Kazakhstan to diversify while growing energy sector

/REUTERS, New-York, May 19, 05/ - Kazakhstan, which has achieved rapid growth thanks to booming oil production, wants to diversify its economy while continuing to develop new oil fields and building natural gas pipelines for export, a high government official said on Wednesday. "Oil is a gift, but investment in non-oil activities is very welcome in Kazakhstan," said Karim Massimov, chief policy advisor to President Nursultan Nazarbayev, at a luncheon organized by the Asia Society in New York. He said that competing with India and China was difficult, but that Kazakhstan would try to attract foreign investment by building a financial center in the capital Almaty. Massimov said that the country would not neglect the oil and gas sector that was primarily responsible for its economic growth since the huge ex-Soviet state became independent. Country's GDP grows by almost 10% a year for the last several years due to high oil prices. Government expects GDP will grow by at least 8.5% this year in comparison with 9.4 one year before. SHELF AND GAS "We plan to develop more of the Caspian shelf," he said. "We will have a tender. We can't do it ourselves, the more multinational corporations (that participate in the tender) the better." He said that Indian and Chinese oil companies have expressed interest, along with Western corporations. Kazakhstan already pumps 1.3 million barrels of oil per day and expects its crude oil output to soar to 3.5 million bpd by 2015, which would put it in the top 10 global producers. Massimov said that landlocked Kazakhstan wants to develop its gas industry more by exploring export routes that would circumvent Russian pipelines. "We have huge reserves of gas, but the only route now is (Russia's) Gazprom," he said. Kazakhstan is holding talks with Beijing to build a natural gas pipeline to energy-hungry China that could come on stream by 2008. An oil pipeline is already under construction. "We have ongoing discussions about a gas pipeline to them," Massimov said. "They have a big need and I hope we will succeed." He added that Kazakhstan is also exploring the possibility of exporting gas through a route similar to that of the Baku-Tbilisi-Ceyhan oil pipeline. Kazakhstan's natural gas output grew by 6.5 bcm last year to 20.5 bcm. Some maturing oil wells are producing more gas and others that have traditionally flared off gas are seeking ways to market the product. [2005-05-19]