KAZAKHSTAN, CHINA SIGN MULTIBILLION DOLLAR OIL DEAL.

Kazakhstani president Nursultan Nazarbaev, Chinese prime minister Li Peng, and senior officials of the two countries signed yesterday in Almaty a set of agreements on oil extraction and transportation valued in total at some $9.5 billion. The package is being described as Central Asia’s "deal of the century" — an analogy to the South Caucasus "deal of the century" signed in 1994 by Azerbaijan and international oil companies for $7.5 billion. Yesterday’s Almaty agreements cover:

1. Oil extraction at Uzen field in west Kazakhstan region, at a cost of $4.4 billion, and three oilfields in the adjacent Aktobe region, at a cost of $1.1 billion. Uzen is Kazakhstan’s second-largest oilfield, after Tengiz. Under this contract, Uzen’s annual output is to rise from the current 2.5 million tons to 8 million tons by 2002. Chinese investments in the Uzen and Aktobe fields will cover the companies’ wage arrears and other debts, ecological rehabilitation, and some "social costs" and personnel training, on top of investments in production.

2. Construction of a 3,000 kilometer pipeline from Uzen to Karamai in western China’s Xinjiang region, where it would link up with China’s pipeline system. The Uzen-Karamai pipeline is to be completed by 2005 at a cost of $3.5 billion.

3. Construction of a 250 kilometer pipeline from Kazakhstan across Turkmenistan to Iran for export of Kazakhstani oil via the Persian Gulf to international markets. (International and Russian agencies, Xinhua, September 24)

Last June, the China National Petroleum Corporation (CNPC) won the international tender for 60 percent of the stock in Kazakhstan’s Aktobemunaigaz oil company, whose fields contain proven reserves of 600 million tons of oil and 220 billion cubic meters of gas. Under that tender, the state retained a 30 percent stake and the workforce a 10 percent. stake in the enterprise. The acquisition of Uzen and Aktobe oilfields, China’s largest investment abroad to date, forms part of Beijing’s plans to secure fuel supplies from Central Asia into the 21st century. Li Peng stated yesterday in Almaty that oil imports from Central Asia are more cost-effective for China, compared to imports from the Persian Gulf states.

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