By STEVE LeVINE
Aug 23
Its options nearly exhausted in a worsening economic crisis, the Central Asian republic of Kazakhstan has grudgingly agreed to sell nearly half its share of the Tengiz oilfield, among the world�s most prized reserves.
The Kazakhs have quietly organized a London-based, invitation-only auction for what amounts to 10 percent of the field, according to industry and Government officials.
The Government estimates the stake as worth $1.2 billion to $1.6 billion, more than enough to fill an estimated $560 million budget gap this year, an official indicated.
��They need some quick cash,�� said Robert Ebel, director of energy and national security at the Washington-based Center for Strategic and International Studies. ��They have decided, �Let�s see what we can get for our equity share.� ��
The auction coincides with an uncertain time in the oil industry � greater confidence as crude oil prices have doubled to levels above $20 a barrel, but also caution, with more attention paid to company mergers and spending cuts than to acquisitions of new reserves.
Still, the prospect of a sale of part of the Tengiz field has stirred rumors for weeks as Kazakhstan�s economic problems became more acute.
As a demonstration of the sensitivity in and outside Government to the sale of even part of the field, Kazakhstan�s most valuable possession, the Government has mailed 20 tender letters to major petroleum companies and state-owned oil companies. But it has intentionally not announced the sale publicly, the official said.
Situated on 2,500 square miles along the scraggly northeastern shore of the Caspian Sea, Tengiz holds six billion to nine billion barrels of proven recoverable reserves of high-quality oil, a quantity that makes it one of the world�s 10 largest fields.
The Government says it has new seismic data suggesting that Tengiz and surrounding fields included in the stake hold much more oil. Tengiz currently produces 215,000 barrels a day.
The Chevron Corporation owns the largest share in the field, a 45 percent stake, with Kazakhstan and the Mobil Corporation at 25 percent each, and Lukoil of Russia at 5 percent.
The stake being offered amounts to 40 percent of Kazakhstan�s holding, or 10 percent of the ownership of the field.
Despite feelings of misgivings here, there seems to have been little choice for the Kazakh authorities but to put part of Tengiz on the sale block.
Kazakhstan, a remote and geographically huge former Soviet republic abutting Russia and China, expects to be in severe economic difficulty until at least 2002, when Government analysts expect large amounts of tax revenue to start flowing from Tengiz and perhaps other oilfields.
In the meantime, some are predicting a budget shortage next year alone of $1.5 billion.
The Government has twice rewritten the current budget because of insufficient revenue and is behind on pension payments, a potentially explosive problem as the elderly are Kazakhstan�s most politically vocal group.
Last month, a $450 million loan program from the International Monetary Fund expired, and the Government found itself embarrassed when the I.M.F. announced that it had failed to reach agreement with the Kazakh authorities on a new one.
Officials with the I.M.F. � whose imprimatur is vital to attracting foreign investors � said Kazakhstan�s budget deficits were too high, among other problems in its economic revamping effort.
The republic has for now rejected an aggressive privatization program because, with the current investment atmosphere, it decided it could not attract the kind of money that its enterprises merited.
All Over the Globe is published by IPA House.
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