In the latest round of state-run energy company IPOs, KazMunayGas, the state oil and gas company of Kazakhstan, plans to list by 2020, with the country’s central bank keeping its 10-percent interest.
The bank bought the 10 percent in KazMunayGas back in 2015 amid the oil price crisis, to help Kazakhstan’s sovereign wealth fund bail the company out: it had amassed enough debt to threaten a breach of its Eurobond covenants, Bloomberg recalls.
The IPO remark, from one member of the management board of the sovereign wealth fund, comes a day after exploration and production company Kuwait Energy plc said that it would be seeking an initial public offering on the main market of the London Stock Exchange, thus confirming reports from March that it was working on an IPO in London. Kuwait Energy expects to raise gross primary proceeds of around US$150 million from an issue of new shares.
The LSE would be a logical choice for KazMunayGas as well. Last December, the FT reported that Kazakhstan had incited a competition between London and Hong Kong for five listings, which will be part of a massive privatization drive aiming to turn Kazakhstan’s economy from a state-controlled one into an economy dominated by private enterprise. The drive should see state control over the local industries drop from 70 percent to 15 percent.
KazMunayGas is among the juiciest morsels in the privatization mix, although no value has been placed on the shares to be floated yet. It pumps a third of Kazakhstan’s oil and is partner in the consortium that is developing the giant Kashagan field in the Caspian Sea.
Kashagan has proved reserves estimated at 38 billion barrels, of them 10 billion barrels recoverable, which makes it the largest discovery in Kazakhstan in the last 40 years. Production at the field began, after numerous delays, last October, at a daily rate of 90,000 barrels.