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Wrap: Kazakh summit yields energy deals, pledge to retain oil routes

Russia's president met with the leader of Kazakhstan, the first leg of his Central Asian tour, Thursday securing his promise not to reroute oil supplies away from Russia and overseeing major uranium and gas deals.
MOSCOW, May 10 (RIA Novosti) - Russia's president met with the leader of Kazakhstan, the first leg of his Central Asian tour, Thursday securing his promise not to reroute oil supplies away from Russia and overseeing major uranium and gas deals.

Vladimir Putin's visit to the ex-Soviet nation took place ahead of an energy summit in Poland May 11-13, where the host country, Ukraine, Azerbaijan and Georgia are to focus on pipeline routes from Central Asia to Europe bypassing Russia.

President Nursultan Nazarbayev - who was earlier expected to attend the forum to discuss joining the Odessa-Gdansk pipeline to be built from Ukraine to Poland using two existing pipelines that bring oil from Ukraine to Europe - said his country planned to transport nearly all oil to global markets via Russian territory.

"Oil and gas cooperation [with Russia] is strategically important, specifically in transporting Kazakh oil to global markets, using Russian trunk pipelines and joint refineries," Nazarbayev said. "Kazakhstan is committed to transporting most of its oil, if not all of it, across Russian territory."

He said last year Kazakhstan transported 42 out of 52.3 million metric tons (384.4 million bbl) of oil via Russia. The president earlier set a goal to double exports by 2012-2015, saying this required the diversification of pipeline routes.

Nuclear deal

At a meeting between Putin and Nazarbayev, the top energy officials signed a deal to set up an international uranium enrichment center in Siberia, which will come on stream in 2013 and offer finished products to states to generate electricity.

The venture in Angarsk, which is part of Moscow's non-proliferation initiative to create a network of enrichment centers under the UN supervision, will also be responsible for the disposal of nuclear waste.

"We consider this document the first step in the implementation of our initiative to create a global nuclear energy infrastructure," Putin said at the meeting.

Sergei Kiriyenko, head of the Russian Federal Agency of Nuclear Power, said Russia that accounts for 45% of the world's uranium enrichment capabilities and Kazakhstan, which holds 15% of global uranium reserves, could build new facilities later if necessary, and a fifth joint venture to prospect and produce uranium was in the pipeline.

Russia proposed nuclear enrichment centers last year to give countries a transparent access to civilian nuclear technology without provoking international fears that low-enriched uranium could be used in weapons programs. Moscow made a similar proposal to Iran, in the center of international concerns after resuming nuclear research in January 2006.

"With Kazakhstan we possess the entire technological chain - from producing uranium to achieving the final product, low-enriched uranium," Kiriyenko said.

Putin said Russia was also ready to help Kazakhstan build a nuclear power plant and highlighted plans to open a joint venture to promote innovative projects for nuclear reactors of low and medium capacity.

Gas processing

The former Soviet allies also signed a series of agreements to create a joint venture in Russia's Urals city of Orenburg to process natural gas from nearby fields and Kazakhstan. Its maximum capacity is expected to reach 30.6 billion cu m in 2012, including 15 billion cu m of Kazakh gas.

"Some very important agreements have been signed today. They concern the terms for the purchase of natural gas from the Karachaganak field [in Kazakhstan], and this is very important for the success of our joint venture in Orenburg," said Alexei Miller, chief executive of Russian gas monopoly Gazprom [RTS: GAZP].

Kazakh Energy and Mineral Resources Minister Baktykozha Izmukhambetov said Kazakh gas would be supplied to Russia "at less than $145 per 1,000 cubic meters." Russia's average gas price for Western Europe is $250.

Gazprom earlier said the deal with Kazakhstan's KazMunaiGaz would allow the Orenburg plant to increase output and raise profits. Production at the Orenburg gas deposit, the main source for the plant, has been falling since 1997.

Gas to be discussed in Turkmenistan

After Astana, Putin will travel to Turkmenistan and then return to Kazakhstan to visit its main Caspian Sea port of Aktau May 12-15. In Turkmenistan, the Russian president will continue pushing for a gas pipeline through his country.

Moscow's proposal to lay a gas pipeline from Turkmenistan, which possesses 11th largest reserves according to the Oil & Gas Journal, along the Kazakh and Russian Caspian coast is currently rivaled by a project sought by the United States, Europe and Georgia to build a pipeline under the Caspian Sea to deliver gas to southern Europe via Azerbaijan, Georgia and Turkey.

During President Gurbanguly Berdymukhammedov's visit to Moscow April 23-24, Putin tried to secure guarantees on the gas contract stretching into 2028 and a separate deal until 2009 signed under his predecessor. Turkmenistan is to supply 162 billion cubic meters of gas to Russia at $100 per cubic meter under the accords.


The action plan for 2007-2008 the presidents adopted covers their cooperation in space.

Nazarbayev highlighted concerns of people living near the Soviet-built Baikonur space center, which Russia has rented since 1994 after the collapse of the Soviet Union. He urged Russia to address social problems in the town of Baikonur, which is under Russian civilian administration.

In Baikonur, the two countries are working to build a launch complex, Baiterek, for the heavy version of Angara rocket, although the project has skidded since Russia delayed tests of the Angara until 2011 from 2008.

Russia is also building Kazakhstan's second satellite, KazSat-2, and training two Kazakh astronauts for a flight to the International Space Station, although the date of the mission has not been decided yet. The Central Asian state is also preparing to join Russia's global navigation system Glonass.

Speaking at a news conference after the talks, Nazarbayev said Kazakhstan and Russia, whose rapid economic growth has been fueled by high energy prices, had often been a driving force behind integration processes in the post-Soviet Commonwealth of Independent States and added that today's agreements would raise Kazakh and Russian companies' competitiveness on global markets.

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