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News: Monday, July 03, 2017 -- Issue 2772 http://www.newsline.kz/rss/

Article of the Day

Kazakhstan’s draft mining code likely to make development of major deposits more costly while increasing Kazmunaygaz’s profile
    The draft Mining Code was discussed at the Foreign Investors’ Council meeting chaired by President Nursultan Nazarbayev on 22 June: it points to increased state interference in the sector along with higher regulatory cost burdens, and may leave existing operators of the country’s main energy deposits facing severe future uncertainties, IHS Markit writes.
    IHS Markit perspective
    Outlook and implications
    The issuance of subsoil permits will take place at open auctions with conditions being attached regarding social responsibility and local content.
    The authorities will retain the right to designate state-owned companies as shareholders where deposits are considered “major and unique”.
    Contract extension at major and unique deposits will be contingent on meeting additional government conditions, which will increase costs and uncertainty for investors: these threaten to increase uncertainties for firms participating in existing production-sharing agreements at key Kazakh energy deposits.
    Risks
    State contract alteration; Contract enforcement; Regulatory burden
    Sectors or assets
    Oil and Gas; Mining
    At the plenary meeting of the Foreign Investors’ Council in Astana on 22 June, the Minister of Energy Kanat Bozumbayev claimed that the new Mining and Tax Codes, which the government will submit to parliament in September, will reduce administrative barriers and increase the attractiveness of investment into Kazakhstan’s mining sector.
    According to Bozumbayev, against the background of the low oil price environment, the amended arrangements will allow Kazakhstan to attract up to USD1 billion each year into oil and geological exploration. The Kazakh analytical portal Ratel.kz reports that the government has circulated the draft Mining Code to industry groups, business associations and major law firms.
    However, despite the positive official claims, legal analysis conducted by a partner at the Almaty-based law firm Aequitas suggests that the new Mining Code contains certain provisions which are likely to alarm foreign mining and energy companies, and various concerns also have been raised during public discussions on the plans.
    The new Mining Code mandates the organisation of open auctions for subsoil permits. In these participants will submit competing bids regarding the signing bonus, starting from an initial level included in the auction announcement. A physical or legal entity that wishes to seek investors through such permits will submit a written request, which will be processed within 10 working days by the Ministry of Investments and Development (MID). If the MID approves the request, an auction announcement will then be made. This will contain a range of conditions that auction participants will need to accept up front. These will include estimated minimum expenditures on various social commitments: these will include training Kazakh cadres during the extractive phase, research and development to be undertaken within Kazakhstan during the extractive phase, and socio-economic development and infrastructure of the region where extraction is to take place. The auction conditions also will contain minimal requirements with regard to maintaining local content .
    Under certain circumstances, depending on the significance of the subsoil deposit, MID also retains the right to introduce additional conditions, including the compulsory allocation of shares to national companies in the final contract. This is likely to increase the role of Kazakhstan’s state-owned KazMunayGaz. The new Mining Code specifically stipulates that if MID designates a national company to be a shareholder, its share in the charter capital of an operator must not be less than 50%.
    The new Mining Code limits the duration of exploration to six years with the exception of offshore exploration or complex projects requiring drilling wells with a depth of more than 6km, which can proceed for eight years. The exploration term can be extended only once and for three years, with the aforementioned exceptions allowed a six-year extension. The contracts also will establish a maximum period of 25 years for extraction activities: this will be increased to a 45-year term at the major and unique deposits. At these projects, the government also will have the right to attach supplementary conditions to the contract extension, which can go beyond those included in the initial contract. Such conditions could entail new requirements for an investor, including creation of new facilities or the modernisation of existing processing capacity. Additionally, it may require an operator to supply the oil and gas produced in Kazakhstan only to domestic refineries.
    If Kazakhstan’s new Mining Code does not undergo revision to address the concerns raised at multiple public discussions organised by MID, it is unlikely to result in the revitalisation of the extractive sector. Potentially of greater concern, it may also increase risks in existing projects. The original production-sharing agreements (PSAs) for Kazakhstan’s three major oil and gas deposits – Kashagan, Karachaganak and Tengiz – are due to expire in 2041, 2038 and 2033 respectively. The new proposals relating to contract extension at the major and unique deposits threaten a significant increase in regulatory burdens and costs for the firms participating in the consortiums which operate these offshore oil fields. Having spent billions of dollars already, foreign energy companies in Kazakhstan may face a stark choice between withdrawal or accepting the risk of potentially sizeable and as yet undefined additional burdens, with a significant increase in project uncertainty risks, in clear contrast to the goal of attracting incremental new investment.
    Reported by KazWorld.

