Kazakhstan Sweep 100929

Kazakhstan Sweep 100929

• Wall Street Journal and Reuters both report that Kazakhstan’s state-owned railway Temir Zholy launched a $700 million, 10-year bond deal at 6.375% on September 29th. WSJ and Reuters cited “a person familiar with the matter” and “a source at one of the lead managers” respectively.
• Reuters Africa reports that three Japanese nuclear companies agreed on September 29th to provide data and cost estimates to Kazakhstan on the possibility of building the country’s first nuclear power plant according to a joint statement by the Japan Atomic Power Company, Toshiba Corp and Marubeni Corp.
• Interfax-Kazakhstan reports on September 29th that Kazakh-Chinese company Great Wall has won the bid to drill the first exploratory well at the Urikhtau gas condensate field in western Kazakhstan according to the operator of the gas field. Great Wall stated that drilling would take place from October to December of 2010.
• Interfax-Kazakhstan reports on September 29ththat Kazakhstan’s BTA Bank has claims against affiliates of Eurasia Logistic, according to Chairman Anvar Saidenov. He added that the claims were not against Eurasia Logistic itself and that BTA bank was actively working to recover embezzled funds in Russia.
• Bloomberg reports on September 29th that as the government seeks a larger share of resource revenue, Chevron Corp.’s Kazakh oil venture TengizChevroilmore than doubled crude extraction tax payments in the first seven months of 2010 as compared to all of 2009. According to data on the Finance Ministry’s Tax Committee website, 2009 saw 122 billion tenge in tax revenue, while the first seven months of 2010 saw 245.2 billion tenge ($1.7 billion).

1) Kazakhstan Temir Zholy Launches $700M 10-Year Bond At 6.375%

NEWYORK (Dow Jones)--Kazakhstan Temir Zholy, the Central Asian country's state-owned railway, launched a $700 million, 10-year bond deal Wednesday with a yield of 6.375%, according to a person familiar with the matter.

The yield came in below the range announced earlier in the day for 6.5% to 6.625%.

The deal is slated to price later Wednesday with Barclays, HSBC and RBS managing the sale.

The securities are rated Baa3 by Moody's, BB+ by Standard & Poor's and BBB- by Fitch.

KTZ is 100% owned by the government through the JSC National Welfare Fund Samruk-Kazyna.

1) Kazakh Railways launches $700 mln bond at 6.375 pct-source

Kazakhstan's state-owned railway has launched a $700 million 10-year eurobond at 6.375 percent and received investor bids of over $8 billion for the issue, a source at one of the lead managers said on Thursday.

The yield tightened steadily from the 6.75 percent area that was talked at the start of the day.

Kazakhstan Temir Zholy (KTZ) will price the deal shortly.

Oil-rich Kazakhstan has no sovereign Eurobonds outstanding, possibly accounting for the huge demand as investors seek exposure to the sovereign.

KTZ has an outstanding dollar bond that matures next year

2) Japan firms to provide nuclear estimates to Kazakhstan

TOKYO, Sept 29 (Reuters) - The Japan Atomic Power Company, Toshiba Corp and a unit of Marubeni Corp have reached an agreement with Kazakhstan to provide data and cost estimates on the possibility of the country building its first nuclear power plant.

In a joint statement, the three companies said on Wednesday that an agreement with the National Nuclear Center of Kazakhstan would enable them to cooperate in the building, operating and financing of a possible nuclear power plant.

If Kazakhstan decides to hold a feasibility study to build a nuclear facility based on the companies' estimates, that would provide a lucrative, but competitive business chance for nuclear technology exporters, including Japan.

Japan, the world's third biggest nuclear power generator, is stepping up its marketing of nuclear technology by establishing a new atomic technology exporting body next month. [ID:nTOE68N03U]

Kazkhstan is looking to build an advanced boiling water reactor with a capacity of 1,000 megawatts or less, said a spokesman at Japan Atomic Power, Japan's oldest nuclear power company. ABWR is a proven technology in Japan although the capacity requested is smaller than usual.

3) Kazakh-Chinese company wins tender for drilling operations at Urikhtau field

Almaty. September 29. Interfax-Kazakhstan – Great Wall, a Kazakh-Chinese company, has won the bid to drill the first exploratory well at the Urikhtau gas condensate field (in the Aktobe Region, western Kazakhstan), Urikhtau Operating, the operator of the field, told Interfax-Kazakhstan.

