REFERENCE: Atyrau region - brief characteristics

/IRBIS, information of the KASE Listing commission, Sept 24, 01/ - The following information is published due to the admittance of second (KZE4KY020023; ARU024.002; $100; KZT1,880,663,000; Sept 26.01 - Sept 25.03; fixed semiannual coupon) and third (KZE4KY050038; ARU060.003; $100; KZT870,746,576; Sept 26.01 - Sept 24.06; fixed semiannual coupon) issue inscribed coupon bonds of local executive body of Atyrau region to the Kazakhstan Stock Exchange (KASE). GENERAL INFORMATION The region was founded on January 15, 1938 and initially called Guriev region. In January 1992 Guriev region and city Guriev (founded in 1640) were renamed into Atyrau region and city Atyrau. The area of the region is 113.5 th. sq. km. It consists of one city and seven districts. The population - 443.4 th., including, 257.6 th. in city and 185.8 th. in rural areas. The density is 4 persons per sq. km. The most densely populated area in along the Ural river and regions adjacent to left bank of river Volga. The main water supply of the region is Ural river. Unique fields of hydrocarbons (oil reserves at 9.8 bn tons, including about 7 bn at the Caspian shelf; 154.0 bn cu m of gas) have been discovered in the region, as well as borate, borate-salt ores, sodium chloride, potassium, potassium-magnesium salts, construction materials (chalk, marl rocks, gypsum, clay, sand, limestone). Reserves of explored fields of gypsum are 21 bn tons, potassium oxide - 11.5 bn tons, potassium salt - 697m tons, sodium chloride - 687m tons. Main industries - oil, oil processing and petrochemical, fishery and fish processing. The major oil companies work in the region: Tengizchevroil JV LLP, OKIOC international consortium, which is conducting oil development at the Caspian shelf; one of the subsidiaries of NOC KAZAKHOIL CJSC - Kazakhoil-Emba OJSC, as well as major fish processor - Atyraubalyk OJSC. Besides, there are machinery, metal processing, oil and fishing equipment repairment industries are located. The main agricultural sector of the region is live-stock breeding. INDUSTRIAL PRODUCTION In 1999-2000 industrial output rate of Atyrau region was much greater than the national average. Based on the data of the Statistics Agency of Kazakhstan, in I half of this year industrial output of the region increased by 27% (13.6% for the country) relative to similar period of last year. In June 2001 rating agency Moody's Investors Service assigned ratings to Atyrau region, which corresponded to those of Kazakhstan at that time: "B1" in foreign currency, and "B1" in local currency. Forecast is stable. The basis for the region's economic potential (more than 90% of the area's industrial potential) is focused around oil extraction. Financial conditions of the companies greatly depend on the world prices, which tend to fluctuate significantly. The biggest payer, Tengizchevroil JV LLP, accounts for the third (55.2% in 2000) of the region's budget. The industrial production volume has been constantly increasing through growth of oil and gas production during the last 5 years. Growth of industrial production in real terms was maintained through increase in production and hydrocarbons prices. Most of the increase in industrial production in 2001 should come from oil extraction as well, including: Tengizchevroil JV LLP - 11.2m tons, Kazakhoil-Emba OJSC - up to 2.3m tons. By 2005 the production is to reach about 16m tons of oil and 4.5 bn cu m of gas. Besides, in 2001 production of oil processing and petrochemical companies should increase by 10-20%. The Atyrau oil refinery (ANPZ) reconstruction project, which should start in 2002, should require $308m in investments. Now, one of the Japanese companies are expected to act as a project developer. By 2005 the oil processing at ANPZ should exceed that of 2000 by 50%. Propilen LLP (founded on the basis of Propilen JSC, which was acquired by Tomsk plant of composite materials and plastics in 1999) plans to increase production 3.3 times against 2000. Chevron is undertaking a plastic pipe plant construction project with the capacity of 6.8 th. tons. Engineering-design and project works have been completed at the site. Machinery production - Zaman-Neftemash LLP, Shelf JSC, have received orders from NOC KAZAKHOIL CJSC and KazTransOil CJSC (about KZT80m). Under the imports substitution program foreign oil companies are to place their orders at these