Putting the “Kaz” in PetroKazakhstan

by Nathan Hamm on 10/4/2005

No matter where it turns, China keeps having trouble acquiring foreign oil companies.

Earlier signs that Kazakhstan’s not entirely thrilled with CNPC’s attempt to buy PetroKazakhstan are now right out in the open.

“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 that a huge southern region of our country is dependent on.”

…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 who is not directly involved in discussions.

Kazakhstan has become increasingly assertive about state oil company KazMunaiGaz playing a role in major projects and has demanded that foreign companies pay a greater share of their local earnings back to the state.

So it’s not as if this comes out of the blue and specifically has to do with China, but it stands to reason that Kazakhstan pays a little more attention to the expanding power next door wanting an important slice of its energy industry than, oh, say Canada.

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Nathan is the founder and Principal Analyst for Registan, which he launched in 2003. He was a Peace Corps Volunteer in Uzbekistan 2000-2001 and received his MA in Central Asian Studies from the University of Washington in 2007. Since 2007, he has worked full-time as an analyst, consulting with private and government clients on Central Asian affairs, specializing in how socio-cultural and political factors shape risks and opportunities and how organizations can adjust their strategic and operational plans to account for these variables. More information on Registan's services can be found here, and Nathan can be contacted via Twitter or email.

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