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KAZAKSTAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 29,749 24,205 22,400 60
         
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 371 - (26/01/12)

The Kazakh government is taking steps to wrest more control of its lucrative oil fields, but bloodshed over worker's rights and flawed elections could challenge the president's power.

On 14 December, Kazakhstan worked out a deal to acquire 10 per cent of the Karachaganak oil and gas field, the last major field in Kazakhstan that did not have any Kazakh shareholders. Oil and Gas Minister Sauat Mynbaev and the Karachaganak Petroleum Operating (KPO) consortium agreed that Kazakhstan would gain a 5 per cent stake in the project and buy another 5 per cent for $1 billion, which it will borrow from other consortium partners.

The KPO consortium is led by Britain's BG group and Italy's Eni, each with 32.5 percent of the shares, Chevron with 20 percent, and LUKoil with 15 percent.

Under the new agreement, which comes into force on June 30, BG and Eni will lower their shares to 29.25 per cent, Chevron to 18 percent, and LUKoil to 13.5 per cent with 10 per cent going to KazMunaiGaz, the state-owned Kazakh energy company.

The deal is in keeping with Kazakhstan's drive to operate its own energy sector without as much need for Western expertise and the inevitable profit-sharing that comes with it. The government is pouring millions into science education in establishments such as Nazarbaev University, which opened in 2010 and aims to end the practice of sending the country's best and brightest abroad to study. But until a new generation of capable businessmen and industry experts is born, the government is making sure that there are no major projects operating within Kazakh territory that it does not have a say in running.

But two days after Kazakhstan edged closer to greater control over its oil, discontent over pay and benefits for workers in the sector escalated into bloodshed, sending the nation into a frenzy that could challenge President Nursultan Nazarbaev's legacy.

On 16 December, 16 people were killed and another 100 injured when police and striking oil workers clashed in the country's western Manghystau region. The violence erupted in the town of Zhanaozen when police tried to clear the main square to erect yurts as part of celebrations to mark the anniversary of Kazakh independence. The square had been occupied for more than six months by hundreds of disgruntled workers at an oil facility controlled by state-owned KazMunaiGaz and, when told to move on, the strikers threw rocks at police, who retaliated with live gun fire.

Foreign workers at Kazakhstan's oil fields take home much higher salaries than local staff and Kazakh KazMunaiGaz employees had been striking to demand a pay increase, equal rights with foreign workers, and the lifting of restrictions on independent labour unions in the region.

Nazarbaev ultimately directs energy policy and, searching for scapegoats, fired his powerful son-in-law, Timur Kulibaev, as the chairman of Samruk-Kazyna, which controls almost all of Kazakhstan's major businesses, including oil and gas firms. He also fired the governor of Manghystau Oblast and the KazMunaiGaz board director. The Prosecutor-General's Office has launched a criminal investigation into actions taken by police at Zhanaozen and reportedly invited the UN to conduct its own enquiry, but the incident has received little press abroad. With major interests in the oil industry, the West has not condemned the tragedy.

The violence on December 16 put an abrupt end to the oil worker's protest without resolving their grievances. A state of emergency was imposed on the region, meaning that a curfew is in place and every effort was made by the authorities to play down the incident as elections to Kazakhstan's lower house of Parliament were scheduled to be held on 15 January.

The vote went ahead and Nazarbaev's Nur Otan party won its expected landslide victory. Two other parties won seven-eight seats each to the lower house – Ak Zhol and the Communist People’s Party of Kazakhstan (KNPK) – but both are supportive of Nazarbaev and his policies, making it a suspect result. Observers from the Organisation for Security and Cooperation in Europe said: “Notwithstanding the government's stated ambition to strengthen Kazakhstan’s democratic processes and conduct elections in line with international standards, yesterday's early parliamentary vote still did not meet fundamental principles of democratic elections.”

The US State Department echoed that line and issued a statement urging the Kazakh government to improve the transparency of elections, and to follow through on strengthening the conditions necessary for genuine political pluralism. But without genuine pressure from the West to improve human rights and democratic processes in Kazakhstan, Nazarbaev will continue to follow his own path.

That is where trouble may lie in the future. For the President to achieve his goal of taking greater control over the country's oilfields he will need to address the problems that his Kazakh workforce face. For now, he needs Western oil companies to keep the industry going.

 

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