KAZAKHSTAN - Offshore Offering.

In July 2002 KMG launched a campaign to auction up to 120 offshore blocks in the Kazakh sector of the Caspian; but until now little progress has been made. KMG is to play a dual role in the action: representing the state in the new ventures and as such it will negotiate the PSAs and acting as a commercial entity, taking 51% in each venture and later gradually selling portions to foreign companies to raise capital as exploration activities move ahead.

Energy Minister Shkolnik has acknowledged that there is a conflict of interest in having KMG represent the state as well as acting as a commercial entity. He has said the government will watch closely what KMG will be doing on both fronts and if there is a need it "will correct the situation".