Kazakhstan Chamber of Commerce in the USA

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New shareholder for Kazakhstan’s KazMunaiGas 0

Posted on August 15, 2015 by KazCham

Colibri Law Firm · Business Intelligence

The National Bank of the Republic of Kazakhstan will become one of the shareholders of the country’s KazMunaiGas national oil and gas company.

Samruk-Kazyna, the country’s Sovereign Welfare Fund that currently owns the entire company, will sell a 10% block of shares and one common stock in KazMunaiGas to the National Bank. The price of these shares will be determined by an independent appraiser.

KazMunaiGas JSC is Kazakhstan’s national operator for the exploration, production, processing and transportation of hydrocarbons.

Eni, Kazmunaygas enter the deal to explore Isatay block in Caspian sea 0

Posted on July 24, 2015 by KazCham

Business Intelligence from Colibri Law Firm: Issue #107

Italian Eni S.p.A. announced entering into a joint exploration agreement of Isatay block in the north Capsian Sea with KazMunayGas (KMG), Kazakhstan’s national oil and gas company.

The agreement defines the commercial terms of transfer of 50 percent interest in the Isatay block, believed to hold significant potential oil resources, to Eni.

KMG and Eni will establish a joint operating company, with each holding a 50 percent stake, to operate the block.

 

KazMunaiGas plans to sell 50% of its interest in KMG Kashagan B.V 0

Posted on July 15, 2015 by KazCham

Business Intelligence from Colibri Law Firm: Issue #107

Kazakh national oil and gas company KazMunaiGas plans to sell 50% in KMG Kashagan B.V., an owner of 16.88% stake in the project to develop Kashagan super-field, to Samruk-Kazyna Kazakh National Welfare Fund.

The purchase price of the deal shall be determined based on an independent appraisal, and is expected to be reach as high as $4.7 billion. The selling transaction is to be fully executed before the end of 2015.

Contract on Karazhanbas field extended in Kazakhstan 0

Posted on July 13, 2015 by KazCham

Business Intelligence from Colibri Law Firm: Issue #108

Kazakhstan’s Energy Minister and Karazhanbasmunai JSC have signed an additional agreement on extending the contract on Karazhanbas oil and gas field in the country’s Mangistau province.

KazMunaiGas Exploration Production JSC owns 50 percent share in Karazhanbasmunai JSC.

KazMunaiGas begins roadshow in U.S., Europe before possible debt issue 0

Posted on November 01, 2014 by KazCham

Business Intelligence from Colibri Law Firm: Issue #96

Kazakhstan’s state oil and gas company KazMunaiGas (KMG) said on Thursday it had begun a roadshow in Europe and the United States for a possible debt issue denominated in dollars. KMG has mandated Citi, Credit Suisse, Deutsche Bank and UBS as joint lead managers and joint bookrunners, and SkyBridge Invest and Kazkommerts Securities as Kazakh lead managers and Kazakh bookrunners, the company said in a statement published by the Kazakhstan Stock Exchange.

It said it was looking to issue senior unsecured debt in U.S. dollars, but gave no volume, adding that a final decision on this transaction would depend on market conditions.

Kazakhstan’s National Oil Company to Consolidate Bridgehead in Europe 0

Posted on August 18, 2012 by KazCham

By Vladimir Socor (Jamestown), August

Kazakhstan’s national oil and gas holding, Kazmunaigaz, has started its first-ever oil exploration drilling outside that country. Rompetrol Upstream, a division of Rompetrol Group, is drilling the Kaz-1 exploration well near Focsani in eastern Romania. The Rompetrol Group is a fully-owned subsidiary of Kazmunaigaz Processing & Marketing, which is a division of Kazmunaigaz. The Kaz-1 well, targeting a depth of 4,200 meters, operates in the first of Kazmunaigaz’s five Romanian concession perimeters.

As part of its acquisition of Rompetrol Group (see below), Kazmunaigaz acquired exploration and development licenses to five Romanian oil blocks. An exploration well is already in progress in northwestern Romania’s Satu Mare perimeter, operated by Canadian Unistar Resources in a joint venture with the Kazakhstan-owned Rompetrol. Two exploration wells are planned for either of these two blocks. However, Kazmunaigaz’s activities in Romania and farther afield in Europe concentrate on the downstream oil business.

