Concern at Oil Firm Flotation

Concern at Oil Firm Flotation

The partial sell-off of a state oil firm has raised eyebrows in Kazakstan, and NBCentralAsia’s energy experts are warning that with no single large investor on the scene, the shares may end up being owned by a few local oligarchs.



Trading in 40 per cent of the shares in KazMunaiGaz Exploration and Production (KMG E & P), a subsidiary of the national oil and gas firm KazMunaiGaz, started at the London Stock Exchange on October 4. The company expects to raise around two billion US dollars from the sale.



KazMunaiGaz chiefs insist denationalisation will help make the company more transparent and attract investment for new projects.



Energy experts interviewed by NBCA say the privatization would have made more sense if there was one big institutional investor making a bid. The fact that no such buyer is involved could result in this crucial economic asset falling into the hands of a small number of oligarchs in Kazakstan.



Such a development would weaken the state’s position in the energy market. The government would have found it easier to negotiate with one strategic investor.



Some public figures and political parties in Kazakstan have complained that the average person has no chance of getting hold of any of the stock since it costs 50,000 dollars just to put in a bid.



Figures from last year indicated that KazMunaiGaz was Kazakstan’s third-largest oil producer, with extraction going on at 44 oil and gas deposits in the Atyrau and Mangistau regions of western Kazakstan.



KazMunaiGaz was founded as a joint-stock company in 2002 and has subsidiaries including KMG E&P and the KazTransOil and KazTransGas distribution companies. The corporation implements the government’s oil and gas policy, and works on international projects and with investors in the sector.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)



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