Friday, 25 March 2011
Kazakhstan tightens control of resources with nationalisation law
The nationalisation provision is already law, having been slipped into a new state property bill which was passed by Kazakhstan's rubberstamp parliament last month. Industry experts have quickly drawn a link between the ruling and the ongoing dispute between the Kazakh government and a Western-led consortium (comprising Eni, BG Group, Chevron and Lukoil) investing in the vast Karachaganak gas condensate field in northwest Kazakhstan.
The Karachaganak contracts were drawn up in the chaotic 1990s, when enterprising oilmen used post-Soviet Kazakhstan's economic upheaval and lack of negotiating knowledge to seal extremely profitable deals. As Astana has gained confidence and expertise, it has pushed back on Western investors and sought a bigger slice of the technical action and the profits. Karachaganak is now the only significant hydrocarbon project in the country without the participation of KazMunaiGas, the state energy firm.
An increasingly acrimonious dispute, featuring several lawsuits has emerged between the Karachaganak consortium and the Kazakh government. In August 2010 it was confirmed that the two sides were close to an agreement which would give KazMunaiGas a stake, and in February and March this year senior officials - including Prime Minister Karim Masimov – said that a deal would be reached this year.
Whether the nationalisation law had this project specifically in mind is unlikely: it seems that the two sides have already gone most of the way towards a solution, and suddenly nationalising the project would be a risky step. However, the lengthy tussle over the Karachaganak field has clearly been a lesson for Astana. The new law provides another tool to ensure that any future investments reap suitable rewards for Kazakhstan.
Sources: Reuters, Silk Road Intelligencer
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