According to Rompetrol Group CEO, Zhanat Tusupbekov, the Kazmunaigaz parent company envisions a “Caspian Basin-to-Europe Energy Bridge,” focusing on oil exports, refining and product marketing within Europe (Ziarul Financiar [Bucharest], Kazmunaigaz press release, July 31; Interfax Oil and Gas weekly report, August 6).

Kazmunaigaz acquired Rompetrol Group in two steps – 75 percent in 2007 and 25 percent in 2009 – for a total price estimated at more than $3 billion. This marked Kazakhstan’s largest investment abroad, and Kazmunaigaz’s first foothold in European Union territory. The Rompetrol Group is largely a creation of Romanian businessman Dinu Patriciu as main shareholder, chairman and CEO until 2009. The Group includes upstream, processing and downstream divisions.

Rompetrol Upstream is active in exploration and production drilling and well services in Romania and beyond. Rompetrol Rafinare consists of the Petromidia refinery on Romania’s Black Sea coast and the Vega refinery in the traditional oil-industry center Ploiesti, with annual processing capacities of 5 million and 2 million tons of crude, respectively; as well as the processing plant Rompetrol Petrochemicals. Rompetrol’s downstream assets – expanded internationally during the Patriciu era – include 1,063 fuel-retailing and service stations, of which 786 are in Romania (25 percent market share in the country), 135 are in France and Spain, 56 in Bulgaria, 29 in Moldova, and 57 in Georgia (Kazmunaigaz press release, July 31; Interfax Oil and Gas weekly report, August 6).

Last month, Rompetrol’s CEO Tusupbekov signed with Naftohaz Ukrainy vice-president Yevhen Korniychuk a memorandum of understanding (MOU) to establish a joint-venture chain of fuel retailing and service stations in Ukraine. Under the MOU, up to 700 stations would come under the control of the joint venture, mainly in areas around Kyiv and other major cities (Kazmunaigaz press release, July 19; Kyiv Post, July 20).

The Petromidia refinery and the Petrochemicals plant are co-located at Midia-Navodari near the Romanian port of Constanta. Their and the Vega plant’s capacities (see above) significantly added to Kazakhstan’s in-country processing capacities, which currently total some 15 million tons per year at the Atyrau, Shimkent and Pavlodar refineries (all operated and majority-owned by Kazmunaigaz Processing & Marketing). Kazmunaigaz supplies its three Romanian plants with crude oil from western Kazakhstan through the Caspian Pipeline Consortium’s (CPC) pipeline, in which Kazmunaigaz has a 19 percent interest, and onward by tankers from the Russian Black Sea port of Novorossiysk to Midia and Constanta. The Petromidia refinery is equipped with an offshore loading/unloading terminal eight kilometers out at sea, capable of receiving tankers of up to 160,000 tons, and connected by an underwater pipeline to the tank farm onshore. Larger tankers can be accommodated at the Constanta port, some 35 kilometers away and connected by an overland pipeline to Midia.

Rompetrol Group had posted healthy profit margins until the generalized financial-economic crisis hit the oil-processing sector in Europe. The Group is also apparently liable for $600 million in older debts to the Romanian state budget. The Romanian government converted that sum into a $600 million bond issue, susceptible to reverting to government shares. Kazmunaigaz has nevertheless financed technical upgrades at Rompetrol during the crisis, in anticipation of European recovery.

Kazakhstan emerged from the Soviet era with meager in-country oil-refining capacities, and lacking direct transport routes to Europe. The Astana government’s Comprehensive Plan for Development of Kazakhstan’s Oil-Processing Plants, 2009-2015, aims to advance Kazakhstan from the primary role as crude oil exporter to a commensurate role as refiner and distributor of products on European downstream markets. The state program for the industry sets goals to increase the depth of crude oil processing and upgrade the quality of certain refined products to EU standards. The Rompetrol Group’s aggregate assets constitute the first major bridgehead for Kazakhstan in EU territory.

