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KazMunaiGaz May Borrow $14 Billion to Fund Projects, Probably Won't Do IPO

KazMunaiGaz National Co., a Kazakh state-owned energy company, may borrow $14 billion to fund developments through 2014 and probably won’t sell stock in an initial public offering.

The company may borrow 70 percent of its $20 billion investment program for 2010 to 2014, Chief Executive Officer Kairgeldy Kabyldin said today in Almaty. The Kazakh state energy company sees no economic advantage from an IPO in current market conditions, he said.

KazMunaiGaz said in April the investments will include $1.5 billion to $2.5 billion a year for the Kashagan development, one of the world’s biggest oil discoveries in the last 40 years. The company, which accounts for 24 percent of the Central Asian nation’s oil production, has $11 billion of bonds and loans outstanding, with peak debt payment of $2.7 billion next year, according to Bloomberg data.

The Kazakh government will decide this year or in early 2011 whether to sell KazMunaiGaz stock in an IPO, Kairat Kelimbetov, chief executive officer of the National Wellbeing Fund Samruk-Kazyna, said yesterday. The fund holds the state stake in KazMunaiGaz.

KazMunaiGaz’s investment plans for projects such as Kashagan may require the state to dip into its National Oil Fund, Kelimbetov said on Oct. 6. He didn’t specify when it might become necessary.

Transfer to KazMunaiGas EP

“We considered transferring the state-owned stake in Kashagan to KazMunaiGas Exploration Production from the parent, but this won’t solve the problem,” Kelimbetov said, referring to the national company’s London-traded oil production unit.

Borrowing will help cover the state company’s needs, including cash for Kashagan, Timur Kulibayev, a deputy head of the Samruk-Kazyna, said on Oct. 5.

KazMunaiGaz, the majority owner of Rompetrol Group, had to repay 571 million euros ($800 million) of bonds held by the Romanian state in exchange for the refiner’s historical debt in September. Rompetrol, the owner of Romania’s second-biggest oil refiner, faces legal action over its decision to convert part of its debt into shares, the European country’s government said on Oct. 1.

KazMunaiGaz plans to reach an agreement with Romania on the debt this year, Kabyldin said today.

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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