Chu oil blocks sold at a third of their value, cabinet papers show

The three oil exploration blocks in the lower Chu that the cabinet of Prime Minister Bakyt Orozbekov auctioned last week were valued by the government’s own geologists at $96 million. They were sold for $31 million, according to cabinet papers seen by the Times.

The papers, a valuation memorandum from the Ministry of Natural Resources dated 1 December and the auction protocol of 14 December, were given to the Times by an official who said the public should see them before the next round of sales. They show that two of the three winning bidders were incorporated in Cyprus in November, less than a month before the auction, and that their bids were the only ones received.

The ministry’s memorandum recommends a reserve price for each block. The auction protocol records that no reserve was applied, “on the instruction of the Prime Minister’s office, in view of the urgency of budget receipts”.

A deficit and a deadline

The republic proclaimed on 9 December inherited a budget without the federal transfers that paid a third of it. The cabinet has said the auctions are needed to pay salaries in January. It has announced further sales of antimony exploration rights, the state grain elevators and mobile-telephone spectrum, and a decree on the Chatkal pastures.

The Prime Minister’s office said the auctions were “open, lawful and conducted in the national interest”, and that valuations “are not prices”. It declined to name the owners of the winning companies.

NurGaz, which operates the producing fields next to the blocks, said it did not recognise the sale and would not allow the new owners on its roads.