Once European demand rebounds from the crisis, Kazakhstan will be well placed to capitalize on its assets in Georgia’s Black Sea port of Batumi and the resulting synergies. In early 2008, Kazmunaigaz acquired full ownership of the Batumi oil terminal and the operating rights to the Batumi Sea Port (see EDM, February 13, 2008). Batumi became Kazakhstan’s first international oil transport asset, and first Kazakh-owned outlet to the open sea, in contradistinction to the Russian-owned Novorossiysk. The Batumi terminal’s capacity is conservatively rated at 15 million tons per year for crude oil and refined products; but it remains under-utilized (as is the Azerbaijan-Georgia transit corridor) under the current crisis conditions.

Kazakhstan’s government and Kazmunaigaz, however, are planning for the post-crisis period. From a supply security standpoint as well as commercially, making full use of the Kazakh-owned Batumi terminal would seem clearly preferable to a disproportionate reliance on the Russian route and Novorossiysk. The two outlets need not be regarded as mutually exclusive. Availing itself of both options, Kazakhstan can achieve bargaining leeway and flexibility vis-a-vis transit countries on both routes. Back in 2008, Patriciu had described the Batumi-Constanta route as a bridge between Kazakhstan and Europe for the transport of oil (Trend Capital, February 9, 2008).

Kazmunaigaz is ranked as the third-largest oil producer in its country, after Chevroil and ExxonMobil. Looking ahead at the post-crisis period, oil production growth in Kazakhstan (including Kashagan offshore production) should increase trans-Caspian oil shipments, boosting the producers’ use of the Batumi export terminal. Kazakhstan could then fully capitalize on its ownership of the terminal, delivering crude oil and refined products by the most direct route to Kazmunaigaz’s downstream assets and customers in Europe.

Kashagan’s big oil coming to market in mid-2013 -sources 0

Posted on August 14, 2012 by KazCham

By Reuters, August 10, 2012

Kazakhstan’s Kashagan oil field is set to make its first deliveries to markets in 2013 after years of delays, with large-scale exports expected from the middle of the year, industry sources told Reuters.

The start-up of the field, one of the world’s largest, has been delayed since 2005 due to cost overruns and disputes with authorities over taxes.

Production rates are initially expected to be very modest after the field starts operations at the end of this year or early next.

Some oil will flow through existing pipelines via Russia to Black Sea ports, some will be transported by Kazakhstan’s shipping firm Kazmortransflot via the Caspian Sea also for delivery to Black Sea or Mediterranean ports.

“Kazmortransflot is in discussion over a contract to ship oil from Kashagan in 2013… We are talking about 1-3 million tonnes out of the overall output of 3-7 million tonnes,” a shipping source told Reuters.

The consortium that controls the field is aiming to produce around 300,000 barrels per day in the initial test phase of operation at the field, eventually increasing to more than 1 million barrels per day in 2018-2019.

If the field reaches output of 7 million tonnes next year it would be equal to 140,000 bpd, enough to supply a mid-sized European refinery.

“They will start producing and stocking up oil, while exports are seen not earlier than June-July (2013),” the shipping source said.

The field is jointly controlled by state-run Kazmunaigas and six international oil companies. Kazmunaigas, Eni, ExxonMobil, Royal Dutch Shell and France’s Total own stakes of around 16.8 percent each.

ConocoPhillips owns 8.40 percent, and Japan’s Inpex 7.56 percent. Kazmunaigas entered the project in 2005 and later doubled its stake to 16.81 percent.

“In December there will be a ceremony to produce the first oil, but they will probably show the oil to the management and production will start in the middle of next year,” a Kazakh industry source said.

Kazakhstan, which holds 3 percent of the world’s recoverable oil reserves, plans to increase crude output by more than 20 percent to 100 million tonnes by 2015. Kashagan, discovered in 2000, will contribute much of this additional volume.

All the Kashagan shareholders are responsible for securing export routes for their crude.

