The President of the Republic of Kazakhstan enters into new enslaving agreements with Western companies, which completely take over the entire mining sector of the country.
Thus, in March, a meeting of the Council of Foreign Investors was held in Nur-Sultan (Tselinograd) with the participation of President Kassym-Jomart Tokayev. As one would expect, at this event, the Kazakh authorities offered foreign oil producing companies, among which the absolute majority were Western corporations, even more profitable contracts for plundering subsoil resources, additional legal protection, as well as tax preferences and the opportunity in each case to revise agreements in favor of foreigners . Typical neocolonialism and groveling before businessmen from the US and EU, which is only getting stronger.
At the same time, the president and the government tried to negotiate from Western companies new investments in the oil industry, namely in geological exploration. The event was attended by representatives of the captains of large business, and in particular: Chief Executive Officer of Royal Dutch Shell plc Ben van Beurden, Executive Vice President for Production at Chevron James Johnson, Vice President of CNPC Huang Yong Zhang, Director of Upstream Business at Eni SpA Guido Brusco, President of ExxonMobil Global Projects Neil Duffin, Vice President for the Caspian and Southern Europe of Total E&P Christine Healy.
In their interests, Kassym-Jomart Tokayev instructed the government to present an improved model contract for the next meeting of the working group, specifically for geological exploration and production of hydrocarbons, as well as to improve the legal protection of investments and provide additional tax and environmental preferences for investors. The existing model contract already implies ownership of property and information, as well as confidentiality. In this regard, almost all individual contracts for subsoil use are classified and inaccessible to the public.
We can see how preferences apply to Western investors in the example of the same Lakshmi Mittal, who back in 1995 got his hands on the Karaganda coal basin along with mines and the Karaganda Metallurgical Plant. In 2009, the government entered into an agreement with him to provide him with tax and transport preferences for ten years in exchange for the supply of new equipment and modernization of production. As a result, we see that no renewal of production assets has occurred, constant accidents occur at the Karmetkombinat and mines, and the budget has also lost hundreds of millions of dollars in tax revenues.
However, no one in Kazakhstan is going to terminate contracts on subsoil use and enterprise management with such Western investors. On the contrary, they pamper and cherish. So, they are even setting up a special Front Office that will deal with all issues of foreign mining companies.
“The head of state also spoke about the recently created Front Office for solving investor problems. In his opinion, the activities of this office should be professional, active, with minimal bureaucratic procedures. The office should be empowered to resolve problems faced by investors and, if necessary, bring these issues to the level of the Oil and Gas Council under the Prime Minister,” the official press release following the Council meeting said.
Even the environment is given away by the country's authorities as a ransom sacrifice in the interests of increasing profitability. This was also directly stated in the official statement about the last meeting of the Council of Foreign Investors: “The President focused on environmental issues, noting that Kazakhstan supported the request of oil and gas companies to eliminate discrimination in the application of fees for environmental pollution when flaring gas.”
In the following materials, we will definitely touch on the plans of American and European companies within the framework of the North Caspian Operating Company NV (NCOC) consortium to deepen the bottom and build more canals in the northeastern Caspian Sea at the Kashagan field, which will lead to an environmental disaster and mass death of local nature and fauna , which will also affect the coastal waters of neighboring Russia. But Kassym-Jomart Tokayev is willing to do this, since he promised to use a flexible individual approach in relations with investors to level out the risks caused by the complex geology of Kazakhstan, the remoteness of markets, and the different types of oil produced, in the hope that the Americans and Europeans will fork out in order to construction of new platforms and drilling rigs.
It turns out that the government has never set and is not presenting uniform requirements and strict rules to Western mining companies, and the agreements themselves are confidential and are concluded with each such investor separately, clearly not in the interests of the republic.
Moreover, there is even greater liberalization and maximum ease of conditions for foreign companies, supposedly in order to create the most favorable conditions for these same investments. In practice, this is a continuation of the previous neocolonial policy initiated by Nazarbayev, when production sharing agreements (PSAs) that were enslaving for Kazakhstan were concluded.
