Kazakh prime minister resigns

ALMATY, Jan 8 (Reuters) Kazakh Prime Minister Danial Akhmetov, who changed the law to favour state companies over foreign investors, has resigned, a government source said today.

Former Soviet Kazakhstan is the largest Central Asian state.

It borders China, Russia and the Caspian Sea, and has become a source of energy supplies for the West looking to circumvent Arab-dominated OPEC.

President Nursultan Nazarbayev has accepted the resignation, which under the constitution triggers the removal of the cabinet.

''Today the country's President, Nursultan Nazarbayev, accepted the resignation of the government,'' a note on the President's official website, www.akorda.kz, said.

The government source gave no reason for Akhmetov's resignation.

Akhmetov, 52, has been Kazakh Prime Minister since June 2003.

He is a career politician and a Nazarbayev supporter. Nazarbayev, the country's leader since Soviet times, reappointed him to the post last January.

Power in Kazakhstan is concentrated in the hands of the president who directs the prime minister's actions.

Kazakhstan is rich in oil and gas and produces around one million barrels of oil a day which it pumps mainly to the West. It has ambitions to triple output by 2015, pushing it into the world's top 10 producers.

Western energy companies have poured money into Kazakhstan, characterised by its stability in a region wracked by civil strife since the breakdown of the Soviet Union.

But Western oil companies in particular have complained of a change in the law which states that Kazakhstan's main state oil company must own half of all future investments, while foreign companies bear the burden of exploration costs -- a change instigated by Akhmetov.

Parliament, which according to the constitution approves the president's nominee for prime minister, is due to hold a plenary sitting on January 10.

REUTERS AB HS1705