Kazakhstan sees $90 bln in oil fund by 2020

Jan 29. Reuters. ASTANA

By Raushan Nurshayeva

Kazakhstan sees $90 bln in oil fund by 2020Kazakhstan plans to accumulate $90 billion in its National Fund by 2020 while spending $8 billion a year from it on industrial development, President Nursultan Nazarbayev said on Friday.

The fund, which now stands at $24.4 billion, accumulates revenues from the oil and gas industry which dominates the Central Asian state’s economy and is partially run by foreign asset managers.

Created as a means to sterilise excess money supply, it has also served as a cushion during the economic crisis, financing a large chunk of the government’s $20 billion stimulus package.

“Starting from this year, the (annual) transfer (from the fund) into the budget would be fixed at the absolute amount of $8 billion,” Nazarbayev said in an annual address to the nation.

“This transfer should first of all be used for industrial development purposes.”

He said budget deficit excluding oil revenues must be cut to 3 percent by 2020 from 11 percent seen in 2009 and 10.3 percent forecast this year.

“National Fund assets should increase to $90 billion by 2020 which would make up at least 30 percent of gross domestic product,” Nazarbayev said.

The rapid build-up of state wealth thanks to high oil prices in the last decade has allowed Kazakhstan both to accumulate sizeable reserves and to increase its role in the key energy sector dominated by global majors.

“Thanks to the fund, not only did we implement anti-crisis measures, but we also returned to the state key assets we had had to sell in hard times,” Nazarbayev said, adding that one of those was a stake in the giant Kashagan oil field.

Kazakhstan sold its stake in Kashagan, the largest oil discovery in the last 40 years, to foreign firms for $500 million in 1998.

But in 2004 the government reentered the project, buying part of outgoing BG’s stake. In 2008, it doubled its stake after a prolonged row with Western partners over the schedule and cost of development.

Kashagan is now run by Exxon Mobil Corp, ConocoPhillips, Royal Dutch Shell Plc, Eni , Total, Kazakh state firm KazMunaiGas and Japan’s Inpex Holdings Inc.

http://www.iii.co.uk/news/?type=afxnews&articleid=7728959&subject=economic&action=article

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