Presidential Sibling Rivalry In Kazakhstan’s Oil Sector

Market Overview of the Oil and Gas Industry in Kazakhstan, 2016 - Research and Markets

Nursultan Nazarbayev has presided over Kazakhstan since 1989. During that span, the president consolidated his grip on power over the media, the economy, and the political process, amassing a slew of landslide victories for himself and his loyal, rubber stamp legislature. But as the 75-year-old autocrat now enters the twilight of his rule, one question looms large for the fate of the nation of Kazakhstan and its vast oil-wealth: Who, or what, comes after Nazarbayev?

Nazarbayev has offered vague plans to open up the country’s tightly controlled political system in the past, but no measures have been taken. But many analysts are wondering how much longer the aging president can delay laying the groundwork for a successor.

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President Nursultan Nazarbaev’s eldest daughter Dariga Nazarbaeva (b.1963) and her second husband, Kairat Sharipbaev, have managed to force their new protégé, former vice-minister of energy Uzakbay Karabalin, onto KazMunayGas’ (KMG) board of directors.

As previously reported, Karabalin had unexpectedly retired from public service and had been replaced as vice-minister of energy by Asset Magauov (43). The latter is a close associate of Timur Kulibaev who is President Nazarbaev’s middle son-in-law and one of the most influential figures within the Kazakhstan’s oil and gas sector.

Karabalin’s return to active work, even if he is no longer a high-level government official, indicates that the rivalry between Dariga Nazarbaeva and the Kulibaev for the informal oversight of hydrocarbon production and exports has not yet subsided.

The president’s elder daughter and her husband have since succeeded in turning the tables when a new twist of fate befell Kulibaev.  On 1 March, Karabalin was appointed as deputy chairman at Kazenergy which Kulibaev himself chairs.

The local media reported that the appointment was decreed by the head of Kazenergy, but local sources contacted byCaspian Focus say it was a result of subtle negotiations between the two powerful families.

Magauov’s rising influence at the Ministry of Energy would be compensated by Karabalin’s claims to executive authority at both KMG and Kazenergy, which is the main oil sector lobby. Direct access to Kulibaev could also make him a potential mediator along with Nazarbaeva’s personal emissary to the rival’s camp.

Since Kazakhstan became independent in 1991, the two key families in the presidential clan have been following a clear division of labour. The president put Dariga Nazarbaeva and her former husband Rakhat Aliev, who mysteriously died in a Vienna prison in February 2015, in charge of the Khabar TV channel, which rapidly grew into a sprawling media empire of unaffiliated newspapers, magazines and radio stations.

They also controlled a leading Kazakh bank, Nurbank. In 2007, two of its managers were kidnapped and killed in Almaty Region, which led to Aliev’s exile in Austria where he had been serving as an ambassador to the Organisation for Security and Cooperation in Europe (OSCE).

In 2010, Nazarbaeva and her eldest son, Nurali Aliev, sold a 70% stake in Nurbank to Sofia Sarsenova, who is the sister of multi-millionaire oil magnate Rashit Sarsenov.

Meanwhile, Timur Kulibaev and his wife — the president’s younger daughter Dinara Nazarbayeva (b.1967) — are still the majority shareholders of the Halyk Savings Bank of Kazakhstan, the country’s second largest bank, via their Almex Group.

According to Forbes the Halyk Bank is the backbone of the Kulibaev family’s combined wealth of US$4 billion.

Timur Kulibaev who goes by the nickname of ‘oil prince’, also wields particularly strong influence over the strategic oil industry.

He is believed to be a hidden shareholder in KMG’s KMG Exploration & Production subsidiary, and was the one to skim the cream off the 1997 sale of AktobeMunayGas to China National Petroleum Corporation (CNPC).

Presidential sibling rivalry in Kazakhstan’s oil sector