Moldovan businessman to seek foreclosure of Kazakh oil field stake

Moldovan busi­ness­man Anatolie Stati will ask bailiffs to sell a $5.2 bil­lion stake in the Kashagan oil field owned by a Kazakh sov­er­eign wealth fund if Astana refus­es to pay a $500 mil­lion arbi­tra­tion award, Stati’s spokes­woman said on Tuesday.

Asked if the stake in the giant oil field — now frozen by a Dutch court — could be fore­closed, Stati’s spokes­woman said: ”This is the expect­ed course of action. 

We will aggres­sive­ly pur­sue enforce­ment in all rel­e­vant juris­dic­tions until the Republic of Kazakhstan com­plies with its treaty com­mit­ment to the award.” 

Samruk-Kazyna, the sov­er­eign wealth fund which holds half of Kazakhstan’s 16.88 per­cent Kashagan stake through a Dutch com­pa­ny, said it was mak­ing “all nec­es­sary arrange­ments to pro­tect its inter­est in accor­dance with the applic­a­ble pro­ce­dure and will con­tin­ue to vig­or­ous­ly defend its rights”. 

Samruk-Kazyna said in a state­ment the freeze had no effect on the day-to-day man­age­ment of its stake in Kashagan and pay­ments “save for pay­ment of div­i­dends to Samruk-Kazyna”. 

Kazakhstan’s sov­er­eign dol­lar bonds fell across the curve on Tuesday. 

Stati, his son Gabriel and two fam­i­ly-con­trolled com­pa­nies have been involved in legal bat­tles with the Kazakh gov­ern­ment of President Nursultan Nazarbayev for sev­er­al years. They invest­ed in Kazakhstan’s oil and gas indus­try and have assert­ed that they were sub­ject­ed to harass­ment from the state aimed at forc­ing them to sell their invest­ments cheaply. 

They and two of their com­pa­nies won an arbi­tra­tion award of around $500 mil­lion in Sweden against the gov­ern­ment. Kazakhstan denies the alle­ga­tions, says the arbi­tra­tion was won through fraud, and has coun­ter­sued in sev­er­al countries. 

Stati’s vic­to­ries so far are a rare exam­ple of Western courts order­ing large-scale freezes of sov­er­eign fund assets, and such moves could alarm the man­agers of oth­er funds in the $7 tril­lion industry. 

Stati’s press office said in a state­ment that he had secured “attach­ments” of oth­er Kazakh assets, includ­ing Kazakhstan’s stake in a Luxembourg-based com­pa­ny, Eurasian Resources Group, and trade receiv­ables due Kazakhstan from some Luxembourg firms. 

ENI.MIMilan Stock Exchange

A Swedish court has also frozen shares in 33 Swedish pub­lic com­pa­nies worth about $100 mil­lion owned by Kazakhstan, Stati said, adding Swedish bailiffs had already begun a fore­clo­sure process on some shares. 

Simon Quijano-Evans, emerg­ing mar­kets strate­gist at Legal & General Investment Management wrote in a note to clients that the saga “real­ly should raise alarm bells amongst all sov­er­eign wealth funds and cen­tral banks glob­al­ly about the assumed ‘immu­ni­ty’ of their assets that are main­ly held in ‘safe-havens’ such as US Treasuries, European Government bonds and the like.” 

Kashagan, oper­at­ed by Eni (ENI.MI), Total (TOTF.PA), Shell (RDSa.L), ExxonMobil (XOM.N), Kazakh state firm KazMunayGaz KMGZ.KZ, China’s CNPC and Japan’s Inpex (1605.T), is Kazakhstan’s biggest oil field. 

Kazakhstan has refused to pay the Swedish arbi­tra­tion award. In October it filed a civ­il rack­e­teer­ing law­suit in the U.S. District Court in Washington, D.C., against the Statis and their two firms. 

Last October, Bank of New York Mellon (BK.N) froze $22.6 bil­lion in assets held by Kazakhstan’s National Fund, anoth­er sov­er­eign wealth fund, fol­low­ing a law­suit by Stati. 

Reporting by Olzhas Auyezov; Additional report­ing by Raushan Nurshayeva in Astana and Karin Strohecker in London; Editing by Andrey Ostroukh

Moldovan busi­ness­man to seek fore­clo­sure of Kazakh oil field stake