SERIK SULTANGALIEV General Director KazTranGas

Kazakhstan is performing extremely well: Since its independence in '91 it successfully embarked on a political and economic reform. It has enormous potential for foreign investment and long-term economic growth. All macro-economic Indicators confirm and this is being acknowledged more and more internationally: Kazakhstan will join the WTO, Kazakhstan has joined the WEF-list of competitive economies and so on… . What would you say it is that differentiates Kazakhstan so strongly from other CIS-countries?

I can explain it to you. I'm very proud that I have the Kazakh nationality. I think that we, Kazakhs and Americans, are very likeminded and I was quite lucky to visit the United States in 1993. I visited Los Angeles, California, where I was taken in by a family. After the Iron Curtain had fallen, for us it was just amazing to see your country. I was born in a small village, in the Almaty Oblast. I think that economic stability can be explained by the people of the country, Kazakhs are very hospitable and friendly by nature, they respect elderly people, now, of course, we have got, maybe, the international upbringing, being part of the Soviet Union, and during WW2 by Stalin's order many minorities just were made to move to Kazakhstan and Central Asia republics, it was deportation, maybe you know about that. We have more than 130 nationalities living here and it was a good mixture that we got assimilated and in some way it all ensured stability. I know the history of the Kazakhs, and I can for sure tell you this, that the Kazakhs have never been nationalists, and have never had any negative properties and qualities, which are unfortunately displayed in the countries, in the states which end with '- Stan'. I think that it's not only the American problem, it causes the problem for America, but it causes the problem for all of us. And it's so nice that the United States look at Kazakhstan from a different angle, with different eyes.

The United States indeed considers Kazakhstan to be a strategic partner. They also understand the importance of this country within the whole Central Asian Region. To put it in the words of Secretary of State Ms. Condoleezza Rice: "It is pulling the whole Central-Asian region forward, both economically and politically".

Of course, we cannot blame Americans that they do not know much about the country such as our or any other countries, which end with '-Stan', and although we are a big country, we are very far from the United States. And it's very nice that the US pays much attention to us now. Especially that event that took place in Washington: watching it on TV made me so happy. I heard the comments of very big persons, VIPs of your country. Kazakhs are always open, with all heart and soul, as much as any other nation in the world. God blessed us with oil and gas and other riches, which constitute the basis of our economy.

The Oil & Gas sector indeed still is the backbone of Kazakh economy. Because of its significant proven reserves and sound policies it is poised to become an increasingly important player over the next decade. With a targeted production level of 3,5 million bbl/day by 2015, Kazakhstan has the potential to indeed become the 5th largest producer worldwide… What are the main challenges the industry is facing in achieving these targets?

First of all we need the help of investors, American investors. We need the support of international, well known companies. What we also need is continued stability and peace in the region. Due to my position I have already visited within this short period of time all the states, wherever there is gas issue, I have visited Kyrgyzstan, Turkmenia, Tajikistan. And that American patriotism of which American citizens are so proud, it started to grow here also among our population, we have started to be patriotic. Especially when you go to those countries, our neighboring countries, and you see that they are less developed and you know that we are pushing them forward, fills you with pride of your country. When you participate in negotiations, you sit with pride because you know that your country has achieved a lot of success. I think it's the worst thing when a person does not like his own country, does not love his country, because of problems related to his lifestyle, quality of life, unemployment, low salaries, lack of light in the house, no gas in the house. In all those regions there is political instability. We also have had to come through that period, pass through those times, successfully.

KazTransGaz plays a very important, pivotal role in the overall development of the country's gas sector and not only in the management of the Gas Transportation Network. For our readers understanding, how would you describe this role?

Within this short period of time we have done so much and I feel quite a pleasant tiredness because we do so much. When the Soviet Union was created, it was built not by silly people. The infrastructure was built in such a way that no other republic could survive by itself; there was dependence between them. In spite of our sovereignty, Kazakhstan, Uzbekistan, Russia, Ukraine and other countries can survive without each other. We have all had our role in the economy. We cannot bear without each other, and we have to be together because we are united through the pipelines, which we commonly share, which we have to share.

