Kulibayev's Empire: How to Buy Half of an Oilfield Service Company for 1 Euro

In 2021, Nursultan Nazarbayev’s son-in-law bought a controlling stake in KazMunayGas’s former subsidiary for $56 million. JSC "OGCC KazStroyService" was immediately given over to the management of Oreon Management LLP and a certain Bauyrzhan Kaymanov. Orda looked into the matter.

JSC OGCC KazStroyService is an engineering and construction company implementing turnkey projects in the oil and gas industry. This includes the design, supply and construction of main pipelines, oil and gas processing plants, refineries, terminals, petrochemical, energy industry and infrastructure facilities.

The organization produces pipelines and builds oil refineries and onshore facilities for the oil and gas industry. OGCC KazStroyService works on projects in Kazakhstan, Thailand, India and Russia. A short list of clients: Asian Gas Pipeline LLP, Atyrau Refinery LLP and Tengizchevroil LLP. It was OGCC KazStroyService that was engaged in the construction of the Atyrau oil refinery, and later its reconstruction. In June 2021, OGCC KazStroyService signed a general contract agreement with the Russian Amur Gas Chemical Complex for the construction of plants for the production of polyethylene and polypropylene.

OGCC KazStroyService has 12 branches. The joint-stock company’s portfolio has orders for $9 billion. More than 100 large objects were completed. We should add that the company is included in the list of the 50 largest private companies in Kazakhstan in 2022 according to Forbes. The JSC is in 24th place. According to an audit report, retained earnings in 2021 amounted to 22,164,464,000 tenge.

How Kulibayev Bought “KazMunayGas’s" Former Subsidiary — JSC "OGCC KazStroyService”

KazStroyService CJSC was established in July 2001. The only shareholder was the national company "KazMunayGas". Four years later, on January 14, 2005, the asset was sold to Mercury LLP. At the same time, the closed joint–stock company became a JSC, and in April 2005 - JSC "OGCC KazStroyService". It should be noted that the ex-president’s son-in-law, Timur Kulibayev, held the first vice-president position in JSC "National Company "KazMunayGas" during this period.

Mercury did not want to be the owner of shares for quite some time. Already in November 2005, OGCC KazStroyService was resold to Oilex Investments Ltd, a company registered in the British Virgin Islands. In January 2007, the company formed a new British holding company "KazStroyService PLC", which later became "KazStroyService Limited" (UK). Note that in July 2019, the company was liquidated due to lenders. It had previously been engaged in the engineering, procurement and construction of pipelines, power plants and refineries.

As a result of the intra-group restructuring, the shares of OGCC KazStroyService were sold by KazStroyService Global B.V. (Kingdom of the Netherlands). The transaction was completed on May 30, 2011.

According to Egov.kz, information on the owners of the joint-stock company is hidden. Now there are three of them.

Orda discovered that the majority stake belongs to Timur Kulibayev and Raushan Sagdiyeva through Joint Technologies LLP. 66.7% of the shares were sold on August 10, 2021 for 56.5 million dollars or 23.5 billion tenge. The remaining part turned out to be Pavel Belovich's (No. 34 on the 2019 Forbes list) through Aquarelle (33.3% of the shares were sold for 56 million dollars or 24 billion tenge). However, on February 7, 2022, Worldwide Invest LLP bought 12.5% of the authorized capital from Joint Technologies LLP for 4.7 billion tenge. The latter company appeared recently: on February 7, 2022. It also belongs to Pavel Belovich.

Kulibayev's company now owns 54.2% of the shares. On April 18, 2023, Kazakhstan’s Agency of the Protection for Regulation and Development sent a written order due to the late posting with information on the convening of the annual and extraordinary general meeting of shareholders.

How OGCC KazStroyService Makes Profit from Oil and Gas Projects

In May 2021, OGCC KazStroyService decided to pay dividends for 2019. Joint Technologies, as the parent company, received 11.3 billion tenge on August 12. It should be noted that the previous shareholder received much less – 5.6 billion tenge. The remaining amount of the owed dividends to KazStroyService Global B.V. went to the account of the remaining loan amount that the shareholder had previously taken from the JSC.

How Does Timur Kulibayev's Company Make Money?

The projects of OGCC KazStroyService can be divided into industrial and civil construction, oil and gas industry and infrastructure. One of the iconic objects for Kazakhstan can be called the construction of the I–stage of the Saryarka gas pipeline. Thanks to the facility, blue fuel from Kyzylorda makes it way to Astana. The contractor was OGCC KazStroyService. The construction period took 12 months.

In December 2017, OGCC KazStroyService completed the construction project for pumping stations. The customer was JSC "Caspian Pipeline Consortium – K" (CPC). The facilities cost, the construction of which took 67 months, was not on the website. However, it is through CPC that Kazakhstan's oil is exported from large fields.

The company also builds various facilities for other countries. In Russia, the construction of polypropylene production plants will take 35 months. The facility is due to be commissioned on May 31, 2024.

JSC also became a general contractor in the construction of a workers' settlement near the Tasotkel reservoir (reconstruction of one of the largest reservoirs of the Jambyl region – Ed.). To do this, an agreement was signed with SPK – Qyzylsha LLP. This is the second stage of the reconstruction of the irrigation system in the Shu residential area. The customer was "QAZSUGAR" LLP. The contractor for the reconstruction of the facility’s second phase is Tarazstroyinvest LLP. The project’s price tag - 2.1 billion tenge. It is unknown how much of this amount was received by OGCC KazStroyService.

