Kazakh billionaire cozies up to Gazprom

A spate of protests and hunger strikes by up to 15,000 oil and gas workers in western Kazakhstan is raising fears of widespread unrest in Russia’s oil-rich neighbor.

The protesters were demanding better salaries and working conditions in a conflict that looked likely to play into a major turning point for the son-in-law of Kazakh leader Nursultan Nazarbayev – the powerful Timur Kulibayev, who controls the country’s energy sector.

Tensions are escalating just as Russia’s state-owned gas monopoly, Gazprom, is making a major foray into Kazakhstan’s energy sector. It is also cozying up to Kazmunaigas, the country’s oil and gas company which is controlled by President Nursultan Nazarbayev’s billionaire son-in-law, Timur Kulibayev.

On Thursday, Kulibayev was one of 12 candidates for the 11 seats on Gazprom’s board of directors at the gas giant’s Moscow AGM.

Kulibayev, who is chairman of the board at KazMunaiGas, is also chairman of the supervisory board of Samruk-Kazyn, the Kazakh National Welfare Fund, which controls the state’s stakes in a swathe of the country’s key industries, including KazMunaiGas.

GazpromNeft, the oil arm of Gazprom, had earlier announced interest in an oil refinery factory which is owned by KazMunaiGas, according to a statement by the Kazakh Association of Oil, Gas and the Energy Complex, headed by Kulibayev.

Earlier in June, KazMunaiGas expressed interest in working together with GazpromNeft in projects in Russia.

Experts said that poor corporate management by a number of both state-owned and private companies had fueled the social tensions.

A market entry by a major corporation like Gazprom could improve corporate management, Konstantin Simonov, an independent oil and gas expert, told The Moscow News.

“Oil and gas assets are being redistributed between different companies there and business elite very soon enough will stop independent production,” Simonov said. “Russian companies could take part in the purchase of assets there.”

With Kazakhstan due to become one of the biggest gas exporters in the world after the completion of the huge Kashagan project in the Kazakh section of the Caspian Sea, Russia’s interest is understandable, experts said.

“Clearly Russia and Kazakhstan are neighbors, and have billions of dollars worth of joint economic activities, including exports of Kazakh energy,” Ariel Cohen, senior research fellow at the Heritage Foundation, told The Moscow News.

“It’s logical that Gazprom is interested in Kazakh oil and gas sector,” Svetlana Grizan, oil and gas expert at VTB Capital, told The Moscow News.

As for Kulibayev – a billionaire who figured in a Wikileaks scandal revolving around British royal Prince Andrew’s allegedly corrupt dealings with him – getting a job abroad as an expert on a country’s energy sector is a normal practice, Grizan said.
 

Unprecedented strikes

In a country known for brutally repressing any public dissent, the strikes pointed to a situation that seemed to be spiraling out of control.

The protests began mid-May, when about 700 workers declared a strike at Karazhanbasmunai oil company. They were joined by 250 workers from two other companies – Ozenmunaygaz, and KMG subsidiary Exploration and Production, IA News-Kazakhstan reported. As the protests snowballed, in June 300 people went on a hunger strike.

“We only demand that the trade unions, our employers and us sit down and discuss the situation. Instead, the company I work for has sacked over 300 people for taking part in the protests,” Maksat Dosmagametov, an employee at OzenmunaiGaz, told The Moscow News.

A brutal response from state authorities – who have reportedly jailed and beaten a number of them while threatening their families – is only fueling the standoff.

“Our salary is around $550 per month, this is nothing as all of us have families and water and food prices are high,” Marat, another worker at OzenmunaiGaz, told The Moscow News.

To date, there are around 15,000 people taking part in the protests across western Kazakhstan, the workers say.

“Instead of a dialogue the authorities and employers tend to use harsh methods to ‘talk to’ the protestors,” Ainur Kurmanov, leader of the left-wing Socialist Movement Kazakhstan, told The Moscow News.

KazMunaiGaz and Chinese energy firm CITIC, who each own half of Karazhanbasmunai, were not available for comment Thursday.

A spokeswoman for Italy’s ENI, which does oil and gas exploration in western Kazakhstan with Kazmunaigas, denied any knowledge of strikes in the country.
 

Conflict may spread

“For now the conflict is being localized, but the authorities are using very tough methods to end the row,” Andrei Chebotaryov, head of Almaty-based political think tank Alternativa, told The Moscow News.

Such major protests are usually solved by roundtable talks between the authorities, employers and official trade unions, Chebotaryov said. “Why this hasn’t been done yet is a good question,” he said.

The strike will undermine the image of Kazakhstan’s energy sector, which is flourishing amid rising oil prices, Cohen, of the Heritage Foundation, said.

By Lidia Okorokova

The Moskow News, 30 June, 2011