Kazakh Oil Sale Causes Shake-Up

ALMATY, Kazakhstan -- The raging dispute in the Kazakh government over the proposed sale of a 10 percent stake in key oil venture Tengizchevroil claimed its first victim Monday with the sacking of the head of state oil company Kazakhoil.

A spokesman for Kazakhoil said Monday that company chief Nurlan Kapparov's departure was largely due to his objections to government plans to sell some of its share in Tengizchevroil to raise desperately needed cash for the budget.

"The first reason [for the sacking] is the disagreement with the government over the sale of the Tengizchevroil stake," the spokesman said. "Mr. Kapparov was and is opposed to this decision, which he believes is not in the interests of the country."

Earlier in the day, Prime Minister Nurlan Balgimbayev signed a resolution sacking Kapparov.

"Kapparov was fired for exceeding his brief in a number of strategically important issues related to the oil and gas industry," a government spokesman quoted the resolution as saying. No details were offered.

Kazakhstan is contemplating selling part of its 25 percent stake in Tengizchevroil - also owned by Chevron with 45 percent of the shares, Mobil with 25 percent and LUKoil and Arco with 5 percent jointly.

Putting the crown jewel of the Kazakh oil industry on the block indicates that the economy of the vast Central Asian state has hit rock bottom, with no other funds available to plug a $560 million hole in the budget.

A recent attempt to tap international capital markets for funds failed because of a weak appetite for emerging debt.

The resource rich Central Asian state has little to show for its wealth, and the recent Russian crisis and last year's low commodity prices only made matters worse.

But the sale would come as yet another blow for Kazakhoil, which officially holds the state's shares in energy enterprises. The company, once seen as a rising power, has seen its assets gradually diminish as the government seeks to raise cash.