How Else Does the JSC Make Money?

OGCC KazStroyService receives dividends from its subsidiaries along with the implementation of projects. According to a financial report, in 2021 they received 988 million tenge from dividends, although a year earlier this figure was significantly higher – 3.5 billion tenge.

The OGCC KazStroyService Group of Companies includes subsidiaries and joint organizations for the implementation of large oil and gas projects.

In January 2021, OGCC KazStroyService acquired a 49% stake in KCA Deutag Kazakhstan LLP for just five thousand dollars or 2.1 million tenge. At the same time, the company acquired a 100% stake in the authorized capital of Munaikemikalservice LLP in Aqtay for 675 million tenge.

In February 2021, the name "OGCC KazStroyService" was changed: from JSC JV "PSN Kazstroy" to JSC "WOOD KSS". The company carries out a number of oil and gas projects at the Tengiz and Kashagan fields.

The company has paid 99,760,933,085.43 tenge to the state treasury since 2015. Judging by tax payments, the most profitable year was 2019 – 36.1 billion tenge.

How 50% For 1 Euro

One of the subsidiaries is the plant of marine metal structures of Caspian Offshore and Marine Construction LLP (COMC), which is located in the special economic zone "Aktau Seaport". The organization is engaged in the design, engineering, construction, supply, testing and commissioning of onshore and floating modules, as well as their repair, restoration, conversion and maintenance.

It should be noted that half of the enterprise belonged to OGCC KazStroyService

OGCC KazStroyService has provided loans to Sasriap Offshore and Marine Construction since 2014. At first, 1.6 billion tenge was allocated at 9%, in 2015 another 6.8 billion tenge. In 2020 and 2021, COMC additionally received 923 million tenge and 52 million tenge respectively. At the same time, two payments worth 1.3 billion tenge and 6.3 billion tenge were received to the accounts of OGCC KazStroyService. The debt had to be repaid by February 2022.

On May 28, 2021, OGCC KazStroyService bought another 50% stake in the authorized capital of the LLP for just 1 euro. The seller was KazStroyService Global Engineering. By the end of the year, COMC was recognized as a subsidiary.

The Caspian Field

There are quite a lot of projects related to the Kashagan field under Caspian Offshore’s and Marine Construction’s belt. For the NCOC operator, the company provided 55 thousand tons of modules of pipe overpasses, wellhead protection structures and reinforced auxiliary metal structures.

The same customer also bought seven icebreaking rescue vessels and mooring pontoons.

The company provided seven ice-class transport barges for NCOC. According to COMC, these are the first sea vessels built and launched in Kazakhstan. 

The organization in consortium with Ersai provided a self-lifting drilling rig "Satti" for the subsidiary of "KazMunayGas" oilfield service drilling company "KMG Drilling&Services" LLP. COMC manufactured panels and built equipped support blocks for the rig body. And also integrated consoles, drilling platforms and sections of the tower equipped with the drilling complex National Oilwell Varco (NOV).  

Wagenborg Kazakhstan has refitted and repaired barges for the sea carrier. They were needed for a transit facility with a helipad and the addition of cargo capacity.

A multidisciplinary company engaged in civil and industrial construction in the Atyrau river port is another client. Isker Consortium serves companies such as Chevron, Shell, ExxonMobil, British Gas and KazMunayGas. They ordered prefabricated metal structures from COMC. In the future, they should be used at the Orken Camp facility at the Tengiz field. The final customer was Tengizchevroil LLP.

Failed Attempt: Businessman Did Not Want to Cooperate with Kulibayev

On February 24, 2023, in the Specialized Interdistrict Economic Court of Almaty, Oreon Management LLP (director and founder Bauyrzhan Kaymanov) wanted to negotiate with OGCC KazStroyService JSC and Arcelor Mittal India Private Limited. Third parties involved KSS Petron Private Limited (Mumbai, India) and Joint Technologies LLP.

Oreon Management's owner asked to recognize unilateral corporate guarantees as terminated.

But what does it mean? According to the data of the depository of financial statements, Oreon Management LLP has been acting as a trustee since August 2021, with the right to own, use and dispose of common shares. In total, the organization has 3,677,741 ordinary shares or 54.2% of JSC OGCC KazStroyService. The management of the JSC was transferred to Kulibayeva's company – Joint Technologies.

Representatives of Oreon Management motivated their claim by the fact that corporate guarantees had been issued in violation of the legislation of Kazakhstan and in violation of the rights of their company. During the preparation, the litigants did not react in any way, although they were repeatedly sent copies of the claim by courier service.

The litigant Arcelor Mittal India Private Limited and the third party KSS Petron Private Limited are registered in India. Therefore, the Kazakhstani court instructed to send documents to another state: copies of the claim, copies of the ruling on the suspension of proceedings, as well as a notice of the day of the trial.

As a result, the court suspended the proceedings in the case until the execution of the instructions. In other words, until companies receive subpoenas in India.

It remains unknown why the company controlling the main stake needed to get rid of it.

Original Author: Maria Gorbokonenko

DISCLAIMER: This is a translated piece. The text has been modified, the content is the same. Please refer to the original article in Russia for accuracy.