Kazakhstan cracks down on religious groups as authorities tackle militants in troubled west

A nascent militant movement in Kazakhstan's oil-producing west seems to be growing, if recent events and the government reaction is any indication.

On 29th August police in the western region of Atyrau shot dead an alleged militant and rounded up 18 others suspected of plotting “violent acts both on the territory of Atyrau Region and in neighbouring regions of Kazakhstan”. The shoot-out occurred in Atyrau city; eyewitnesses reported hearing gunfire and explosions after security forces cordoned off a district, suggesting a fairly intensive clash.

The break-up of the 'terror cell' is the latest in a string of violent incidents which has surprised analysts and the Kazakh government. Unlike its southern neighbours, Kazakhstan has been largely spared any Islamist militancy and is widely regarded as the region's most stable and harmonious state.

Over the past six months, however, the country has seen a spate of bombings and shoot-outs. Although mainly focused in the western areas of Aktobe and Atyrau, a car bomber struck outside the security services headquarters in the capital Astana on 24th May. Kazakhstan's first-ever suicide bombing came just a week before when a suicide bomber blew himself up in Aktobe, again at the offices of the National Security Committee.

In June, authorities announced that they had disbanded a militant cell in Almaty which was planning to assassinate local officials. In July, a series of gunfights in the west between 'armed groups' and the police left at least nine militants and five officers dead.

The violence so far appears to be sporadic and spontaneous, indicating that the militants are fairly disorganised and inexperienced. But the very presence of such groups is concerning for the Kazakh government, which has only recently admitted that the attackers are probably motivated by religious extremism. Previously they had blamed the mafia or given no real explanation.

The country's west is poor by Kazakhstan's standards and widely considered to be more religiously conservative than other areas. Little of Kazakhstan's oil wealth has reached ordinary people in the area, raising concerns that social and economic frustration will lead young Kazakhs to follow radical Islam.

Alarmed by the prospect, the authorities are now seeking to monitor Muslim groups more closely. President Nursultan Nazarbaev announced on 1st September that tighter controls on religious groups were necessary. Speaking to parliament, the longstanding ruler warned that “Whoever wants to, comes here, opens a mosque and what they're doing in these mosques no one knows, no one checks, no one registers them.” All religious groups will now have to re-register with the government.

So far, international energy companies – most of which are operating in the west - have not been too concerned, as the violence has not been directed at foreign interests. However the mysterious nature of the attacks makes it difficult to identify the scale of the danger or the militants' aims. Attacks against foreigners are certainly possible if the Kazakh government fails to contain the threat.

Sources: Radio Free Europe / Radio Liberty, Eurasianet, Reuters

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Kazakhstan: Profits double for KMG

Last year was an exceptional one for NC Kazmunaigas, which saw net profits more than double year on year to $2.73 billion, compared to $1.29 billion in 2009. No reasons were given for the huge rise, though the rise in global oil prices was clearly a key factor.

KMG, which owns a 62 per cent stake in its London listed affiliate KMG EP, also benefited from a rise in production from the Chevron-led Tengizchevroil joint venture, in which it holds a 20 per cent interest.

KMG, which has a very good credit rating and an unblemished repayment record, needs to raise billions of dollars in extra financing over the next four to five years to meet its cash calls for the Kashagan project, in which it holds an 18.6 per cent interest. The company is in the market for a $1 billion-plus loan that will refinance some of its existing debt.

For more news and expert analysis about the Caspian region, please see Caspian Focus.

© 2011 Menas Associates

Kazakhstan tightens control of resources with nationalisation law

Claiming the need for predictability and clarity, on 24th March the government of Kazakhstan announced that its ability to nationalise private property was now enshrined in law. Seeking to calm the concerns of foreign investors, already concerned about growing resource nationalism in the energy sector, Economy Minister Zhanar Aitzhanova insisted that nationalisation would occur only as a last resort, and that market-based compensation would be paid out. In a choice of phrase that underlined the importance of gas and oil to Kazakhstan's economy, Aitzhanova said that nationalisation would only occur in the case of a “ threat to national security".

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

For more news and expert analysis about the Caspian region, please see Caspian Focus.

Kazakhstan plans to carry on with its nuclear programme

Kazakhstan's Vice Minister of Industry and New Technology Duisenbai Turganov told a conference in Astana that the government believes that the “construction of a nuclear power plant should take place” irrespective of the ongoing crisis in Japan.

Turganov added: “We hold the world's second-largest uranium reserves, and we are in front of everyone in terms of production. Allah himself has commanded us to engage in this industry." He said the events in Japan “have given rise to radiophobia," and confirmed Khazakhstan's plans to build a nuclear power plant, but noted: "It goes without saying that there must be a thorough selection of projects and significant attention must be paid to security."

Kazakhstan signed an agreement with three Japanese companies – Toshiba, Marubeni and Japco – last September to build a new plant. The programme is still in its early stages, and the location of the plant and other details are yet to be announced. The country holds more than 15 per cent of global uranium reserves; Australia is the only other country to hold more uranium in the ground.

Sources: The Daily Telegraph, Reuters, Bloomberg

For more news and expert analysis about the Caspian region, please see Caspian Focus.