One Less Position: How Will Changing KAZENERGY Chairperson Affect Oil and Gas Industry?

The former president’s son-in-law has been succeeded by the head of KazMunayGas, Magzum Mirzagaliyev, as chairman of the Kazakhstan Association of Oil and Gas and Energy Complex KAZENERGY. Orda.kz has spoken to experts about the change.

The Association was established in 2005. It unites companies operating in the oil and gas, electric power, and nuclear industries. The position of the chairman in the association is based on public principles, i.e. it is unpaid. On December 9, KazmunayGas’s head took it over.

After the events of Bloody January, Timur Kulibayev stepped down as chairman of NCE Atameken. He then resigned as a member of the Board of Directors and an independent director of PJSC Gazprom.

Weaker Lobbying?

According to oil and gas industry analyst Oleg Chervinsky, with Kulibayev's departure, the political weight and lobbying capabilities of the KAZENERGY association will diminish.

In the summer of 2020, the Ministry of Finance, in response to a deputy's request, reported that Timur Kulibayev is the largest taxpayer in Kazakhstan in terms of the amount of tax revenues from an individual for 2015-2020. Magzum Mirzagaliyev, the head of the KazMunayGas national company, was elected the new chairman of the KazEnergy Association. It is noteworthy that already in October 2023, Kulibayev did not attend or speak at the traditional KAZENERGY forum in Astana for the first time since the foundation of the association, Chervinsky wrote.

The Very Top

Political scientist Marat Shibutov has called the change of leadership at KAZENERGY a beginning of a big trend and an epoch-making event.

Since 2005, this organization had been continuously headed by Timur Kulibayev in a key industry for the economy. Magzum Mirzagaliyev, the head of KazMunayGas JSC, was elected as the new chairman. Given the person of the ex-chairman and the importance of the industry, it is obvious that the initiative for the change could have only come from the very top, Shibutov said.

The political scientist considers what happened to be a logical continuation of Qasym-Jomar Toqayev's policy for restoring order and establishing fair, understandable, and transparent rules of the game in the market.

We started by returning illegal assets to state ownership, reforming the tax system with an emphasis on increasing the burden on the rich, and achieved the sale of ArcelorMittal Temirtau. Now it's time for oil and gas. Choosing Mirzagaliev is, in fact, the only plausible option. KAZENERGY includes not only Kazakhstani, but also large foreign companies — Shell, ExxonMobil, Chevron, Total, CNPC and Sinopec. This imposes additional responsibility on the new chairman — in fact, he is the main "overseer" of the industry, simultaneously the main negotiator and representative of Kazakhstan's interests in oil and gas, the political scientist explained. 

Marat Shibutov highlighted the criteria that a new candidate must meet:

• Toqayev's trust - constant access for prompt resolving of issues and explanations of  foreign oil companies’ position.
• High industry competence — understanding of the intricacies and problems of the field, long-term professional background.
• Authority in the industry and weight in the state apparatus — the new head should be able to keep others on a "short leash", be able to negotiate with major players, as well as lobby the interests of the industry in government agencies.

The political scientist suggested that positive changes should be expected in the oil and gas industry in the near future.

Is KMG Ready?

Expert Olzhas Baidildinov expressed the opposite opinion about the change. He noted Timur Kulibayev's great contribution to the development of the oil industry and the organization.

With his support, KAZENERGY became the very institution that absorbed the memory in the energy and oil and gas sector, becoming an analytical "shadow" center with an alternative point of view from the relevant Ministry of Energy and national companies. The international recognition of Kazakhstan’s oil was largely due to the annual KAZENERGY forums, which later turned from one or two days into the traditional Energy Week format. International recognition became the "business card" of Kazakhstan and allowed attracting investments and technologies. Timur Kulibayev provided serious financial support to the work of these organizations, holding positions on a voluntary basis, Baidildinov said.

According to the expert, when representatives of the energy and oil and gas industry faced "incorrect" reforms or saw the need for changes, they always turned to KAZENERGY and found support there.

I am against the current head of a national company heading an independent industry association. This, in my opinion, is a conflict of interest. Timur Kulibayev could sort out some financial and other issues with the support of his companies or members of the association — there is never enough money, as in any industry union. If the head of KMG asks for such support, it's wrong. As well as the allocation of additional resources from the national company itself. KAZENERGY is preparing a large number of analytical documents for the leadership of the industry and the country. Is it convenient for KazMunayGas to take the position of the association in case of divergence of points of view? Is KMG ready for criticism for its money or other assessment of its position? said Baidildinov.

The expert doubts how Mirzagaliyev will speak out against the national company itself if he is asked to do so by members of the association concerned about KMG’s increasing presence in the industry.

Nothing Will Change.

Economist Aidarkhan Kusainov called the change of the chairman of the association a "routine event."

He probably (Timur Kulibayev - Ed.) has other things to do now. It is quite a routine procedure. It is clear that there is a political background to this. It's obvious, but on the other hand, it's standard procedure. Economically, this will have no effect at all. The association does not depend on a person,
the expert said in a conversation with an Orda correspondent. 

Kusainov believes that the KAZENERGY association has enough abilities to lobby without Kulibayev.

Editorial board of the Orda.kz will continue to monitor developments.

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 piece in Russian for accuracy.