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Kazakhstan General

Baglan Mailybaev sentenced to 5 years in prison
    The Esil District Court No. 2 of Astana has examined the criminal case against Baglan Maylybayev and Nikolai Galikhin, Kazpravda.kz reports with reference to the press ...
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First urban forum to be held in Astana
    On July 7, Astana will host the first urban forum "City DNA: Communities, Business, Power" within the framework of the annual festival Astana Art Fest, Kazpravda.kz ...
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Kazakhstan finds its future without losing its past
    As a country, Kazakhstan has set its sights firmly on the future. The continued modernisation of the economy and society is rightly seen as essential to ...
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Expo-2017

Half a millionth visitor registered at EXPO in Astana
    On June 29 evening, a half-millionth visitor to the EXPO-2017 was registered, Kazpravda.kz reports with reference to the media center of the exhibition.
    It is not yet ...
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Azerbaijan's pavilion at EXPO-2017 among top visited
    Azerbaijan's pavilion has ranked fourth in terms of attendance at EXPO 2017 International Exhibition in Astana since its opening, said a message posted on the EXPO ...
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National Day of Somalia held at EXPO 2017
    The celebration of the National Day of the Federal Republic of Somalia was held at the EXPO in Astana, Kazpravda.kz correspondent reports.
    Executive secretary of the Ministry ...
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Chinese automaker JAC Motors takes part in Kazakhstan’s Expo 2017
    At the ongoing Expo 2017 in Astana, the leading Chinese automaker JAC Motors and its Kazakhstani distributor showcased three models: The S3, the iEV6S and the ...
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Oil and Gas Sector

China-Kazakhstan oil refinery put into operation
    Petrokazakhstan Oil Products LLP, a former Shymkent oil refinery, and joint venture between China National Petroleum Corporation (CNPC) and KazMunaiGas, has gone through its first phase ...
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KMG EP announces changes in its management board
    KazMunaiGas Exploration Production JSC (“KMG EP” or the “Company”) announces changes in the Management Board.
    The Board of Directors has appointed Kuanyshbay Nurgaliyev, Managing Director for Operations ...
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Moody’s assigns B2 rating to Nostrum’s proposed notes
    Moody’s Investors Service (Moody’s) has today assigned a B2 rating with a loss given default assessment of LGD4 to the proposed senior unsecured notes to be ...
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Nostrum Oil and Gas announced buyback of its bonds
    Nostrum Oil and Gas has announced its intention to redeem the eurobonds of the two offering issues. Nostrum plans to finance the cost of the buyout ...
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Med crude-Urals unchanged in Baltic, weaker in Med
    Kazakhstan’s benchmark Urals’ differentials were stable in northwest Europe on healthy demand, but eased again in the .
    In the window offered 80,000 tonnes of Urals loading ...
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Crude oil benchmarks recover, $45 per barrel remains realistic trget
    Oil climbed on Friday for a seventh straight session as a decrease in the U.S. rig count and stronger demand data from China lifted depressed prices ...
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Europe set to be natural gas kingmaker as LNG booms
    It's probably not quite here yet, but the trend is unmistakable; the world is moving to a globally linked natural gas market and the rise of ...
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Energy Industry

Large-scale solar energy plant built in beach resort north of Almaty
    The largest Central Asian solar power plant will be built in the Almaty region. The plant will produce 50 megawatts of electricity. This is enough to ...
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KEGOC: 2016 and 1Q201 results review
    Given the neutral results of 2016 and strong production figures for 1Q2017 we have revised the target price for KEGOC shares. Long-term tariffs approved by the ...
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Finance and Investment

Pensions, allowances rise in Kazakhstan
    Pensions and allowances have been raised for Kazakh citizens since July 1, Kazinform correspondent reports.
    As a reminder, on June 20, Head of State Nursultan Nazarbayev signed ...
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Samruk-Kazyna JSC saved billions of tenge due to new technologies
    The companies of JSC Samruk-Kazyna saved more than 36 billion tenge from the beginning of the year due to the use of new technologies, Kazpravda.kz reports ...
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Security guard implicated in bank robbery
    In Almaty City, an Alfa Bank security guard and his accomplice turned out to be involved in the KZT65 million robbery, Kazinform reports.
    "Having conducted investigation by ...
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The trend of the transfer of deposits in foreign currency into tenge deposits continues
    As of the end of May 2017, the volume of deposits amounted to 17 707.3 bln. KZT, having decreased by 2.2% from the beginning of the ...
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Metals and Minerals

