A Natural Gas Holding for the Senior Son-in-Law

An interesting reprint appeared on Forbes.kz on the eve of the New Year holidays. The article has got an intriguing title – “The Kazakh Gas Market: The Age of Independence”. The content is no less intriguing. Our question is who’s got their hand in it.

Here are some quotes from the source. There are quite a few of them but all are important (text in bold by kz.expert).

“The past ten years have been groundbreaking for the Kazakh gas industry. Kazakhstan has managed not only to completely modernize the entire gas transportation system but to build tens of thousands kilometers of the formidable arterial roads from the West of the country where the main deposits lie to the South-East. With that, they have built the required technological infrastructure capable of not only enhancing the power capacity but diversifying the gas flows in all directions which is very important for the state with an advantageous geographic position. This has made Kazakhstan not only a serious player on the gas market but also an essential partner for Russia in implementing the joint projects and increasing the export potential”.

“Today’s experts share the view that, to ensure the productive dialogue, each member of the Eurasian Economic Union (EEU) must have their own independent agency responsible for the functioning of the country’s entire gas transportation system”.

“Kazakhstan has an agency that handles the gas industry issues (starting from gas extraction to its delivery to the end costumer). However, considering the tasks in hand, it needs to grow stronger and become more independent from the parent structure and the pressure on the part of the oil industry, says Alexey Mikhaylovich Mastepanov, Doctor of Science, Economics, Senior Researcher of Oil and Gas Institute, Russian Academy of Science. He then continues by saying that, in order to fully realize its potential, it is necessary to form an adequate legal and regulatory environment. A complex of the economic, administrative and legal measures”.

“The gas industry is extremely important for the country. So, it is strange that the national gas operator is still a part of Kazmunaigas’s structure. With that, the main assets and, therefore, Kazmunaigas’ interests are focused on oil while the entire gas industry falls under the jurisdiction of the affiliated company”.

V.N. Abramov, associate professor at the Department of Mineral-Resource Complex Economy (Russian State Geological Prospecting University), believes that “the Kazakh gas industry is too overshadowed by the oil industry (…) But times are changing and, as the latest news from the Kazakh gas market show, the palm of victory in terms of the efficiency of the power market, is moving from the oil industry to the gas industry. Apart from that, most of the Kazakh deposits have already passed their peak in terms of extraction capacities and are considered spent. To sustain the pressure, the associated gas must pumped back to the soil which is a rather costly procedure that makes the price of the extracted oil too high. It would be much more profitable to export this gas, to use it for fulfilling the needs of the internal market or to process it, to develop the gas chemical industry”.

“As noted by President of the Union and Gas Producers of Russia Gennadiy Iosifovich Shmal, “only a large independent organization is capable of introducing new equipment and new technologies and of developing an entire industry. I think, for Kazakhstan, which has become the leader among the Central Asian countries in terms of gas transportation, the time has come to think of a diversified strategy of the gas industry development. As far as I know, the oil-oriented KazMunaiGas is merging with the gas-oriented TransGas which, in my opinion, is not quite right. The development of the gas industry should not happen by a “leftover” principle since only a professional gas-industry management is and will be able to help the industry’s development, to promptly react to the demands of the market, to follow the trends as Gazprom does in Russia”.

We believe that the publication of the cited article written by Russian communication group Neftegaz.ru and its reprint by the Kazakh internet-resource is not a coincidence but the execution of an order. That being said, it is not too difficult to identify the ordering customer since the disaffiliation of KazTransGas NC with KazMinauGas NC is a lifelong dream of the top-management of the former. The thing is that they did not have enough political influence and were not making enough bureaucratic efforts to achieve the success before.

However, when Kayrat Sharipbayev, Dariga Nazarbayeva’s current husband and President Nazarbayev’s son-in-law, became KazMunaiGas’ Chairman, the situation changed radically.

The fact that Sharipbayev is full of ambition is evident from his biography published on the national company’s website. Here is how the bio ends:

“Under his leadership, the gas industry has implemented the following projects:

  • The development of the Amangeldinsk gas field in the Zhambyl region;
  • The reconstruction and modernization of the gas distribution networks in the South-Kazakhstan region;
  • The expansion of the gas-supply systems in the Aktobe, Atyrau, Zhambyl, West-Kazakhstan, Kostanay, Mangistau regions;
  • The gas infrastructure development of Zaysan town in the East-Kazakhstan region;
  • The gas infrastructure development of Turkestan town in the South-Kazakhstan region;
  • The construction and putting into operation of the Korday-Shu high pressure supply pipeline in the Zhambyl region;
  • The gas infrastructure development of Kyzylorda city and connecting the regional gas network to the Beyney-Bozoy-Shymkent main gas pipeline;
  • Under K.K. Sharipbayev’s direct leadership, they had created a single gas-supply operator on the internal market which became the final step in unifying the gas distribution networks all over the country.
  • For the first time in KazMunaiGas’ history, long-term investment-based tariffs were introduced which gave a start to the realization of the large-scale program to modernize and expand the gas-transportation and gas-supply systems of Kazakhstan”.

We admit, this is the first time that we come across this kind of appropriation of a national company’s corporate successes by a single person. In Kazakhstan, such successes are usually associated with the company itself, or its management as a whole, or the Leader of the Nation Nursultan Nazarbayev.

This is precisely why we believe that the appearance of the article in Russian magazine Neftegaz.ru and its reprint by Forbes.kz is but the planting of a certain idea (advantageous to Kayrat Sharipbayev) into the Kazakh information space for the purpose of studying the public response to it.

Moreover, we allow for the possibility that the payment for the publication came from the KasTransGas’ funds. Spending personal funds when you have access to the corporate ones is not the Kazakh way.


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