Kazakh parliament approves law on oil stake sales

/REUTERS, Аstana, Raushan Nurshayeva, October 20, 2004/ - Kazakhstan's lower house of parliament passed a law on Wednesday giving the state first refusal rights on stakes in oil joint ventures that foreign firms want to sell. The law appeared to be a reaction to a controversy over British firm BG's stake in the key Kashagan oilfield, which other members of the ENI-led consortium had already agreed to buy, but which Kazakhstan has said it wants. However, Kazakh officials have said the amendments to Kazakhstan's subsoil laws, passed in a unanimous vote on Wednesday, do not directly affect the BG case, as they believe they already have the right to buy BG's stake ahead of the other companies. To come into force, the law must now be approved by the upper house, usually a formality in Kazakhstan, and then be signed by President Nursultan Nazarbayev. He has in the past sometimes vetoed controversial legislation at the last minute. In the BG case, the British company agreed to sell its 16.67 percent stake in Kashagan, in the Caspian Sea, to two Chinese firms in March 2003. Five of the six other consortium members scuppered the deal by exercising a pre-emption right to buy. That, in turn, was blocked when Kazakhstan said it had a constitutional right to pre-empt the terms of the contract because its people own all Kazakh land and resources. It has offered BG around $1 billion for the stake in the field, one of the Central Asian state's three large hydrocarbon deposits at the heart of a target to triple crude output to 3.0 million barrels a day by 2015. The struggle to agree between Kazakhstan, BG and the rest of the North Caspian Production Sharing Agreement -- ENI, Royal Dutch/Shell, ExxonMobil, Total, ConocoPhillips and Japan's Inpex -- has dragged on for months. So far consortium members say the wrangling has not delayed work to start pumping from the field in 2008, and Kazakh officials have said the foreign firms will benefit if its state oil company KazMunaiGas joins the Kashagan group. Economy and Budget Minister Kairat Kelimbetov said in a newspaper interview on Wednesday that he believed foreign managers should be invited to join Kazakhstan's top state firms. Such firms are usually dominated by ethnic Kazakhs, with few other ethnic groups, let alone foreign nationals. Asked if KazMunaiGas should have foreign top managers, he told Express-K daily: "Let's remember, where is the best management in the oil sector today? Shouldn't we want the company to be managed by world class managers and to make the maximum profits?" [2004-10-20]