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Kazakhstan’s sovereign wealth fund has offered to Shell up to a 20 percent stake in KazMunayGas (KMG) in a bid raise the value of the state oil company ahead of a planned listing, Reuters reported on Tuesday, citing two sources familiar with the discussions.
Kazakhstan’s wealth fund Samruk-Kazyna holds 90 percent in KMG, while the central bank, the National Bank of the Republic of Kazakhstan, owns 10 percent plus 1 share.
Kazakhstan’s fund has plans for an initial public offering (IPO) of KazMunayGas at some point after 2018, as part of a government privatization program.
KMG has stakes in all major projects in Kazakhstan, including in the North Caspian Operating Company that manages the giant Kashagan oil field, in which Shell is also a co-venturer alongside other oil majors such as ExxonMobil, Total, Eni, CNPC, and Inpex. Shell is also a minority shareholder in the Caspian Pipeline Consortium that ships crude oil from Kazakhstan to the Black Sea.
Now the sovereign wealth fund has offered Shell to buy up to 20 percent in KMG in a potential deal that would include the 10-percent stake of the Kazakhstan central bank, a source close to KMG told Reuters, adding that talks “are under way”.
The offer to Shell is for buying 10 percent in KMG, another source, close to the Kazakh government, told Reuters.
“We think they (Shell) could become a strategic partner, this would increase the company’s (KMG’s) value ahead of the IPO,” the second source noted.
While Shell declined to comment on the matter for Reuters, KMG only said that it cooperated and planned to cooperate “with a number of international companies on different projects.”
The Kazakh wealth fund plans to continue to hold a controlling stake in KazMunayGas after the IPO, but has not announced plans yet as to how much of the state oil company it would put up for listing.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.