KazMunaiGas EP faces for new parent buyout offer

KazMunaiGas Exploration Production (KMG EP), the London-listed subsidiary of Kazakhstan's national oil company, could soon come under more control of its parent despite a failed buyout last year.

National Company Kazmunaigas, the highly indebted state company that owns just shy of two thirds of lossmaking but cash-rich KMG EP, wrote to chairman Christopher Hopkinson on Monday to propose a change to the relationship agreement between the two companies.

According to the Financial Times, the state company set out its plan to gain greater power over the running of its subsidiary as the current agreement prevented it from giving greater support to KMG EP and that "the interests of all shareholders will be best served by a relationship agreement that allows NC to exercise appropriate control".

National Company Kazmunaigas stated that, should the relationship agreement be changed, it would offer to buy the shares of any shareholders that disagreed with the price to be determined later, but at a premium to the past month's average price, which at just over $7 apiece is less than half the $18.5 offer last year that was rejected by the London-based Plc board.

A new relationship agreement would likely face a shareholder vote at the annual meeting in January.

The state company has recently said it plans to float in the next few years.