July 15, 2008

Kazakh Oil Manager Doubts Viability of Nabucco Project – Hungarian Daily

Text of report by Hungarian privately-owned liberal newspaper Nepszabadsag website, on 14 July

[Report on interview with Kanat Bozumbayev, Samruk Holding president, by Peter Dunai in Astana; date not given: "Will There Be Supplies for Nabucco, Stream Pipelines? - in Conversation With Kanat Bozumbayev, President of Kazakhstan's Top State-Owned Samruk Holding "]

In response to Nepszabadsag's question on the business and political prospects of the future construction of Nabucco and other gas pipelines, Kanat Bozumbayev, president of Kazakhstan's top state- owned company, Samruk Holding (Sas), said in Astana that no matter what colours or names are given to the pipelines, he personally believes there will not be enough gas to supply them. Kazakhstan has the most stable and balanced leadership in the Central Asian region and the state maintains good relations with both Moscow and the West, as well as China.

Gas and oil pipelines

In cooperation with the Kazakh state-owned gas company, KazMunayGaz (part of Samruk Holding), the construction of the first 1,300-km-long pipeline started this week, running from Kazakhstan to China. At first (from 2010), it will be able to carry 4.5bn cu.m. of natural gas and later its capacity is expected to be increased to 40bn by 2010, almost 10 times as much as the original amount. As reflected by the words of Mr Bozumbayev, there, in the Central Asian region, boundless amounts of energy are emerging and also being consumed; Russia and the West are struggling to assert authority. The president outlines that Russia and Gazprom have hired a talented and capable team of leaders, alluding to Gazprom's massive step of buying up Central Asian gas at high, western prices, by which they practically pulled the rug out from under Nabucco, draining off the gas from under their nose.

The hunger of China, the third key player, for energy is virtually insatiable. The president says they are planning another pipeline construction from western Kazakhstan to China. Kazakhstan is important not only as a producer (they annually excavate 70m tonnes of oil), but also as a transit country as both Turkmenistan (the largest gas producer in the region) and Uzbekistan transport gas to the Russian pipe system through Kazakh territory.


Hungary is present in the rather wide sphere of Samruk activities even if to a small extent. They are negotiating about the supply of Hungarian-made gas distribution systems with a Hungarian company, noted Mr Bozumbayev. He has remarked that Samruk shows particular interest in Central and Eastern Europe, including our country through its subsidiaries. They acquired a thermal power station in Bosnia and a 75 per cent stake in Rompetrol, a large oil company. Their most spectacular deal was the complete purchase of Batumi Black Sea port from Georgia. Kazakhstan's black gold is transported there by pipeline or tank wagons, and then pumped into tankers to be delivered to one of the ports in southeastern Europe, avoiding Russia. They have also embarked on a shopping spree on the other side of the Black Sea and bought two oil refineries in Constanta, Romania, therefore they will be able to process Kazakh crude transported by tankers from Batumi and refine it to fuel to be distributed solely at the majority-owned Rompetrol filling stations. By the way, independent Kazakhstan's relations with Russia are excellent and the bulk of the country's gas and oil is carried to consumers from Russian territory using the Russian pipeline system.

Samruk's future

Samruk's attempts to combine the best eastern and western virtues in its management strategy is the manifestation of independent Kazakh politics. Mr Bozumbayev reveals that their role model is Singapore's Temasec Holding. Western managers populate several Samruk subsidiaries (One of ABN-Amro's most promising executives has recently been lured to Astana, to Samrak's enormous semicircular headquarters.)

Originally published by Nepszabadsag website, Budapest, in Hungarian 14 Jul 08.

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