Polymetal International receives GBX 950.09 average target price from brokerages
    Shares of Polymetal International PLC (LON:POLY) have been assigned a consensus recommendation of “Hold” from the twelve brokerages that are covering the stock, Marketbeat.com reports. Two ...
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Copper slips on firmer dollar, rise in inventories
    Copper prices dipped on Friday, pressured by a firmer dollar and a rise in inventories, offsetting better than expected factory growth in top metals consumer China.
    China's ...
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Gold heads for 1st monthly loss in 2017 as rally stalls in 2nd qtr
    Gold eased on Friday to stay on track for its first monthly loss this year, as hints
    from leading central banks that the era of easy money ...
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China to limit imports of dirty coal
    Imagine you live in a village where one very large and powerful family both farms and eats half of the grain, and has massive tracts of ...
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Uranium prices: nuclear capacity increases at fastest clip in 25 years
    Uranium miners are banking on an increase in nuclear plant builds in the coming years to boost uranium demand, and according to the World Nuclear Association ...
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Trade and Consumer Goods

EU wheat crop suffers second downgrade in two days
    The European Union wheat crop suffered its second downgrade in two days as the European Commission reduced its forecast below 140m tonnes, following a cut by ...
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Wheat prices soar as US sowings hit record low, soya up too
    Soyabean futures gained, and spring wheat futures took gains this month nearly to 40% after much-anticipated US crop data showed that farmers sowed fewer acres of ...
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Real Estate

Unfair developers of three residential complexes in Astana arrested
    Unscrupulous developers of three residential complexes in Astana have been put under arrest. The joint-stock company "Tamiz Invest Group" erected the residential complexes "Comfort Territory-2", "Orbita", ...
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Sports

Anti-doping laboratory in Almaty deprived of accreditation by WADA
    The World Anti-Doping Agency (WADA) has denied accreditation of anti-doping laboratories in Almaty (Kazakhstan) and Bloemfontein (South Africa), Kazpravda.kz reports citing vesti.kz.
    Both laboratories are recognized as ...
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Regional News

Chinese top political advisor urges concerted efforts to boost economy
    China's top political advisor Yu Zhengsheng on Friday called for concerted efforts by non-Communist parties and personnel to boost the country's economy.
    Hosting a symposium attended by ...
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China to focus on top-end products for industrial edge
    China aims to make breakthroughs in high value-added products like the next-generation numerical control machines, large passenger jets, sensors and industrial software, to improve its capability ...
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Waste sorting plant to be erected in Irkutsk region
    A powerful waste sorting plant with a capacity of 20,000 cubic meters per year will be established in the Irkutsk region, Russia.
    As Construction.RU was told by ...
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Furniture factory of famous brand to be built in Russia for $17 million
    Felix, a manufacturer of an office and hotel furniture, will build a factory in the Tver region for over 1 billion rubles. That is about $17 ...
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Volume of investments in Russian real estate grew by almost 40%
    In the first half of 2017, the volume of investments in Russian real estate exceeded $2 billion, which is 39% higher than the same period last ...
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Uzbekistan planning to purchase the Y2018 soyabean crop on state order
    The state order for soyabean procurement will be introduced in Uzbekistan beginning from the Y2018 crop, reports Podrobno.uz. The respective amendments to the resolution of Uzbekistan’s ...
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New Uzbekistani projects are meant to promote peace in Fergana Valley
    The Uzbekistani government is working on a strategy to raise living standards in the Fergana Valley and to bring citizens turned insurgents abroad ("those who've lost ...
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ISIS loses 5 senior leaders in an airstrike in north of Afghanistan
    The Islamic State of Iraq and Syria (ISIS) terrorist group has lost five senior leaders in an airstrike in northern Jawzjan province of Afghanistan, reported Khaama ...
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SAS soldiers 'suspected' of executing unarmed Afghans and covering up potential war crimes
    A “rogue” Special Air Service (SAS) unit is suspected of executing unarmed civilians in Afghanistan and fabricating reports to cover up potential war crimes, according to ...
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Prices and Statistics

