Kazakhstan’s sovereign welfare fund Samruk-Kazyna has reportedly proposed that the Anglo-Dutch major Shell acquire a minority stake, amounting between 10% and 20%, in the state-controlled oil and gas company KazMunaiGas (KMG). Due to the relative information scarcity surrounding the discussions, as none of the two negotiators has yet gone public with the details, the price of a possible agreement is for the moment not known. Samruk-Kazyna, whose total assets were estimated at $67bn as of 2016, already holds a 90% stake in KMG. In 2015, the year that ended with crude oil prices at their lowest level since 2009 (below $40 per barrel), the National Bank of Kazakhstan became a 10% shareholder of KMG, following a $4bn injection, in order to support the fund in its effort to bail the energy group out. It was then believed that KMG’s accumulated net debt/EBITDA, which normally shouldn’t exceed 3.5, would lead to a breach of its Eurobond covenants. Samruk-Kazyna’s decision to spend $4.7bn for half of KMG’s stake in Kashagan helped the oil producer deconsolidate some $2.2bn of indebtedness stemming from the giant offshore oilfield project in the Northern Caspian and to reduce its debt-to-EBITDA ratio.
Today, Kazakhstan’s oil champion continues work towards lightening its debt burden, through sales of non-core assets, and stabilizing its performance, amidst slightly elevated oil prices, on the road to an initial public offering (IPO), set to take place around 2019-2020. Even though the exact time of realization, as well as the size that Samruk-Kazyna will finally retain in KMG, are still undisclosed, the float was practically enabled resulting from KMG’s recent move to delist its upstream unit KMG Exploration and Production (KMG EP) in London after 12 years. Despite it not completely fitting into the category of the so called ‘’blue chips’’, KMG is numbered among the most high-value prizes for investors, under a major privatization program launched by the Kazakh government with the aim of trimming State’s participation rate in 65 businesses down to 15% of GDP by 2020, in line with OECD precepts. Therefore, a strategic partnership with Shell at this point, potentially via the granting of the central bank’s stake to the international oil firm, is widely thought to be rendering KMG more appealing ahead of its planned listing.
Shell is, of course, no stranger to Kazakhstan’s offshore oil and gas industry, since it owns a 16.8% stake in Kashagan and a 29.25% in Karachaganak Petroleum Operating (KPO), plus a 7.5% (in a joint venture with Rosneft) in Caspian Pipeline Consortium (CPC), responsible for shipping Kazakh oil to Russia’s Black Sea port of Novorossiysk. Undoubtedly, Shell’s entry into KMG’s shareholder structure might theoretically assist in boosting foreign investors’ interest in the shares offered by the Kazakh company. However, it must also be borne in mind that Shell has to battle an $88bn debt pile of its own, and so it is uncertain whether the obtainment of even a minority stake in KMG would be to its financial detriment or not. In addition, with the value of the rumored accord for the present unconfirmed, the extent to which it could affect the price and outcome of the imminent IPO cannot yet be determined. Hopefully, as soon as the companies themselves either corroborate or refute the transaction, more light will be shed on the future of KMG’s public listing.
Available online at: http://www.caspianpolicy.org/energy/caspian-energy-insight-march-21-2018/#3
Kommentare