Kazakhstan to form new national oil and gas company

Mar 04, 2002 01:00 AM

Kazakhstan's President Nursultan Nazarbayev issued a decree on the evening of February 19 ordering the formation of a new, vertically integrated national oil and gas concern. The company will include the assets of KazakhOil, the national oil company, and Transport Neft i Gaz (TNG), the operator of the country's oil and gas pipeline networks, the decree said. The new company will be known as Kazakmunaigaz, it added.

Kyazzat Kiinov, a former governor of the oil-rich Mangistau region in western Kazakhstan, will serve as the company's head. Timur Kulibayev, who is presently at the helm of TNG, will serve as Kiinov's deputy. (Kulibayev also heads Central Asia Investment Holdings or CAIH, the offshore affiliate of Kazkommertsbank that tried, unsuccessfully, to carry out a hostile takeover of Canada's Hurricane Hydrocarbons last year.) Both men are perceived as loyal to Nazarbayev; indeed, Kulibayev is a son-in-law of the president.
A source in the Kazakhstani government said that the formation of the new company would provide a serious boost to Kulibayev's career. Kulibayev will have more power as the second-in-command at Kazakmunaigaz than he did as head of TNG, the source said. The post will also give Kulibayev room to exercise his skills in management and experience in borrowing money on foreign markets, he said, adding that Kiinov would have more of a professional oilman's perspective.

The new company is likely to have other advantages vis-à-vis foreign lenders. Al Breach, a Goldman Sachs analyst, was quoted as saying that the merger might help Kazakhstan solicit funds since it grouped valuable production assets with transportation facilities of lesser value. The new company will be worth more, Breach said, and bankers usually like to lend money to companies that are worth more. If Kazakmunaigaz can secure a higher credit rating, he said, it will be able to cut the cost of borrowing money from abroad.
KazakhOil's head Nurlan Balgimbayev, a former prime minister of Kazakhstan, also commentedon the value of the new company. KazakhOil quoted him as saying that he approved of the government's plans since his company had been stripped of its assets to some degree since its formation in 1999. Balgimbayev has not been appointed to any post within Kazakmunaigaz.

Kazakmunaigaz will have some exposure to international markets. KazakhOil launched a five-year Eurobond issue worth EUR 125 mm earlier in February, and KazTransOil, the oil pipeline operator that was merged with Kaztransgaz last year to form TNG, issued $ 150 mm worth of five-year Eurobonds in June of 2001. Kaztransgaz, for its part, has said it wants to issue $ 100 mm worth of Eurobonds before the end of this year.

Source: NewsBase
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