Tuesday, 04 October 2005

KAZAKHS SEEK \"STRATEGIC CONTROL\" OVER PETROKAZ

Published in News Digest

By empty (10/4/2005 issue of the CACI Analyst)

Kazakhstan wants \"strategic control\" over Canadian oil company PetroKazakhstan\'s assets and its state oil firm is in talks to obtain a stake in the firm, the energy minister said on Tuesday. Such a move could complicate a $4.18 billion offer from China National Petroleum Corp.
Kazakhstan wants \"strategic control\" over Canadian oil company PetroKazakhstan\'s assets and its state oil firm is in talks to obtain a stake in the firm, the energy minister said on Tuesday. Such a move could complicate a $4.18 billion offer from China National Petroleum Corp. (CNPC) for PetroKazakhstan Inc., which has all of its assets in ex-Soviet Kazakhstan. The Chinese bid, announced more than a month ago, has unsettled some Kazakh lawmakers who want a refinery owned by PetroKazakhstan brought back under state control. \"Whatever happens to the shares, the state company will have a stake, which would allow (us) to properly work in this direction,\" Energy and Mineral Resources Minister Vladimir Shkolnik told reporters at an oil and gas conference in Almaty. \"In any case, strategic control will stay within the country,\" he said. \"This is a very serious issue, we\'re talking here about a strategic enterprise, upon which a huge southern region of our country is dependent.\" Shkolnik said talks were under way but declined to specify with whom or to give any further details. PetroKazakhstan produces 150,000 barrels per day but also owns the best of only three oil refineries in Kazakhstan, a vast landlocked Central Asian state bordering China and Russia. The Canadian company has modernised the refinery at Shymkent but has frequently clashed with the government over its attempts to cap fuel prices during the harvest season. CNPC denied a newspaper report last month saying that it was in talks to sell half of PetroKazakhstan to Kazakhstan. And industry sources said on Tuesday the structure of the deal might be more complicated than just a direct purchase. \"Kazakhstan is definitely afraid of CNPC becoming a monopoly in the country\'s south. So they might think about buying Shymkent and one of PetroKazakhstan\'s producing units from CNPC on market terms,\" said an industry source. Kazakhstan has become increasingly assertive about state oil company KazMunaiGas playing a role in major projects and has demanded foreign companies pay a greater share of their local earnings back to the state. Last month, parliament started considering an amendment to the subsoil laws which would impose greater state control over the sales of foreign-held stakes in the energy sector. The Kazakh government used a similar change to the subsoil law last year as part of a battle to gain access for KazMunaiGas to the consortium developing the offshore Kashagan field. British BG Group Plc\'s had sought to sell its share in the ENI-led consortium to most of the other consortium members, only to be blocked by the government and the change in law. After months of negotiation, the state agreed to pay $600 million for half of BG\'s 16.67 percent stake. (Reuters)
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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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