Middle East Economic Survey

VOL. XLIX

No 23

4-June-2007

CASPIAN

Canada’s Cameco Signs MOU With Kazatomprom

Canada’s Cameco Corporation on 28 May announced it had signed a non-binding memorandum of understanding (MOU) with Kazakh state-owned atomic energy company Kazatomprom to cooperate in the development of uranium conversion capacity and to pursue additional uranium production. Cameco will work with Kazatomprom to study the feasibility of constructing a uranium conversion facility in Kazakhstan and elsewhere. Cameco would provide the technology and potentially hold an interest of up to 49%. The MOU also calls for doubling production from the Inkai uranium deposit to 10.4mn pounds sometime in the future. Cameco, the world’s largest uranium producer, owns 60% and operates Joint Venture Inkai. Kazatomprom holds 40% of JVI, which has regulatory approval to construct a full-scale recovery mine and mill on site, with commercial production targeted in 2008. By 2010 the plant is due to produce 5.2mn pounds/year, of which Cameco’s share would be 3.1mn pounds. Additional capacity at Inkai would allocate 50% to Cameco and 50% to Kazatomprom. The Canadian firm’s share of 10.4mn pounds production would be 5.7mn pounds. Binding agreements based on the MOU are expected to be signed before the end of the year.

Kazakhstan’s uranium deposits are considered the second largest in the world after those in Australia, and Kazatomprom is a major global producer. The country plans to raise its uranium production capacity in coming years. In April, Kazatomprom signed 24 agreements with Japanese entities regarding uranium mining and sales and the development of nuclear power during a visit to Astana by Japanese Trade Minister Akira Amari (MEES, 7 May). Earlier this year, Japanese companies bought a Kazakh firm previously owned by Kazatomprom, in order to participate in uranium production at Kazakhstan’s Kyzylkum and Baiken-ULLP mines (MEES, 30 April). On 10 May during a visit to Astana by Russian President Vladimir Putin, Kazakhstan signed with Russia an agreement to create a joint uranium enrichment center in Angarsk, Siberia.

Other recent developments in the Caspian region include:

  • Bulgaria’s parliament on 30 May ratified an agreement with Russia and Greece to build the 279km Burgas-Alexandroupolis crude oil pipeline (BAPline). The Greek and Russian parliaments have already done so. The BAPline will take 18 months to construction and carry an initial volume of 700,000 b/d, rising later to 1mn b/d. The cost of the project is estimated as high as €1bn. Russian state companies Rosneft, Gazprom Neft and Transneft (operator) will hold 51% of the project. Greek and Bulgarian interests will hold 24.5% each (MEES, 9 April, 19 March).  

  • Kazakhstan’s parliament on 30 May decided to delay legislation on the creation of a joint venture with Russia to process gas produced at the Karachaganak gas and condensate field at Russia’s Orenburg processing plant. The 15-year deal calls for 15 bcm/year of raw gas to be transported to Orenburg (MEES, 23 April, 9 October 2006).  

  • The UK’s Victoria Oil & Gas has begun a six-well development program in the Kemerkol Block in western Kazakhstan. Victoria on 24 May announced that Well 73, the first in the program, had been drilled to a depth of 1,250ms and intersected three oil-bearing intervals that tested at an initial flow of 450 b/d.  Victoria said its 3D seismic acquisition showed a number of potential targets.   

  • Turkmen President Gurbanguli Berdymukhamedov visited neighboring Kazakhstan on 28 May to discuss with Kazakh President Nursultan Nazarbayev joint cooperation on a number of subjects including energy resources development and transport. While in Astana, President Berdymukhamedov said he would like to see Turkmenistan become more active within the Commonwealth of Independent States, formed in 1991 after the demise of the Soviet Union, ending the isolation imposed by the previous Turkmen President Saparmurate Niyazov (MEES, 5 March).   

  • Romania’s Rompetrol on 25 May denied it was negotiating with Azerbaijan’s Socar for a 25% stake in a Romanian refinery. Rompetrol said it was looking for an investor to purchase 25% of the entire Rompetrol Group, not just one refinery (MEES, 28 May). Rompetrol, based in Amsterdam, is active in 13 countries.  

  • Georgia’s Black Sea port of Poti exported 673,543 tons of oil products during 2006. The port is used by Turkmenistan to export low-sulfur diesel, which it produces in the refurbished Turkmenbashi refinery.