Demand for inquiry into $6.1bn float of Kazakh oil company

KazMunaiGas, the exploration and production arm of the state oil company in Kazakhstan, announced yesterday that it wanted to raise $1.9bn (£1bn) through a London and a local listing, but questions were raised about transparency at the company and its planned acquisitions.

Analysts also said that the valuation of the company - $6.1bn at the midpoint of the price range published yesterday - looked demanding. It equates to nearly $3 a barrel for KazMunaiGas's proven and probable reserves, once the company's post-float cash is counted, which is similar to the valuation put on the controversial London flotation this summer of the Russian energy giant Rosneft, which was accused of having "stolen" assets.

Controversy is likely to centre around KazMunaiGas's plans to use the money it raises to buy assets from its parent company, National Company KazMunaiGas (NC).

The company wants to buy from NC its 50 per cent stake in KazGerMunai, an upstream oil company, bought for $1bn, and its 33 per cent stake in PetroKazakhstan, acquired for $1.4bn.

Dmitry Loukashov, an analyst at Aton Capital, one of the leading brokerages in Moscow, said that, given the "full" price paid for the stakes by NC, unless the parent is willing to sell at a loss to KazMunaiGas, "we do not believe there will be any major value creation from acquiring these stakes from its parent".

Mr Loukashov added: "I don't see why [NC] would sell at a loss to KazMunaiGas."

The company's relationship to its parent has also raised other concerns. NC is chaired by Timur Kulibaev, who is married to Dinara, the second oldest daughter of the country's President, Nursultan Nazarbaev.

Members of the Majlis or parliament in Kazakhstan have called for a full-scale financial investigation into KazMunaiGas, including the "management fee" that the company pays each year to the parent.

The logic of privatising KazMunaiGas has also been questioned by President Nazarbaev's eldest daughter, Dariga. Her husband, Rakhat Aliev, is a bitter rival of Timur Kulibaev.

A spokesman for KazMunaiGas in London said the MPs' concerns had been addressed. He also said that KazMunaiGas's acquisitions would be subject to safeguards.

It was announced yesterday that the issue will be priced at between $12.75 and $14.75 a share.