South Korean President Lee Myung-bak (left) and Kazakh President Nursultan Nazarbayev shake hands during summit talks in Astana on Aug. 25.
(© Yonhap)

After summit talks between Lee and Kazakh President Nursultan Nazarbayev, the two sides signed an “inter-government agreement” guaranteeing South Korea’s 70% stake in a $4 billion project to build a coal-fired power plant in the southern city of Balkhash.

Korea Electric Power Corp (KEPCO) and Samsung C&T currently hold a 35% stake each in the project to build a 1,320 MW plant that is expected to generate about 7% of Kazakhstan’s electricity needs.

Officials said that the intergovernmental guarantee is a must to make sure that the terms of the contract will remain effective regardless of changes to the law in Kazakhstan and to ensure that the Kazakh government will buy electricity from the plant.

In addition, South Korea’s LG Chem and Kazakhstan Petrochemical Industries (KPI) also signed a contract to establish a joint venture to push for a $4 billion project to build a petrochemical complex in Atyrau on the northern banks of the Caspian Sea. The envisioned complex will use gas from the nearby Tengiz oil field to produce about 800,000 tons of polyethylene annually. Construction is expected to be completed by 2016, with commercial production to begin the following year, officials said.

The two agreements were the largest-ever since South Korea and Kazakhstan forged relations in 1992, and the latest achievement of Lee’s three-nation Central Asian tour that already took him to Mongolia and Uzbekistan. In Uzbekistan, a $4 billion deal was signed to develop a massive gas field and build a chemical plant. Lee arrived in Astana on Wednesday. During Thursday’s summit talks, Lee and Nazarbayev agreed that the success of the Balkhash power plant and the Atyrau petrochemical complex will serve as a model for further expanding cooperation between the two countries and pledged to cooperate closely on them, officials said.

The two leaders also expressed satisfaction that their countries have steadily expanded cooperation and discussed ways to strengthen substantive cooperation in the fields of trade, investment, energy, resources, environment, health care, medicine, IT and agriculture, officials said. The two sides also signed about 20 economic cooperation agreements.

Officials said that Lee has developed a close friendship with Nazarbayev as he has held summit talks with the Kazakh leader every year since taking office in 2008. This year’s visit would further strengthen their personal bond, officials said.

“There has been a lot of progress in relations between the two countries over the past four years […] We presidents met four times over the four years,” Nazarbayev told Lee during summit talks. “What I want to stress is that economic relations between the two countries have been moving forward at a rapid pace thanks to President Lee’s considerations. Trade volume rose 90% from last year to $800 million this year,” he said.

Nazarbayev praised South Korea for playing key roles in the international community, such as last year’s hosting of the G20 summit and winning the right to host the 2018 Winter Olympics in the alpine city of PyeongChang.

Lee also spoke highly of Kazakhstan’s growing international status as shown in its hosting of last year’s summit of the Organization for Security and Cooperation in Europe (OSCE) and this year’s Winter Asian Games, officials said.

Lee also expressed gratitude to Nazarbayev for his decision to participate in next year’s Nuclear Security Summit in Seoul, and the Kazakh leader promised to provide support for a successful staging of the summit, officials said.

“Despite global economic difficulties, Kazakhstan has seen its economy grow steadily thanks to the excellent leadership of President Nazarbayev,” Lee told a joint news conference.

Lee also said that his talks with Nazarbayev were “very useful”.

In a display of their friendship, Lee and Nazarbayev called off several events scheduled for later in the day and spent time together at a presidential retreat outside Astana after the Kazakh leader made the suggestion, officials said.