“The main routes for Kashagan are likely to be CPC and BTC,” a Kazmunaigas source said referring to a pipeline via Russia and a pipeline from Azerbaijan to the Turkish Mediterranean coast.

KazMunaiGas shares information about resources in Kazakhstan 0

Posted on August 13, 2012 by KazCham

By KazWorld.info, August 3, 2012

Forecasted reserves of “black gold” in the Kazakh sector of the Caspian Sea exceed 17 billion tons (124.3 million barrels), head of Kazakhstan’s national oil company KazMunaiGas Lazzat Kiinov said in an interview on Thursday, Trend reports.

At the same time proven hydrocarbon reserves in the country, both onshore and offshore, estimated at five billion tons, or more than 35 billion barrels, of gas – three trillion cubic meters.

Today, more than 90 percent of Kazakhstan’s oil resources are concentrated in the 15 largest fields: Tengiz, Kashagan, Karachaganak, Uzen, Royal, Zhetybai, Zhanazhol, Kalamkas, Kenkiyak, Karazhanbas Kumkol North Buzachi, Alibekmola, Central and Eastern Prorva and Kenbai.

Oil and gas bearing regions of Kazakhstan (6 out of 14 regions) and their 180 oil and 50 gas fields cover about 62 percent of the country.

“The concentration of geological resources reduces the cost of their development, however, the geological features of fields, such as the nature of bedding, high impurity content of chemically active substances, require careful consideration of their service projects and significant initial investment,” Kiinov said.

Approximately 70 percent of the hydrocarbons found in the West: in Atyrau region is open for more than 80 oil and gas “fields.” Less than half of the 70 fields of the Mangistau region are in operation, and most – in the later stages of development (the largest of them – Uzen, Zhetybai, Kalamkas and Karazhanbas).

Aktobe region accounts for about 25 fields, and the most significant include Zhanazhol group. Seven years ago, CNPC-Aktobe announced the opening of the new field Umit on the central block of the eastern part of the Caspian basin.

Evolution of role sees fund gearing up for ‘People’s IPO’ 0

Posted on December 25, 2011 by Alex

The heart of Kazakhstan’s economy, Samruk-Kazyna has, since its inception, played a crucial role in the country’s industry and economy. Now the fund is ready to float some  of its assets at discounted prices to retail investors. By Clare Nuttall

Kazakhstan’s sovereign wealth fund Samruk-Kazyna put to work billions of US dollars to support the economy during the global economic crisis. With Kazakhstan growing strongly, the fund’s role has evolved – it is now responsible for creating new industries and increasing efficiency in the economy’s most important companies.

This year will see further dramatic changes, as minority stakes in some of its largest and most attractive companies are floated on the domestic stock exchange. Samruk-Kazyna was created in the depths of the crisis through the merger of two existing organizations – holding company Samruk and investment company Kazyna – in October 2008, and its importance to the Kazakh economy cannot be overestimated. Its subsidiary companies include the national rail and postal companies, electricity grid operator Kegoc, state oil-and-gas giant National Company KazMunaiGas, nuclear company Kazatomprom, national air carrier Air Astana, and three of the top four banks. It is also the parent of the Damu small enterprise fund, private equity fund of funds Kazyna Capital Management, and other  financial organizations.

Overall, Samruk-Kazyna manages assets worth in excess of $70 billion, accounting for around 40 percent of the economic activity in the country. It has a total of 404 subsidiaries and affiliated companies. As of March 2010, Samruk-Kazyna announced it had invested KZT897 billion ($6.1 billion) from Kazakhstan’s National Fund to support the economy during the crisis. Its largest financial commitment was to the banking sector, where it invested some KZT486 billion.

Other anti-crisis measures included supporting the real-estate sector (KZT360 billion), support for small and medium-sized enterprises (KZT120 billion) and implementing industrial and infrastructure projects (KZT121.5 billion).

Samruk-Kazyna became the majority shareholder of  BTA Bank and Alliance Bank, injecting liquidity when both were on the brink of collapse in February 2009. Today, a debt restructuring for the two banks has been agreed with creditors.

