forecaster:
a very predictable outcome.....cooliebayev
May 29, 2001
Business and Finance - Europe
Son-in-Law of the President of Kazakstan
Becomes a Caspian, Capitalist Juggernaut
You May Not Have Heard of Kulibayev,
But if Oil Gushes in Kazakstan, You Will
By STEVE LEVINE
Staff Reporter of THE WALL STREET JOURNAL
ALMATY, Kazakstan -- Not long ago, Timur Kulibayev was known for little more than his family ties in this oil-rich Caspian Sea nation. Now
the 34-year-old son-in-law of president Nursultan Nazarbayev is emerging as one of the region's most powerful businessmen.
One of Mr. Kulibayev's recent deals would merge Kazakstan's two biggest banks, making him one of the Caspian
region's foremost bankers. A second venture, an attempt to take over a midsize oil company, would swell his already
substantial influence in the key energy sector, say people familiar with the deal.
But Mr. Kulibayev is more than a private businessman. He is also an appointed government official, whose
bureaucratic territory is expanding at a rapid clip. Already head of Kazakstan's powerful state oil-pipeline arm, he
was recently given responsibility for overseeing the country's natural-gas pipelines as well.
His higher profile comes as Kazakstan, with the discovery of what appears to be an enormous new oil field called
Kashagan, is becoming a bigger player in global oil.
Like the leaders of other Caspian Sea nations, Mr. Nazarbayev has
accumulated autocratic power since the 1991 Soviet breakup. His
son-in-law's ascent illustrates how some of the region's ruling families
have amassed economic muscle, too. Mr. Nazarbayev has said he sees
nothing inappropriate about his relatives' professional activities.
Mr. Kulibayev, who sports boyish looks and is an avid golfer, is married to the president's middle
daughter, Dinara. Mr. Kulibayev shuns publicity and declined to be interviewed for this article. But in
both his governmental and private roles, he appears increasingly assertive.
People familiar with Mr. Kulibayev's activities are impressed with the management team he has
assembled for his private businesses, as well as the advisers he has chosen to work with him in
government. Some of his recent business deals involve foreign-listed companies, demonstrating his
desire to move into the international arena, according to people familiar with his operations.
The recent oil and banking deals illustrate how Mr. Kulibayev works
behind the scenes, a tendency that makes his influence often difficult to detect. In the banking deal, JSC
Kazkommertsbank agreed to acquire JSC Halyk Bank, both of Kazakstan. Together, they would have some $1.5
billion in assets, or more than 40% of the nation's total bank assets.
Mr. Kulibayev is involved in both sides of that deal. A company he controls has the right to buy a 35% interest
in Kazkommertsbank, giving him influence in the activities of that bank, which trades on the London Stock
Exchange. Another company he controls owns 15.6% of Halyk.
Similarly, the oil deal could eventually result in the merger of two foreign-listed oil companies whose reserves
are in Kazakstan, say principals in the deal.
Mr. Kulibayev controls 35% of one of the companies, Nelson Energy Resources Corp. A Kazkommertsbank
affiliate, which also owns 35% of Nelson, owns 30% of Hurricane Hydrocarbons Ltd., a Calgary, Alberta, oil
company.
The Kazkommertsbank affiliate made an unsolicited proposal to buy another 23% of Hurricane, giving it control. Hurricane has fought the offer.
But people familiar with the matter say Mr. Kulibayev's presence in the deal will probably force Hurricane to negotiate. Separately, Askar
Alshinbayev, chief executive of the Kazkommertsbank affiliate, said that "most probably we will" merge Hurricane and Nelson. Nelson says a
merger is possible at some point.
Combined, the two companies would be one of Kazakstan's largest three oil producers. Both Nelson and Hurricane are traded on the Toronto
Stock Exchange.
This month, a government decision created a new state holding company combining the government's oil and natural-gas pipeline arms.
Authority over energy transportation, which includes oil trading abroad, is an extremely powerful position that has control over one of the
government's biggest sources of revenue.
In January, Mr. Kulibayev angered foreign oil companies by taking control of arranging crude exports through the main export route across
Russia and charging the companies for the service. Previously, the companies negotiated these exports directly. The state pipeline company's
"behavior is making foreign companies very nervous, and rightfully so," says Julia Nanay, an analyst with the Petroleum Finance Co., a
Washington, D.C., consultant.
Write to Steve LeVine at steve.levine@wsj.com |
