Kazakh Spat Casts Light on China Deals

Exiled Banker Alleges Chinese Oil Firm Routed $166 Million to Associate of Top Oil Executive, as Part of 2003 State Sale

Guy Chazan
The Wall Street Journal

An acrimonious battle between two prominent Kazakh businessmen has triggered a slew of allegations that purport to lift a lid on how Chinese companies built such a commanding position in Kazakhstan’s oil industry.

The dispute pits a fugitive banker against one of the country’s top oil executives—Timur Kulibayev, the powerful son-in-law of Kazakhstan’s long-serving president.

Mukhtar Ablyazov, now living in London, accuses Mr. Kulibayev, the chairman of Kazakhstan’s state oil company, of being behind several privatization deals over the past 10 years in which state assets were allegedly sold off at well below market value…

…Mr. Kulibayev initially took extraordinary steps to squelch Mr. Ablyazov’s claims. When opposition newspapers there published the open letters the banker wrote to law-enforcement agencies in January outlining his allegations, Mr. Kulibayev won court injunctions ordering the print runs seized and banning publication of any material impugning his honor. After the newspapers appealed, the court overturned its decision.

Some of the most explosive allegations concern a deal involving a China-owned oil company, China National Petroleum Corp., or CNPC. They come at a time when Chinese authorities put four officials from Anglo-Australian mining company Rio Tinto on trial this week on charges of accepting bribes.

The Ablyazov affair has aroused passions in Kazakhstan, where the issue of Chinese oil investment is highly controversial.

Western oil majors, which in the early days of Kazakh independence won a string of historic contracts to develop some of the country’s largest oil fields, have seen their influence wane in recent years as that of Chinese companies such as CNPC has grown…

The entire article is at The Wall Street Journal

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