Kazakhstan's first ever online auction for exploration and development licences has proven a letdown for authorities, with the winner of two major blocks failing to pay on time.

At the auction held at the end of December, little-known offshore-registered company Winsple Netherlands committed to paying a total of over $141 million for the Zaburunye and Sarayshyk blocks in the Atyrau region of the country.

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The deadline for payment was 25 January. The block were two of seven tracts offered at the time.

Authorities believe that the two blocks may contain both shallow conventional and deep oil resources.

Winsple participated in the auction via its Kazakh subsidiary, Petro Qazaq, which was incorporated in the city of Almaty shortly after the country’s Energy Ministry announced the auction in October.

Letter sent to Energy Ministry

According to the ministry, it received a letter from Petro Qazaq asking for the payment deadline to be rescheduled to 25 March.

The letter reportedly quoted Covid-19-related challenges in arranging external financing to complete the acquisition of the two licences.

The ministry said that it does not have the authority to postpone the deadline for the payment, and said that it will refer the request to a special commission that will include representatives from other ministries.

A spokesman for the ministry has not responded to an Upstream request for comment on when the commission will meet to discuss the request from Petro Qazaq.

Potential new auction

However, industry observers in the Kazakh capital of Nur-Sultan expect that authorities may have to re-auction both blocks, adding a requirement for bidders to provide bank guarantees or proof of available financial resources.

Media reports in Nur-Sultan have linked Winsple with former Energy Ministry secretary, Kanatbek Safinov, who was appointed to the upper chamber of the Kazakh parliament in August 2019.

Safinov has spent years at various posts in the Kazakh government and state-owned holdings and does not have public affiliation to any oil and gas company or project.

The ministry could potentially elect to award the licences to the company that bid the second-highest price behind Petro Oazaq.

The Energy Ministry has refused to disclose the name of this second bidder, however, it is reportedly controlled by another Kazakh national, Serik Estay.

Estay is a former executive director of a gas pipeline company, with his business interests focused on poultry, according to the Kazakh edition of Forbes magazine.

The Energy Ministry added that it received a total of about $3.5 million from winners for the five other blocks in the Atyrau region that were auctioned last December, and will proceed with issuing those licences.