Kazakhstan Unbundles Gas Pipeline Operator

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Kazakhstan Unbundles Gas Pipeline Operator

Mon, 11/15/2021 - 10:32
Kazakhstan with flag embedded on the surface of the earth (© Shutterstock/Harvepino)
Kazakhstan with flag embedded on the surface of the earth (© Shutterstock/Harvepino)

Kazakhstan authorities on Thursday, November 11, announced they had completed disbanding of natural gas operator Kaztransgaz from KazMunayGaz, a state-owned gas and oil company, after months of regulatory delays and endless wrangles.

On Thursday, the gas and oil company announced that it had completed transferring 100% of the shareholding from Kaztransgaz to Samruk-Kazyna, a state welfare fund, in a swap with a 1 Tenge (0.2 USD) nominal payment.

The developments have come more than a year since June 2020, after Kazakh authorities ordered KazMunayGaz to commence the unbundling process to make Kaztransgaz independent from the gas and oil producer.

Even though the disbanding process took a bit longer than expected, the delay is attributed to the company's financial and regulatory conditions the company had to satisfy for approval by the investors holding Eurobond from the company.

Additionally, the international banks that credited the company also had to agree before making the transaction.

Kaztransgaz's significant contribution to KazMunayGaz's overall revenues skyrocketed in recent years due to the construction of massive domestic pipelines as well as the Kazakh section of the Turkmenistan-Kazakhstan-Uzbekistan-China gas pipeline.

According to KazMunayGaz, Kaztransgaz operated 20,000 kilometers of pipeline in Kazakhstan, double what the company had in 2000.  The gas pipeline operator supplied 12% more gas between January and September, translating to more than 71 billion compared to 2020, KazMunayGaz disclosed earlier.

Based on the latest financial statement, KazMunayGaz's natural gas transmission segment raked in a whopping 451 billion tenge ($1.1 billion) revenue and a net profit of 262 billion tenges in the first half of this year.

In comparison, the company raked in a total of 3.1 billion tenges in revenue and a net profit of 644 billion tenges within the same period. Following the pipeline operator's exit, the holding company's total debt of $8.7 billion as of June 30 was reduced by $1.1 billion.

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