Samruk-Kazyna: Kazakhstan companies should invest at home

Sept 12. New Europe. ASTANA

By Kulpash Konyrova

Samruk-Kazyna: Kazakhstan companies should invest at homeNone of Kazakhstan’s major acquisitions over the past several years has been successful and, therefore, it would be wise for Kazakhstan companies to focus on investing into important domestic projects, the head of the National Welfare Fund (NWF) Samruk-Kazyna, Kairat Kelimbetov, told New Europe in an interview.

The main subsidiary of the national oil and gas company KazMunaiGas – KazMunaiGas Exploration Production (KMG EP) – and a British company BG Group Plc have recently signed an agreement in Astana to join their efforts in a promising oil and gas project in Britain’s sector of the Northern Sea. The Kazakh side will have 35% of this project. Its financial risks, including the drilling costs, will be $25 million to $30 million, which is good news for Kazakhstan’s oilmen and their international expansion.

The Northern Sea is one of the most important sources of energy resources for Norway, Great Britain, the Netherlands, and some other countries of the European Union. The recoverable reserves of its depths are about 20 billion barrels. Kazakhstan’s Executive Secretary of the Ministry of Energy and Mineral Resources Kanatbek Safinov told New Europe such exposure to the Northern Sea was important to Kazakhstan for both the experience and the new offshore exploration technologies. This view, however, is not shared by Kelimbetov, the head of Samruk-Kazyna, which is an association of all national companies of Kazakhstan.

Asked about this new joint venture, Kelimbetov told New Europe that there are several aspects of work with the investors, and they should be considered separately from one another. “Take, for example, social projects. We would ‘pressure’ an investor into taking on or investing into a social project, and we would be very proud of ourselves. But this is fundamentally wrong! We should do a proper work with the investors, and not on the social projects, which, I believe, should be funded from the budget. Today, our work with the investors should focus more on transfer of technology. And this joint venture is a right step in this direction,” Kelimbetov said.

Any new joint venture means financial infusions. But KazMunaiGas, already, has considerable obligations, including, for instance, in the Kashagan project. In addition to that, there are plans to join the Karachagank project and to build new oil and gas pipelines. “Over the past ten years, I have been observing the implementation of the oil and gas projects that have been postponed several times. Even those that have been completed are not exactly in the areas we need. For example, I believe that our investment in foreign petrochemical assets has not been a very smart move. I mean the Romanian concern Rompetrol,” Kelimbetov said. “We presently have serious issues with Tbilgas (gas-distributing company in Georgia). As a matter of fact, we have lost all our assets that constituted the investments of the BTA Bank in the CIS countries,” he said. “It is my firm belief that in the nearest five years our national companies should invest locally. Until we have upgraded our own refineries, power stations, pipelines – the most needed investment – we should not, I believe, look at investing internationally. Let us focus on what lies literally under our feet,” he said.

Asked what export directions would be preferable for Kazakhstan, Kelimbetov said that in the future, Kazakhstan has two options for its international expansion. “First, to export processed goods to the countries of the Customs Union, where we can more or less compete with the Russian and Belarus manufacturers, which would be very difficult. Second, to export our traditional goods: oil, gas, ores, and uranium to China. Considering the expert forecasts that China’s economy will be at par with the USA’s by 2030, the future of Kazakhstan’s exports lies obviously there, and we should work hard in that direction,” Kelimbetov said.