ALMATY, Kazakhstan -- The merger of Kazakhstan's state oil production and transport companies into a vertically integrated structure may give another boost to the country's already-booming oil sector, officials and market analysts say.
But apart from the sizeable economic dividends, industry and government sources concur that the powerful new structure may also bolster the prominence of President Nursultan Nazarbayev's family clan in the resource-rich Central Asian state.
Last week, Nazarbayev issued a decree ordering oil firm Kazakhoil and state-owned crude and gas pipeline company Transneftegaz, or TNG, to merge into the new unit, Kazmunaigas.
Lyazzat Kiinov, a 52-year-old oilman, Nazarbayev loyalist and former governor of the oil-producing Mangistau region, will head Kazmunaigas, with assets of billions of dollars, several large oil fields and stakes in joint oil ventures with Western majors.
Prime Minister Imangali Tasmagambetov, whose sudden appointment surprised many last month and who has pledged better management for several national companies, on Thursday offered his version of the formation of Kazmunaigas.
"The government proposed to the head of state a decree on forming a vertically integrated company intended as the core of the country's oil and gas sector," government spokesman Murat Buldekbayev quoted Tasmagambetov as saying while presenting Kiinov to Kazmunaigas staff.
Foreigners have invested some $13 billion, mostly in Kazakhstan's lucrative oil and gas sector, since independence in 1991, and the country's state oil producing and transport companies are now facing tough competition from Western majors.
Such giants as ChevronTexaco, Agip and BG PLC are developing onshore and offshore fields in Kazakhstan, which produced some 40 million tons (800,000 barrels per day) last year and plans to triple output by 2015.
Oil revenues make up one-third of Kazakhstan's budget and account for half of its exports.
Market analysts say a large, vertically integrated company like Kazmunaigas may receive a higher credit rating than its separate branches and will benefit strongly if it decides to borrow much-needed cash on international markets.
"It doesn't seem like an unwise thing to do," Al Breach of Goldman Sachs said from Moscow. "From the bond market perspective, there is some merit in what they are doing."
TNG consists of oil transport company KazTransOil, which launched a $150 million five-year Eurobond last June, and gas transport company KazTransGaz, which may issue a $100 million Eurobond later this year. Kazakhoil launched a five-year Eurobond worth 125 million euros ($108 million) earlier this month.
All the companies have ambitious expansion plans, and Breach said a higher credit rating for Kazmunaigas would cut the cost of eventual borrowing by the new company.
"In this new company you have a firm like Kazakhoil that has the actual oil assets rather than a company that has got the backing of the state but is just a transport company," he said. "Bankers like to lend to rich things rather than poor things."
Apart from the obvious economic benefits of the reorganization, some political dimensions arise as well.
Nazarbayev, 61, and ruler of the nation of 14.8 million with an iron grip since Soviet times, is surrounded by a powerful family whose members are active in politics and economics.
TNG head Timur Kulibayev is Nazarbayev's son-in-law, and industry sources and government officials said on condition of anonymity that the creation of Kazmunaigas might be a way of boosting the importance of the Nazarbayev clan further.
Kulibayev, 35, whose interests vary from banking and oil to golf, became Kiinov's deputy Thursday.
"We are now trying to figure out what has happened. It does not look like it's all just about economics," said a source in a Western major working in Kazakhstan.
A government source was more explicit. "Kulibayev's powers are likely to be much greater now than those he enjoyed in charge of TNG," he said. "Kiinov knows the job as a professional oilman, while Kulibayev is an excellent manager and is experienced in borrowing on international debt markets."
Kazakhoil's powerful chief, Nurlan Balgimbayev, will no longer hold his post, and Tasmagambetov praised him Thursday "as a person personally devoted to Nazarbayev."
"The president values highly his knowledge and experience," Tasmagambetov said. The government source said Balgimbayev might soon be moving as ambassador to a comfortable European country.
But apart from the sizeable economic dividends, industry and government sources concur that the powerful new structure may also bolster the prominence of President Nursultan Nazarbayev's family clan in the resource-rich Central Asian state.
Last week, Nazarbayev issued a decree ordering oil firm Kazakhoil and state-owned crude and gas pipeline company Transneftegaz, or TNG, to merge into the new unit, Kazmunaigas.
Lyazzat Kiinov, a 52-year-old oilman, Nazarbayev loyalist and former governor of the oil-producing Mangistau region, will head Kazmunaigas, with assets of billions of dollars, several large oil fields and stakes in joint oil ventures with Western majors.
Prime Minister Imangali Tasmagambetov, whose sudden appointment surprised many last month and who has pledged better management for several national companies, on Thursday offered his version of the formation of Kazmunaigas.
"The government proposed to the head of state a decree on forming a vertically integrated company intended as the core of the country's oil and gas sector," government spokesman Murat Buldekbayev quoted Tasmagambetov as saying while presenting Kiinov to Kazmunaigas staff.
Foreigners have invested some $13 billion, mostly in Kazakhstan's lucrative oil and gas sector, since independence in 1991, and the country's state oil producing and transport companies are now facing tough competition from Western majors.
Such giants as ChevronTexaco, Agip and BG PLC are developing onshore and offshore fields in Kazakhstan, which produced some 40 million tons (800,000 barrels per day) last year and plans to triple output by 2015.
Oil revenues make up one-third of Kazakhstan's budget and account for half of its exports.
Market analysts say a large, vertically integrated company like Kazmunaigas may receive a higher credit rating than its separate branches and will benefit strongly if it decides to borrow much-needed cash on international markets.
"It doesn't seem like an unwise thing to do," Al Breach of Goldman Sachs said from Moscow. "From the bond market perspective, there is some merit in what they are doing."
TNG consists of oil transport company KazTransOil, which launched a $150 million five-year Eurobond last June, and gas transport company KazTransGaz, which may issue a $100 million Eurobond later this year. Kazakhoil launched a five-year Eurobond worth 125 million euros ($108 million) earlier this month.
All the companies have ambitious expansion plans, and Breach said a higher credit rating for Kazmunaigas would cut the cost of eventual borrowing by the new company.
"In this new company you have a firm like Kazakhoil that has the actual oil assets rather than a company that has got the backing of the state but is just a transport company," he said. "Bankers like to lend to rich things rather than poor things."
Apart from the obvious economic benefits of the reorganization, some political dimensions arise as well.
Nazarbayev, 61, and ruler of the nation of 14.8 million with an iron grip since Soviet times, is surrounded by a powerful family whose members are active in politics and economics.
TNG head Timur Kulibayev is Nazarbayev's son-in-law, and industry sources and government officials said on condition of anonymity that the creation of Kazmunaigas might be a way of boosting the importance of the Nazarbayev clan further.
Kulibayev, 35, whose interests vary from banking and oil to golf, became Kiinov's deputy Thursday.
"We are now trying to figure out what has happened. It does not look like it's all just about economics," said a source in a Western major working in Kazakhstan.
A government source was more explicit. "Kulibayev's powers are likely to be much greater now than those he enjoyed in charge of TNG," he said. "Kiinov knows the job as a professional oilman, while Kulibayev is an excellent manager and is experienced in borrowing on international debt markets."
Kazakhoil's powerful chief, Nurlan Balgimbayev, will no longer hold his post, and Tasmagambetov praised him Thursday "as a person personally devoted to Nazarbayev."
"The president values highly his knowledge and experience," Tasmagambetov said. The government source said Balgimbayev might soon be moving as ambassador to a comfortable European country.
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