

Delays in the Kashagan project have also strained relations between the oil companies developing it – from Italy, France, Holland, the United States and Japan – and the government of Kazakhstan.

Kazakhstan, a mainly Muslim nation four times the size of Texas that borders Russia and China, gained independence after the 1991 collapse of the Soviet Union. It’s a thinly populated steppe nation of 16.5 million people that has grown wealthy off of several major oil projects and other substantial mineral reserves. Many locals, however, complain that the country’s riches are poorly distributed.

ON THE ISLANDS

Away from the politics, technicians on Kashagan’s hub island – two long, narrow mazes of wells and processing modules linked by a bridge to form what is known as D-Island – exude pride in what they have achieved.

“In 2004, when we first started, the island was just a small box,” said Giancarlo Ruiu, offshore project manager with Agip KCO, a subsidiary of the Italian oil giant ENI, which has led the work on Kashagan. Other companies in the consortium are Shell, ExxonMobil, Total, ConocoPhillips, Inpex and Kazakhstan’s state-owned KazMunaiGaz.

The rocks and sand needed to build up D-Island and its four satellite islands were laboriously transported from the once-vibrant fishing port of Bautino, some 350 kilometers (217 miles) to the south.

But when the wind pushes the Caspian’s lime-green waters south, in effect tilting the entire sea to below-navigable levels, the 18-hour summertime boat trip can become impossible, forcing workers to rely on helicopters. In the winter, ice breakers are deployed to clear paths for convoys to make the stultifying 36-hour voyage.

To protect D-Island from destructive ice drifts, a defensive ring had to be erected.

“You can occasionally get very rare conditions, where it is partially melted, and the water and semi-melted ice becomes like a lubricant. And when you get a surge of the ice, it can move very quickly,” said Robert Dunkley, head of information and design at Agip KCO.

The construction team used a computerized system to carefully place tons of material, using building techniques similar to those that created Dubai’s palm tree-shaped islands.

“We used to say that you are just dumping rock,” Ruiu said. “(But) every single placement of rock was done with GPS control” to calculate depth and location.

In all, some 200,000 tons of concrete, enough to fill 50 Olympic swimming pools, and 600,000 truckloads of rock were used to form D-Island.

The island is now a dense forest of barges housing facilities such as gas injection equipment and emergency generators from Norway, Italy and Dubai.

In parallel with the construction, 12 wells were put down on D-Island to begin tapping into the highly pressurized reservoirs of sulfurous oil located 4,200 meters (13,780 feet) below the seabed. Another eight wells are primed to go on the smaller A-Island, while drilling is still ongoing to complete a further 20 wells on three remaining islands by the end of 2016.

In the meantime, thousands of laborers in orange suits work on the islands and sleep in floating apartment blocks during monthlong shifts. Sometime next year, the workforce on D-Island will be scaled down to 240 people and the largely automated offshore operations will be run from a high-tech control room.

IT WAS A GAMBLE

When test crude at Kashagan was discovered in 2000, oil prices were around $30 per barrel. This made any massive investment on a problematic energy project seem potentially foolhardy, but could also keep costs down.

The price of oil more than tripled over the decade, however, which sent outlays for energy-intensive construction labor, equipment and materials soaring as well.

More than $30 billion has been spent so far on the Kashagan project, way more than its original $10 billion estimate. The final bill for the Phase 1 development stage could even gallop past $45 billion. That figure will swell more with Phase 2 drilling at other patches of the field.

“It’s not going to be profitable for the companies until you get into Phase 2,” said Andrew Neff, Moscow-based senior analyst with IHS Energy. “Phase 2 is supposed to be by 2018-2019 and there hasn’t been any progress in the last two years as far as I’m aware.”

Kazakhstan has been irritated by the frequent postponement of the first oil, which over-optimistic planners had once said would start by 2005.

Kashagan operates under a production-sharing agreement where international companies pay for the exploration and development costs. Returns are shared between investors and the government on a sliding scale.

Now that Kazakhstan is growing increasingly rich on oil from other fields, it negotiates from a position of strength and has sought to adapt the deal to more favorable terms. The government is eager to begin receiving oil royalty payments and the state-owned KazMunaiGaz is due a share in the profits as a 16.85 percent owner.

“Everybody has been looking at Kashagan as this great cash cow coming down the road soon,” Neff said.

While a KazMunaiGaz chief executive predicted a few years ago that Caspian oil would boost the country’s annual oil production up to 180 million tons – equivalent to 1.3 billion barrels – by 2015, officials now have tamped that down to 90 million tons.

To reach that target, Kashagan will need to deliver 370,000 barrels of oil a day.

The production-sharing agreement expires in 2041 – a date that is distressingly near to consortium members, considering the size of their investments. On the bright side for the companies, oil was selling for around $92 a barrel this week.

“We know the life of this field is much longer than 2041,” said Alain Guenot, planning director of North Caspian Operating Co., the joint venture that manages Kashagan. “Everybody would like to extend the (deal).”