At the same time, the fund took minority stakes in Kazakhstan’s other big-four banks, Halyk Bank and Kazkommertsbank. Now that GDP growth in Kazakhstan has returned to pre-crisis levels, Samruk-Kazyna is starting to divest some of the assets it acquired during the crisis. The fund has already exited its investment in Halyk, selling the stake back to the bank and its majority shareholder Almex.

Kazkommertsbank could buy back its shareholding in the near future. A sale of BTA to Russia’s Sberbank is still on the cards and Samruk-Kazyna is also looking at potential exit routes for Alliance, but it is adamant that it will sell its shareholdings only if the price is right.

Post crisis, Samruk-Kazyna is involved in raising the efficiency of its subsidiaries, and is the main conduit for big foreign investment projects. The emphasis within Kazakhstan has shifted toward production of processed and value-added products, rather than being purely a supplier of raw materials.

Several of the priority projects within the 2010-14 Accelerated Industrial and Innovative Development program are aimed at achieving this goal. Samruk-Kazyna is already working to diversify and industrialize Kazakhstan. The ‘breakthrough projects’ under the Samruk-Kazyna umbrella include reconstruction of the Atyrau refinery, modernization of the national electricity grid and construction of several new power stations. Within Samruk-Kazyna, two holding companies created in late 2008 are responsible for the chemicals and metals sectors, respectively. The United Chemicals Company was set up to develop a national chemicals industry and reduce Kazakhstan’s dependence on imports of products such as fertilizers. Tau Ken Samruk is the holding company for the Kazakh government’s stakes in metals and mining companies. While oil and gas still account for the lion’s share of Kazakhstan’s exports, metals and mining have been growing in importance in recent years.

Soaring metals prices, and the steady growth in demand from neighboring China in particular, have provided an impetus for Kazakhstan to increase its output. The government stakes in two major London Stock Exchange-listed mining companies – Eurasian Natural Resources Company (ENRC) and Kazakhmys – are held within Tau Ken Samruk. Both companies have an immense presence in the Kazakhstan mining sector, as well as internationally.

Kazakhmys is the largest copper producer in Kazakhstan and one of the top 10 producers worldwide. ENRC – a diversified natural resources group – has a presence in China, Russia, Brazil and Africa, as well as in Kazakhstan. This year has already seen significant changes for Samruk-Kazyna. On April 12, Timur Kulibayev was promoted to chairman as part of the post-elections reshuffle. Kulibayev, the son-in-law of Kazakh president Nursultan Nazarbayev, was previously the company’s deputy chairman.

The fund’s main task this year will be to carry out the ‘People’s IPO’ program, under which shares in companies that are wholly or partly owned by Samruk-Kazyna will be offered at a discount to retail investors and pension funds. In addition to raising funds for expansion, the program is also intended to stimulate the domestic capital market.

At least some of the IPOs are due to take place by the end of this year. Companies expected to be part of the first wave of IPOs include power-generation company Samruk-Energo, electricity grid operator Kegoc, postal service Kazpost and KazMunaiGas Exploration and Production. In the following two years, IPOs of other companies – including Kazatomprom, National Company KazMunaiGas, and railway operator Kazakhstan Temir Zholy – are planned.

SOURCE: Invest in Kazakhstan, 2011, p. 45-46

Rompetrol completes debt-for-equity swap of subsidiary 0

Posted on October 31, 2011 by Alex

Rompetrol Rafinare (RRC), a subsidiary of the Rompetrol Group owned by KazMunaiGas, concluded the conversion of EUR570-million debt into equity, ending a long  row over the repayment of the debt owed to the Romanian government.  With the conversion, the  Romanian  government will have a 44.7% stake in RRC.  The government has not yet announced a decision on what it plans to do with the stake but  KazMunaiGas is reportedly willing to negotiate its purchase.

New Smart Energy Ltd, a Kazakh alternative energy company, plans to invest $100 million to construct a 45-MW wind farm in the Akmola Region.

SOURCE: SRI, Kazakhstan Daily News Brief, dated 24 October, 2011, available at http://silkroadintelligencer.com/wp-content/files/srikznewsbrief_oct24_2011.pdf



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