TURMOIL AT KMG - FIRST VP IDENOV MAY BE OUT THE

C O N F I D E N T I A L ASTANA 000754

SIPDIS

SIPDIS

STATE FOR SCA/CEN. EEB
DOE FOR EKIMOFF
COMMERCE FOR HUEPER

E.O. 12958: DECL: 04/15/2018
TAGS: PGOV PREL EPET KZ
SUBJECT: TURMOIL AT KMG - FIRST VP IDENOV MAY BE OUT THE
DOOR


Classified By: AMBASSADOR ORDWAY FOR REASONS 1.4(B) AND (D)


1. (C) KazMunaiGas (KMG) First Vice President Maksat Idenov
called the Ambassador from Dubai on April 14 and told him
that he is on the verge of leaving KMG. According to Idenov,
KMG President Uzakbay Karabalin met earlier that day with
President Nazarbayev to complain about Idenov's activities at
KMG. Karabalin criticized Idenov's efforts to restructure
KMG, saying that they were unacceptable, demoralizing, and
not in accordance with "Kazakh traditions and culture".
Karabalin also blamed Idenov for problems with the Kashagan
Memorandum of Understanding. Idenov said that Karabalin had
ordered him to write a letter admitting his mistakes.


2. (C) Idenov noted that in reforming KMG he was acting at
the instructions of Prime Minister Masimov. (Note:
Karabalin's attack on Idenov came as Masimov was returning
from China). He told the Ambassador that Karabalin and Askar
Balzhanov, Director General of KMG Exploration and
Production, had planted a story in the media accusing Idenov
of corruption. After indicating earlier in their
conversation that he was considering resigning, Idenov
concluded by saying "I am going to resign anyway." (Note:
Idenov later called Coordinator for Eurasian Energy Policy
Steve Mann and told him that he would return to Astana on
Wednesday to submit his resignation. He said that Samruk
Chairman Sir Richard Evans asked him not to resign. Idenov
also discussed at further length Karabalin's motivations,
saying that he is trying to get his own people in to the new
Kashagan operational structure in order to gain access to the
procurement and supply chain. Karabalin is also seeking to
chair the Kashagan management committee, which Idenov
currently chairs.)


3. (U) On April 15, one media source, RusEnergy, reported
that Idenov had already resigned, citing a source close to
Agip KCO. According to the source, Idenov wrote in his
resignation letter that he is leaving KMG because of
disagreements with the GOK over Kashagan, in particular the
heavy demands placed on the project's operator.


4. (C) Comment: The cocksure Idenov may rub some the wrong
way but he is also a bright light in Kazakhstan's energy
sector. His resignation would be a significant loss for KMG
and a sign that entrenched interests are hesitant to accept
his serious efforts to reform the company. Only last week, a
representative from ExxonMobil told Poloff that she had
recently attended a presentation by Idenov on restructuring
and that she was extremely impressed with Idenov's vision for
KMG. End Comment
ORDWAY