Business News in Brief

Oil production at the giant Kashagan oilfield started on Sept. 9, KazMunayGas Chairman Sauat Mynbayev said. “We are expecting the start in two days. That is the first, so-called pilot. It should reach a certain level for us to announce the start of commercial production,” Mynbayev said on Sept. 7. At the same time, he emphasized it would take up to three weeks before the launch of commercial production. However, commercial production may start as early as before Oct. 1. Earlier, Kazakhstan and China agreed on the sale of a 8.4 percent stake in Kashagan to China’s CNPC. A respective agreement was signed on Sept. 7 in Astana at the sitting of the Kazakh-Chinese Business Council. The Kashagan field, named after a 19th century Kazakh poet from Mangistau, is located in the Kazakhstan sector of the Caspian Sea and extends over a surface area of approximately 75 kilometres by 45 kilometres. The reservoir lies some 4,200 metres below the shallow waters of the northern part of the Caspian Sea and is highly pressured (770 bar of initial pressure). The crude oil that it contains has high sour gas content. The development of Kashagan, in the harsh offshore environment of the northern part of the Caspian Sea, represents a unique combination of technical and supply chain complexity. Its combined safety, engineering, logistical and environmental challenges make it one of the largest and most complex industrial projects currently being developed anywhere in the world. According to Kazakhstan geologists, Kashagan’s geological reserves are estimated at 4.8 billion tons of oil. According to the project’s operator, the oilfield’s reserves are estimated at 38 billion barrels with 10 billion barrels being recoverable. Natural gas reserves are estimated at over 1 trillion cubic meters. The consortium developing the field comprises Eni, Shell, ExxonMobil, Total and KazMunayGas (all with a 16.81 percent stake) as well as ConocoPhillips (8.4 percent), which is in the propocess of relinquishing this stake that is to be acquired by the Chinese, and Japan’s Inpex (7.56 percent). NCOC, a consortium developing the giant Kashagan oilfield, plans to produce 75,000 barrels of oil per day at the initial production stage.

In 2012, the World Bank issued its annual Doing Business report measuring the business regulation and business climate in 185 countries on 10 indicator sets. In 2012, Kazakhstan improved its positions in the Doing Business report climbing up seven positions from 56th place in 2011 to 49th. According to the World Bank’s report, Kazakhstan is ahead of such countries as China (91st), Turkey (71st), Poland (55th), Russia (112th), Belarus (58th) and Kyrgyzstan (70th). Besides, this year, Kazakhstan is ranked among the countries that demonstrated essential improvements in doing business over the past year. Kazakhstan made starting a business easier by eliminating the requirement to pay in minimum capital within three months after incorporation. That change allowed the country to climb 30 positions — from 55 to 25 — on the “Starting Business” indicator. Kazakhstan is ranked 55th on the “Resolving Insolvency” indicator. Kazakhstan strengthened its insolvency process by introducing an accelerated rehabilitation proceeding, extending the period for rehabilitation, expanding the powers of and improving qualification requirements for insolvency administrators, changing requirements for bankruptcy filings, extending the rights of creditors, changing regulations related to the continuation of operations, introducing a time limit for adopting a rehabilitation plan and adding court supervision requirements. The country also improved from 97 to the 83rd place on the “Getting Credit” indicator. Kazakhstan strengthened secured creditor rights by introducing new grounds for relief from an automatic stay during rehabilitation proceedings. The country continues reforms in the business sphere, which are conducted in accordance with the action plan on improvement of indicators of the Doing Business report. Among the former USSR member states, Kazakhstan is one of the top five countries in terms of a favourable business environment. Georgia holds the top spot again. That country climbed up from the 16th to the 9th place followed by Estonia (21st), Latvia (25th), Armenia (32nd) and Kazakhstan (49th).

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