machinery plants. Besides, Shelf JSC should receive orders from the Defense Ministry under the conversion program. As a whole, the machinery industry should increase production 1.4 times in 2005. The production of construction materials is increasing in region due to the use of Indersk minerals field development (Inderstroiindustrya CJSC). As a result of general decline in fish production at the Caspian Sea, silting of eriks, decrease in hatchery area, insufficient volume of youngsters of sturgeons, it is expected that in 2001 the fish production and processing volumes will decline. Therefore, dredging is to be continued on a regular basis at Ural-Caspian channel, Ural and Kigash rivers. New fish processing plants are to be built (only 2 are functioning now). In I half of 2001 the region produced KZT229.5 bn worth of output, or 27% more than in similar period of last year. In 6 months 7,879.2 th. tons of oil was extracted, or 29.2% more than similar figure of last year. Natural gas production reached 1,715.1m cu m, or 1.7 time increase. Industrial production dynamics of Atyrau region in 1998-2000 --------------------------------------------------------------------------------- Measureme 1998 1999 1999/ 2000 2000/ 2001 Indicator nt unit 1998,% 1999,% (plan) ------------------------- --------- ------- ------ ------ ------- ------ ------ Industrial production output bn KZT 87.8 191.9 118.6 393.0 104.8 450.0 Index of physical volume of industrial output % 103.0 102.0 -1.0 110.0 7.8 107.0 Oil production m tons 11.1 12.3 10.8 13.4 8.9 13.9 Natural gas production bn cu m 3.9 4.6 17.9 5.1 10.9 5.3 Borate ore production th. tons 13.1 20.6 57.3 28.5 38.3 30 Oil processing m tons 2.7 1.9 -29.6 2.2 15.8 2.5 Engine fuel th. tons 324.1 260.8 -19.5 290.5 11.4 450.0 Fuel oil th. tons 1,117.6 652.4 -41.6 613.6 -5.9 900.0 Diesel oil th. tons 834.5 651.7 -21.9 756.7 16.1 910.0 Sulfur m tons 932.8 1,105.4 18.5 1,238.1 12.0 1,384 Fish products (including cans) th. tons 5.9 2.8 -52.5 5.1 82.1 4.4 Sturgeon caviar tons 30.0 22.3 -25.7 19.0 -14.8 18.0 Power bn kWh 1.5 1.4 -6.7 1.8 28.6 1.9 Heat m Gcal 1.4 1.3 -7.1 1.4 7.7 1.4 --------------------------------------------------------------------------------- TRANSPORTATION Railroads, which has a length of 1,480 km, service major cargo flows of the region (mostly oil and oil products). River transportation is stopped because of temporary incapability of navigation at Ural-Caspian channel (dredging has been continuing second year). Pipeline transportation is consisted of oil and gas pipelines. The oil pipelines stretch for 1,237 km, and their capacity reaches 13m tons of oil a year. In 1998 CPC pipeline construction has began from the Kazakhstani fields to the Black Sea port of Novorossiisk, which will increase transportation up to 67.0m tons of oil a year. The first segment of the oil pipeline with 28m tons of capacity will be put into service in 2001. Gas pipelines have the length of 3,058 km, and capacity of 40.8 bn cu m of gas a year. Now, the Central Asia-Center, Makat-North Caucasus gas pipelines are used to transport Turkmen gas (250m cu m a month) and that of Tengizchevroil JV LLP (0.8 bn cu m a year). Average annual natural gas consumption of the region is 574.2m cu m. Automobile roads of general purpose has the length of 2,722 km, including 1,761 km of local roads (maintained through regional budget). Atyrau sea port has routes with Iran, Azerbaijan, Turkmenistan and access to Azov and Black Sea through Volga river. Current dredging works at Ural- Caspian channel will increase transportation through Atyrau sea port. COMMUNICATION The region has a quite developed communication system. In 1999 an old 5 ESS system was replaced with 10.1 version with 600 channel capacity. Under National Satellite System Network the DAMA systems were installed in all district centers and in Atyrau. Based on the country's telecommunication modernization program, Shymkent-Aktiubinsk-Atyrau- Russia fiber optics line is being built, which should provide with high quality digital communication channels with the other cities of the country and district centers. New electronic telegraph station STIN-E was put into service, DSPD station is launched, which will improve the data transmission quality, opened access to Internet and videoconferencing with all regions of the country. For further development and modernization of the communication facilities of the