While Kazakh officials and oil executives are eager to start pumping, workers on the ground are more sanguine.

“Without production, we don’t have revenue, they don’t have revenue, and they’d like to have revenue as soon as possible,” Guenot said. “(But) we’re not going to start this plant if we’re not sure that it’s properly finished.”

Article sourced from SunHerald

Kazakh companies enter Kyrgyz humanitarian market

Some 10 Kazakh companies took part in the fair of relief supplies which was held in Bishkek on October 17.

‘Kaznex Invest’ national agency on export and investments rented the exhibition square with equipment for Kazakh companies under the auspices of ‘Relief Supplies from Kazakhstan’.

Emergency food, medicine, medical equipment, detergents, disinfectants, light industrial products and construction materials are currently most frequently bought products on the market of humanitarian purchase. All these products are offered by Kazakh producers. The national stand is represented by such companies as ‘SMS Almaty plant'(detergents), ‘Baris 2007’ (pasta), ‘Juldyz Cenan Co LTD’ (medical production), ‘Korona export’ (flour, pasta), ‘Maslodel’ (vegetable oil), ‘Kazmedpribor’ (medical equipment), ‘RZA’ (rice), ‘Shimkentmay’ (vegetable oil, soap), ‘Sunpaper'( hygienic production).

The participation in the exhibition allowed the local export oriented companies to establish contacts with organizations of UN system in Kyrgyzstan, Kyrgyz Ministry of Emergency Situations, Kyrgyz National Society of Red Crescent, International Committee of Red Cross in Kyrgyzstan, other international and national nongovernmental organizations as well as representatives of business-society.

International humanitarian organizations take active part in settlement of social problems of different kinds and emergency situations, which are frequent in Kyrgyzstan (earthquakes, landslides and avalanches, floods). According to UN Office for Coordination of Humanitarian Issues some $163 mln have been contributed to Kyrgyzstan in 2006-2011.

Kaznex Invest, the national Agency for Export and Investment under the Kazakh Ministry of Industry and New Technologies operates within the framework of the State Program on Forced Industrial-Innovative Development of Kazakhstan for 2010-2014. The agency is the national operator of the development and promotion system of non-oil exports, as well as specialized state company on involvement of foreign investors. Kaznex Invest is funded by the national budget and provides its services free of charge.

Article sourced from Trend

IDB will finance Kazakhstan projects worth 1 bln USD

As part of the implementation of the country strategy together with Kazakhstan, in 2012-2014 the Islamic Development Bank may finance projects worth 1 billion USD.

In the interview to the Kazakh TV channel the vice president on finance Abdulaziz Al-Hinai has announced that at the beginning of October in Astana the Islamic Development Bank will sign a new country strategy of the bank in Kazakhstan. He hasn’t told about the document in details and just announced that the sides are still discussing some issues of the strategy. In his turn, at the meeting in Almaty the deputy minister of industry and new technologies Bakhytzhan Dzhaksaliyev noted that in the nearest 2 years the IDB will finance projects worth to 1 billion US dollars in Kazakhstan.

Article sourced from CaspioNet

2013 production of crude and condensed gas forecasted at 82 million tons

Production of crude and condensed gas in Kazakhstan in 2013 is forecasted at 82 million tons, with the figure augmented up to 90 million tons in 2015, Newskaz.ru reports, citing the country’s Ministry of Economic Development and Trade.

In 2011 Kazakhstan produced 80 million tons of crude and condensed gas; plans are there to produce 81 million tons this year. The draft 2013-2015 budget is based on Brent oil standing at $90 per barrel in 2013, $89 in 2014 and $88 in 2015.

The average year price in 2012 is forecasted at $100 per barrel.

Earlier Tengrinews.kz reported, citing KazMunaiGas National Oil and Gas Company’s chairman of the Board Mr. Lyazzat Kiilov as saying in a recent interview for Kazakhstan’s Liter newspaper, that the overall carrying capacity of Kazakhstan’s export oil pipelines is to be augmented 1.5 times up to 100 million tons by 2020.

“The current demand for export oil pipelines is almost met. However, the plans to boost oil production will call for both expansion of the already operating pipelines and construction of new ones. The current carrying capacities of all the Kazakhstan’s export oil pipelines stand at 66 million tons a year; the figure is to be brought up to 100 million tons a year by 2020”, he elaborated.

Article sourced from Tengri News

S Korean business to help develop Kazakhstan’s economy

South Korean businessmen will play an active role in the development of Kazakhstani economy.

The news came after the meeting of President Nursultan Nazarbayev with his South Korean colleague Lee Myung-bak on Thursday in Akorda Presidential Residence.

“We highly estimate the results of today’s negotiations. This year Kazakhstan and South Korea mark 20 years of diplomatic relations. Today we have discussed important issues in the sphere of international security, regional stability and touched upon the nuclear disarmament and non-proliferation,” President Nazarbayev said.

According to the Kazakh Leader, the sides also debated the ways on overcoming the world crisis.

Article sourced from Gazeta.kz