Today KazTransGaz is not the company, which only transports gas, we now also develop our own Kazakhstani gas. Let me tell you about some of our projects: The first project is Amangeldy oil field. The geological surveys prove that we have trillions of gas reserves. That of course is not enough. You need the infrastructure: if you don't have the infrastructure you cannot develop. With just the small Amangeldy field where we produce around 350 ml cubic meters per year which can provide one-forth of the amount which we generally procure from Uzbekistan. Last year we commissioned a facility processing associated gas.

And on top of transportation and development of gas this year we became responsible for management of an energy company Almaty Power Consolidated (APC). This has been transferred to us by the Government. Before it belonged to Tractebel, now part of Suez. It's logical, because we supply gas to those facilities. There are some financial settlements between us. And I think that the Government made a good decision.

This must have made the Akim of Almaty very happy…

He is happy. For us it's of ourse generating a lot of additional work. We'll have to invest a lot of money into those facilities. We recently procured one more hydroelectric station in Aktobe. And we have experience of working with the Dzhambul hydroelectric power station, which is very unique and one of our biggest hydropower stations. And while we have such big power stations, we decided to set up a big holding. So, you see we are not only active in gas transportation and development. This is in large part thanks to our managers of the middle ranking which are very successful, very skillful. Managers of the middle class are very professional, they know their business. President of our country always insisted on sending our children to study abroad. We developed a State Program - Bolashak - under which young people are sent abroad to study. Private companies, as well domestic as international, on their own also finance education of our children abroad.

For the first time in our experience, we were able to defend our tariffs increase. It's very difficult to prove to Gazprom that there is indeed a need to increase tariffs. But we did it at the highest level. It's our first victory. And it's a big victory because now we are getting money through the increase of tariffs, we are getting more money and it means that we'll be able to put the money not only in the refurbishment and restructuring of the existing facilities and infrastructure, but we'll allocate money for social programs in order to support our employees, to increase their salaries and social wellbeing. We started to build good quality houses for our employees. Don't forget that they are often working in remote places, far in the steppes where we have our compressor stations. They used to live in very small shacks, in wagons. Such people work on the rotation basis, they come to the compressor station every other fortnight for a two-week period and they have to live in wagons. This year for the first time we were able to build houses for them with lots of comfort and convenience. Here in Astana you can see everything, it's beautiful, it's understandable, but when you create such conditions in remote places for our employees it's a different story, it's a development of the company.

One of your main targets is to triple the amount of produced gas by 2010. What are the main investment opportunities that exist for American companies to help you achieve this goal?

I'm waiting for a huge delegation from the US to come on 16 November. Their representatives have already been here. I gave them a chance to know about our activities, to learn about our investment programs. They studied all the information, which was accessible for them and now they are sending their practitioners. There are a lot of American technologies we are interested in. We'll be talking about compressor stations, which are produced in the US, we'll talk about the high techs which are available in the US, to compress gas, into a container, and this container will be taken to some remote settlement and you do not need to build a gas pipeline which is expensive, you can bring that container. It'll be heating the whole region. We hope many energy projects and specialists will join this delegation.

We understand many opportunities also exist in the development of the petrochemical sector.

There are so many topics to discuss around this business. That's why such a big delegation from the US is coming because there are so many opportunities here. And we'll have serious and fruitful talks. And I think that of what I have mentioned 70% can be achieved and implemented via this negotiation process.

Our President initiated it (the American delegation), generally all the initiatives are coming from him. He is very busy and I sincerely wish him good health. He's taking the control over the whole situation in the country, in big areas, and even in small areas, big business and in small business. Business would not have survived in this country without him because I know it I have worked in the area of private business for 10 years.

This was all very new for us. During Soviet times we were all equal, and when somebody moved forward and earned more money than others, some people found it hard to accept. Then our President, Mr. Nazarbayev, said that nobody should interfere with business, let businessmen do their business. And just an example, companies can divest in facilities, which are not profitable for them, you can get rid of a sun-spa, which doesn't bring you revenues, you can sell it. The mentality of a Soviet state official wasn't like this - they will not do anything but at the same time they will not let other people who had business skills to develop business and to do something with such things which are generating loss.