region, local analog stations in district centers should be replaced to digital ones; in 2001 western branch of National Information Highway (NIH) should be built in Kzyl-Orda-Atyrau direction. SMALL BUSINESS The administration of the region considers the development of small business one of the high priority tasks in overcoming one-industry based economy of the region, diversification of the region's revenues, solve social problems, including employment. From 1997 funds have been allocated from the region's budget to finance small business, including: in 1997 - KZT39m, in 2000 - KZT140m, in 2001 - KZT200m planned. Besides, KZT870m will be allocated to finance small business under Regional Investment Program (RIP) through the funds raised with bond issue. The output of the small businesses in 2000 equaled KZT6.8bn, which is more than 2 times increase against 1998. Also, the number of small businesses (11,503 in 1999, 12,195 in 2000) and their employment rates (27,263 in 1999, 27,842 in 2000) are also tend to grow. In general, the role of small business in local economy is still insignificant. AGRICULTURAL SECTOR The core of agriculture in Atyrau region is live-stock breeding. During crisis in agriculture (1994-1997) the number of live-stock and poultry declined significantly. As diary products factories stopped working and consumer cooperation system collapsed, along with great distances between settlements, distant pastures, lack of good roads typical to the region, meat, milk and other agriculture products sales problems arose. Sharp decline in number of poultry took place after only one poultry farm has stopped. The number of pigs was reduced as supplementary facilities of major industrial companies and construction companies fell apart. To support local producers of agricultural goods, in 1997-1999 more than 80 agricultural projects have been financed through regional budget, which exceeded KZT60. At that time, debt of agricultural producers have been deferred regularly. Debt to regional budget amounting to KZT75.2m, which has built on Jan 1, 00, was deferred for 3 years. Transfer of the agricultural producers to patent taxation had a favorable impact on their financial conditions. In 2001-2005 up to 70% of the regional budget will be used to undertake agricultural projects to support small and mid-sized businesses. INVESTMENTS Atyrau region, thanks to its rich fields, is an interesting region for making investments. In terms of investment allocation, Atyrau region is among the most active regions in Kazakhstan. In 1999 investments into capital construction reached KZT68.4 bn, a 2.5 time increase against 1995. In January-June of this year investments increased by 37.1% relative to similar period of last year, at KZT69.1 bn, which is about 25% of the national budget. The major investors are: Tengizchevroil JV LLP, OKIOC, NOC KAZAKHOIL CJSC, KazTransOil CJSC and others. One of the high priority investment directions is the development of the region's infrastructure. STATE ADMINISTRATION The state administration is carried out in the region by the akim of the region, who is a direct representative of the president of Kazakhstan. The akim has a control over its deputies and executive bodies represented by autonomous regional ones. Administration of Atyrau Akim Akim of Atyrau region (from December 2000) - Daukeev Serikbek Jusipbekovich - graduated from KazPTI after V.I.Lenin (Almaty), Ph.D. in geology-mineral science. Deputy of akim (from February 2000) - Dosmagambet Ergali Mukanuly - graduated from People's friendship university after Patris Lumumba (Moscow). Supervision role over: finance, treasury, statistics, customs, taxes. Deputy of akim (from May 2000) - Ishanov Kairat Kydyrbekovich - graduated from KazPTI after V.I.Lenin (Almaty). Supervision role over: industry, capital construction, city construction policy, agricultural-fishery sector, emergency. Deputy of akim (from February 2000) - Ergaliev Farkhat Gapparovich - graduated from KazPTI after V.I.Lenin (Almaty). Supervision role over: oil and gas sector, external relations, investments. Deputy of akim (from February 1999) - Mursalieva Taskira Kabievna - graduated from Kazakh State University (Almaty). Supervision role over: public social protection, labor relations, public employment, education, health maintenance, social and cultural development, relations with political parties and other public organizations.