Interview with the Chairman of KazEnergy Association

Feb 15, 2008 01:00 AM

by K. Konirova

Here follows an interview I had with the Chairman of KazEnergy Association, Timur Kulibayev, in Astana.

Question: Did KazEnergy Association make an initiative to join the World Oil Council?

Answer: Yes, KazEnergy Association made a decision on Kazakhstan joining the participants of the World Oil Council. This decision was supported by Kazakhstan’s Minister of Energy and Mineral Resources as well.
I think that Kazakhstan is a large participant in the world oil community. Our country will increase its oil production. Currently, we produce nearly 70 mm tons of oil and I believe that in the near future, we will increase the production up to 100 mm tons or more. It is important for us to participate in the world processes as well.

Question: What are your comments on the Government’s initiative to apply export custom duties to the extractive companies?

Answer: During the discussions, the members of the Association expressed their opinions towards efficiency of applying such measures because experience speaks of their seriousness. Particularly, it may touch on the investment component of the economy. Applying these duties may bring reduction in the investment activity of oil companies already working in Kazakhstan.
Therefore, the Association has decided to participate in the working group, which is devising the new tax code, in order to gain an opportunity to jointly find a balance of the investors of State and investors, a study model of conducting budget in the various scenarios and inviting the high-class experts. The investment risks have their concrete specification. However, it is still needed to understand this that there is competition for investments in the world.

Question: Is there an alternative to this duty?

Answer: Always there is a situation where the oil companies are prepared to pay off and the State receives more taxes.
So, there is a need to find a balance.

Question: Was a decision made on the necessity to hold a Geologic Forum?

Answer: This forum will take place within the third Eurasian Energy Forum “KazEnergy” in September, in Astana.

Question: How do you assess KazMunaiGaz’s purchasing 72 % shares of “Mangistaumunaygaz”?

Answer: Unfortunately, “Mangistaumunaygaz” is not a member to the Association.
In addition, to my knowledge, this contract includes not only the shares of “Mangistaumunaygaz”, but also the 2 offshore blocks, 15 licenses for the exploration, particularly Pavlodar Petrochemical Plant -- which will be enabled to settle the issue of providing oil products to the internal market.

Question: There is information that due to Pavlodar Petrochemical Plant, KazMunaiGaz considers the issue of purchasing oil fields in Western Siberia?

Answer: If it is profitable for KazMunaiGaz, it may purchase any shares.
Each company should be strengthened, but the national company, which faces a task to become a large international player, may go to the neighbouring countries and become stronger in these markets.

Question: How do you assess establishment of a joint venture on the base of Pavlodar Petrochemical Plant?

Answer: Probably all the integration of the bordering countries and coordination of the efforts on stabilization of the markets, especially oil products, should be welcomed.
Today half of the oil products to Kazakhstan come from Russia, and it means supporting the presence of the Russian companies in the internal markets, as it will provide an opportunity to avoid deficit of oil products and keep the prices levelled.

Question: There is information that in future strategy, preference will be given to the investors from Arab countries or countries of South-East Asia?

Answer: You should know that the investors in Kazakhstan are being selected on the basis of tenders, and those companies who meet the requirements of the government win, so there is no point of preference here. In each concrete case, the partner is selected, whether it is from America or Asia.
Due to the existence of many difficult fields and the prospects increase of the offshore oil production in Kazakhstan, it is important for the government if the companies have relevant experience, technology and management.

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