NUR-SULTAN
Kazakhstan may prepare natural gas exporter and pipeline operator KazTransGaz company for initial public offering (IPO) in 2022 as it seeks to improve the management of its oil and gas sector.
Under government plans, KazTransGas will first become a national gas company, broadening out its activities along the entire chain from geological exploration to the sale of final products.
“If the concept of a vertically integrated gas company is successfully implemented, the government … will have to study the possibility of holding an IPO for KazTransGas already in 2022,” Kazakhstan’s President, Kassym-Jomart Tokayev, told the government. “This will significantly revitalize the financial market and enable citizens to have a part of the country’s gas assets,” he said.
Tokayev added that more efforts should be made to attract foreign investment, especially in the gas producing and gas processing industries.
“The current model of development and management of the (oil and gas) industry requires updating,” he said.
Kazakhstan sits on some of the most impressive natural resources in the world. The world’s biggest foreign businesses poured into the Central Asian country in the 1990s, attracted by its oil fields. Of the $150 billion in foreign investment Kazakhstan received since independence, $120 billion – or more than 70 percent- have been in natural resources extraction.
And while the vast country, with its relatively small population, attracts about 60 percent of all capital invested in the five former Soviet Central Asian states, COVID-19 has taken its toll. FDI is forecast to decline by 5 to 10 percent in 2021, before recovering in 2022.
KazTransGas operates both domestic pipelines shipping natural gas across Kazakhstan as well as export routes, which link Kazakh, Uzbek, and Turkmen gas fields to consumers in China and Russia.
It also sells natural gas from Kazakhstan to Chinese buyers, the biggest of which, PetroChina, declared force majeure last year due to the coronavirus outbreak, and reduced purchases of Kazakh gas by up to a quarter, Reuters reported. Force majeure is a legal concept in which unforeseen circumstances prevent a party from fulfilling a contract.
The company’s revenues dropped last year and in 2021 due to a decrease in gas export and international transit volumes, as well as the average gas sales price.