Commodities
    

Date: July 3, 2017; Source: Bloomberg.com

Energy

Index Units Price Change %Change Contract Time (EDT) 2 Day
USD/bbl. 46.19 +0.15 +0.33% Aug 2017 12:54 AM
USD/bbl. 48.86 +0.09 +0.18% Sep 2017 12:54 AM
USd/gal. 151.07 -0.30 -0.20% Aug 2017 12:47 AM
USD/MMBtu 2.95 -0.08 -2.67% Aug 2017 12:54 AM
USd/gal. 148.67 +0.36 +0.24% Aug 2017 12:53 AM
 
Index Units Price Change %Change Contract Time (EDT) 2 Day
USD/t oz. 1,237.50 -4.80 -0.39% Aug 2017 12:54 AM
USD/t oz. 1,237.80 -3.81 -0.31% N/A 1:04 AM
USD/t oz. 16.59 -0.04 -0.22% Sep 2017 12:54 AM
USd/lb. 270.45 -0.65 -0.24% Sep 2017 12:54 AM
USD/t oz. 923.00 -2.87 -0.31% N/A 1:04 AM
Index Units Price Change %Change Contract Time (EDT) 2 Day
USd/bu. 385.00 +4.00 +1.05% Sep 2017 12:52 AM
USd/bu. 540.75 +14.75 +2.80% Sep 2017 12:54 AM
USD/MT 1,940.00 +79.00 +4.25% Sep 2017 6/30/2017
USd/lb. 68.41 -0.18 -0.26% Dec 2017 12:47 AM
USd/lb. 116.30 -0.20 -0.17% Aug 2017 6/30/2017
 

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Exchange Rates
    

Date: July 3, 2017; Source: the National Bank of Kazakhstan

1 AUSTRALIAN DOLLAR AUD / KZT 245.95    
1 AZERBAIJAN MANAT AZN / KZT 188.78    
10 ARMENIAN DRAM AMD / KZT 6.67    
1 BELARUS ROUBLE BYN / KZT 165.33    
1 BRAZILIAN REAL BRL / KZT 96.79    
10 HUNGARIAN FORINTS HUF / KZT 11.85    
1 HONG KONG DOLLAR HKD / KZT 40.99    
1 GEORGIAN LARI GEL / KZT 133.58    
1 DANISH KRONA DKK / KZT 49.17    
1 UAE DIRHAM AED / KZT 87.13    
1 US DOLLAR USD / KZT 320    
1 EURO EUR / KZT 365.47    
1 INDIAN RUPEE INR / KZT 4.95    
1000 IRANIAN RIAL IRR / KZT 9.85    
1 CANADIAN DOLLAR CAD / KZT 246.84    
1 CHINESE YUAN CNY / KZT 47.2    
1 KUWAIT DINAR KWD / KZT 1057.5    
1 KYRGYZIAN SOM KGS / KZT 4.64    
1 MALAYSIAN RINGGIT MYR / KZT 74.57    
1 MEXICAN PESO MXN / KZT 17.66    
1 MOLDAVIAN LEY MDL / KZT 17.8    
1 NORWEGIAN KRONA NOK / KZT 38.35    
1 POLISH ZLOTY PLN / KZT 86.48    
1 SAUDI RIYAL SAR / KZT 85.34    
1 RUSSIAN ROUBLE RUB / KZT 5.43    
1 SDR XDR / KZT 445.25    
1 SINGAPORE DOLLAR SGD / KZT 232.56    
1 TAJIKISTAN SOMONI TJS / KZT 36.37    
1 THAI BAHT THB / KZT 9.43    
1 TURKISH LIRA TRY / KZT 90.98    
100 UZBEKISTAN SUM UZS / KZT 8.09    
1 UKRAINIAN GRIVNA UAH / KZT 12.27    
1 GREAT BRITAIN POUND GBP / KZT 416.67    
1 CRECH KORUNA CZK / KZT 14.01    
1 SWEDISH KRONA SEK / KZT 37.97    
1 SWISS FRANC CHF / KZT 333.99    
1 SOUTH AFRICAN RAND ZAR / KZT 24.53    
100 SOUTH KOREAN WON KRW / KZT 27.96    
1 JAPANESE YEN JPY / KZT 2.85    

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