Kalistani Major History

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KalNaPeCo and MInInd officials fly to Lourenne to discuss increasing production
Reported Deal involves forming joint firm with Lourennais Institutional Investors
Suldanor, Sulari
April 12, 5347


Several decommissioned Oil Platforms could be returned to Service if Deal with Lourenne is sealed

Negotiators from the Ministry of Industry and Trade, as well as high level KalNaPeCo representatives travelled to Eroncourt this week to discuss the future direction of the National Oil Company. The Republic has spent most of the last 150 year attempting to free itself from dependence on fossil fuel extraction and refining, and has only been mostly successful. Kalistan now operates at just 6 percent of its total national capacity, and mainly utilizes petroleum products to fuel military vehicles and ships, and to generate plastics. Most of the currently remaining proven reserves lie in capped deep water wells along the Southern Limit.

Within the last few months, there has been a buzz in Kaliburg and Sulari about a possible deal aimed at restoring the oil industry in Kalistan. In February, representatives from the Foreign Ministry from Lourenne contacted Kalistan's government about the possibility of selling the United Kingdom petroleum. "Initially, we were fairly pessimistic on the proposal," said KalNaPeCo spokesman Jarvis Craft. "The initial proposal called for Kalistan to sell oil directly to Lourenne. But at the moment, KPO only produces about 57,000 barrels of oil a day from wells in Suldanor. This is not enough to create exports without shorting our own companies."

Craft then said that Kalistan made a counter proposal. "We actually offered a plan where Lourennais Institutional Actors (say, for example, Lourenne's Government, or large scale Private investors) purchase a block of stock in the company up the entire total of remaining outstanding stock, or just over 1 billion shares, and then as part owners, recommission the capped infrastructure we have been maintaining but not using to extract oil since about 5200. These platforms would still be operated by KPO whatever that entity looks like after the buy in, but Lourennais tankers would be treated as KPO tankers under the agreement, same as Kalistani Tankers. The new Joint Kalistani-Lourennais firm would then invest in new refinery infrastructure in Lourenne so that oil extracted in the Strait could be refined in Dovani rather than Suldanor and used for the Lourennais Market, saving Lourenne significant sums of money both on transport and also whatever markups there are in the whole sale market- They would essentially be sharing the cost of extraction, and then getting the petroleum at that cost, like Kalistan does."

Craft said this deal makes sense under the long standing economic integration agreement between Kalistan and Lourenne. "It would seem that such a reinvestment makes sense under that agreement. Rather than sell the oil to Lourenne, they would buy into the company, and it would be their oil. All profits realized by Lourennais remain in Lourenne and they share the burden of maintaining the infrastructure they use. Right now, this is KPO's largest cost--wells we can't abandon completely because we aren't trying to create environmental disasters, but for which there is no longer a market in Kalistan."

When discussing whether such a deal would involve a corporate restructuring, Craft said that might depends on how independent both nations wish to remain under this deal. "Kalistan and Kalistani Investors would retain controlling interest in the company, whatever the investment of Lourenne ends up being. But this doesn't mean that some corporate restructuring wouldn't happen. For example, I can imagine bringing KalEnCon under a larger KPO umbrella as a major institutional investor, as well as the Kalistani extraction and refinery operations, while the Lourennais extraction and refinery provisions would be a separate department of the company."

The news of a Lourennais buy-in was met with some skepticism by some of the more ardent left-nationalists among the Socialists. Deputy Brienne Gardner, of Vrassa City said "KPO is proposing selling our national resources to a foreign power. A Great power at that, who might use that oil in a war against Kalistan." Jeoffery Argentum, Deputy from Eveari said "We must stop this deal before it even starts. The paltry figures the Government has preliminarily offered this chamber do not come close to a fair market value for this infrastructure. They are suggesting that Lourenne buy in at the current stock price of 27.35 Rubles a share, for all 1.23 Billion outstanding shares, or 37% of the company. Lourenne, if they go through with this purchase, will be the second largest stockholder in the KALISTANI National Petroleum Company, after the National Government itself, which still owns just over 40% of the company. This massive transfer of the infrastructure of Kalistan is obscene!"

Supporters of a deal shouted down the Nationalists in the National Assembly, with Katie Boggs, Deputy from Sulari leading support for a deal. "The loyal opposition needs to relax," she said on the Floor of the Assembly. "The details are not formalized yet, so we do not even know what Lourenne will offer for the outstanding shares. We only know a friendly nation is interested in going into business with this Republic, and we aren't using that oil, nor do we have any plans to use it. This joint venture will be a boon for Kalistan as profits from petroleum sales by Lourenne will also benefit Kalistan. Further, it will reduce the market for foreign oil in the Anantonese Ocean basin: A deal like this may allow Lourenne to completely abandon purchase contracts with other major oil producing nations that do not benefit Seleyans or Dovanians at all. And last, the fact that Kalistani waters are the source of Lourennais Oil will help tie our two countries even closer together than they are, a fact which militates AGAINST conflict over those waters, not promotes it." In the end, Socialist Deputies supported the proposal to send negotiators to Lourenne by a vote of 53-26, with most of the holdouts being from Vrassa and Ananto. The measure passed on voice vote, fast tracking the resolution through the Assembly.

Negotiators are now in Lourenne to discuss the terms of an agreement, if there is one. The team, consisting of the deputy minister for industry and Trade overseeing KALNAPECO Operations, Chad Smith, as well as the CEO, CFO and COO of KALNAPECO, along with their staff, has the power to negotiate on behalf of the Republic, but any decision they conclude requires ratification in the National Assembly before it goes into effect. This feature was a concession to nationalists opponents of any deal, and ended up flipping perhaps 2 votes.

The Government has signaled that they will support the deal when it is brought back to the Assembly.