According to the company, the drilling operations are scheduled to start in October this year and finish in December. The target depth of the well is 4,000 meters.

As reported, Urikhtau Operating planned to drill the first exploration well at Urihtau gas condensate field by the end of 2010. The company is going to drill 5 wells during the exploration period scheduled to end by 2014.

The 29-square km Urikhtau field is adjacent to the existing Zhanazhol, Kenkiyak and Alibekmola oil and gas fields, which are under development. Urikhtau is part of the Beineu-Bozoi-Samsonovka pipeline project, which will ensure steady gas supply to southern regions of Kazakhstan,

Urikhtau Operating LLP is wholly owned by National Company KazMunayGas.

The former Ministry of Energy and Mineral Resources (now the Ministry of Oil and Gas) and National Company KazMunayGas signed in December 2008 a 30-year contract for exploration and development of the Urikhtau field.

Urikhtau was discovered in 1983. Its reserves were estimated at 39,815 million cubic meters of free gas, 11,623,000 tons of condensate, 6,493,000 tons of oil and 2,389 million cubic meters of dissolved gas, as approved by the USSR State Committee for Natural Reserves on October 28, 1988.

4) BTA Bank has claims against offshore companies affiliated with Eurasia Logistic

Almaty. September 29. Interfax-Kazakhstan – Kazakhstan’s BTA Bank doesn’t have claims against Eurasia Logistic Company but against offshore companies affiliated with it, the bank’s Chairman Anvar Saidenov told reporters in Almaty on Tuesday.

He decided to address numerous media reports that BTA Bank’s Deputy Chairman Nikolai Varenko recently told a Moscow press-conference that the bank had no claims against Eurasia Logistic regarding the recovery of the bank’s assets.

“I was present at the Moscow press-conference, where Varenko answered this question. This is literally what he said; “Formally, Eurasia Logistics did not borrow from BTA Bank.” He didn’t say that BTA Bank didn’t have any claims. We have claims, but against offshore companies related to the former owners and management of BTA Bank and Eurasia Logistic. That’s what he meant,” Saidenov explained.

He also disagreed with some media outlets claiming that a criminal case over embezzlement of BTA Bank’s funds and assets instigated in Russia could collapse in the near future as the bank did not perform necessary legal actions.

“The fact that we are involved in this process speaks for itself,” Saidenov said adding that the bank would issue an official statement regarding the issue.

He noted that the bank’s efforts to recover its funds in Russia were very active.

In 2009 BTA Bank was ranked 14th among the CIS banks by assets and 3rd among the Kazakh banks according to the Interfax-1000: CIS Banks ranking prepared by the Interfax Center of Economic Analysis.

5) Chevron-led Kazakh Venture Doubles Oil Extraction Tax Payment

Chevron Corp.’s Kazakh oil venture, the country’s biggest exporter of the fuel, more than doubled crude extraction tax payments as the government seeks a larger share of resource revenue.

TengizChevroil paid 245.2 billion tenge ($1.7 billion) in the first seven months, compared with 122 billion tenge in all of 2009, according to data published on the Finance Ministry’s Tax Committee website, without elaboration.

Kazakhstan, which holds 3 percent of the world’s oil reserves according to BP Plc, introduced the extraction tax, replacing royalty payments, to boost revenue and narrow a budget deficit. The government started levying export taxes on crude oil from the venture led by Chevron, in the government’s latest effort to gain more from the country’s energy wealth. The Central Asian nation raised the oil export tax to $20 a metric ton ($2.73 a barrel) in August and plans to double that to $40 starting next year.

TengizChevroil increased oil production to 12.5 million tons in the first half, more than a half of the 22.5 million tons it produced in 2009, the company said on its website.

The venture’s total tax burden rose to 514 billion tenge through July from 452 billion tenge in all of 2009, the tax committee said. The venture paid 248 billion tenge in corporate income tax, compared with 294 billion tenge for all of 2009, according to the statement.

Linsi Crain, an Atyrau-based spokeswoman for TengizChevroil wasn’t immediately available for comment. Raikhan Sharipova, a spokeswoman for tax committee, declined to comment immediately.

Chevron, based in San Ramon, California, holds 50 percent of TengizChevroil. Exxon Mobil Corp. has 25 percent, state-run KazMunaiGaz National Co. owns 20 percent and Lukarco, owned by Russia’s OAO Lukoil, 5 percent.