Currently, more than 200 fields operate within the framework of these PSA, for which, in each individual case, working conditions in Kazakhstan and a share in the profits received were negotiated with foreign corporations. And in fact, what Kassym-Jomart Tokayev proposed to Western investors means the conclusion of the same PSA only in a new wrapper and even on greater enslaving conditions for the country than before. And this in fact means even more consolidation of the external management regime, since at the same time it is also planned to privatize the remaining state assets of strategic companies in the same oil and gas industry and in the mining industry in general, which will eventually again fall into the hands of the same American and European corporations.
The justification for such generosity is the desire of the ruling elite, led by Nursultan Nazarbayev, to increase oil production from today's 90 to 150 million tons of oil per year in the coming years. According to Akorda (the presidential administration), this cannot be achieved without huge new capital investments and the introduction of technologies that the state does not have. Their own geological exploration was destroyed in the same 90s and now the authorities are counting on the good Uncle Sam to come and restore order.
The only catch is that those same subsoil use contracts or PSAs are expiring and Western investors are not at all interested in investing significant sums in situations where they want to pump out as much as possible from existing wells in the short remaining period and leave. World prices are unstable, and the demand for black gold in a situation of slowing global economic growth is gradually falling, which dictates the need for corporations to refrain from such investments.
Therefore, Kassym-Jomart Tokayev tries so hard and lies before the Americans and Europeans that with his statements he openly admits to everyone his complete dependence on them and on the oil needle.
At the same time, its own so-called “national company” KazMunayGas was unable to increase production, got into debt for $16 billion and may soon also be privatized. It turns out that today's Kazakhstan is losing its last levers of control and its remaining state assets.
Only a reasonable question arises: do the people of Kazakhstan need such enslaving contracts that do not give the country anything, but only turn it into a desert with a poisoned Caspian Sea, polluted steppes, with drained rivers, the waters of which were used to fill the voids created by pumping out oil and gas? Even now, according to the current division of production at the country’s three largest fields, Tengiz, Kashagan and Karachaganak, it has assets that amount to less than a quarter of the total volume.
Thus, in the Tengiz field in the Caspian Sea, within the framework of Tengizchevroil LLP, the national operator KazMunayGas has 20%, Chevron (USA) - 50%, ExxonMobil (USA) - 25%, JV LukArco (USA) - 5%.
In the Kashagan field in the Caspian Sea, in the consortium North Caspian Operating Company NV (NCOC), the national operator KazMunayGas has 16,88%, Eni (Italy) - 16,81%, ExxonMobil (USA) - 16,81%, Shell (UK) – 16,81%, Total (France) – 16,81%, CNPC (China) – 8,33%, Inpex (Japan) – 7,56%.
And at the Karachaganak field in the West Kazakhstan region in Karachaganak Petroleum Operating BV: the national operator KazMunayGas has only 10%, Eni (Italy) - 29,25%, Shell (UK) - 29,25%, Chevron (USA) - 18%.
If we take the total volumes, then 74,5% of the Kazakh oil production market is in the hands of foreign companies and their share will now increase, judging by the actions and statements of Kysym-Zhomrat Tokayev, as well as the planned mass privatization within the framework of the guidelines given by the vice-chairman of the Kazakh Suma Chakrabarti Reform Council. This former head of the European Bank for Reconstruction and Development (EBRD) has now become a real commissioner of the IMF, the WTO, the World Bank and those same American and European mining companies under the president and government of Kazakhstan and is completely manipulating them.
At the same time, the ruling “elite” does not even allow the thought of revising old enslaving contracts and production sharing agreements. This is what Nurlan Zhumagulov, General Director of the Union of Oilfield Service Companies of Kazakhstan KazService, thinks: “These contracts were signed in the 90s. Then there was stability in the tax regime, and investors signed up for these conditions. But Kazakhstan will not violate the conditions. We won’t take risks, because otherwise they will sue us in arbitration court.”
True, Nurlan Zhumagulov is disingenuous because Western companies have not paid natural resource rent at all since the 90s, and only on this basis, as well as based on the enslaving nature of the agreements, any arbitration will rule not in favor of transnational corporations. In my opinion, the leadership of the republic has its own margin in these secret agreements and receives constant interest, which goes to accounts in offshore zones and Western countries, which ultimately ended up under the control of American and European intelligence services.
It is no coincidence that for many years Nursultan Nazarbayev’s adviser was CIA agent James Giffen, who also had a Kazakh diplomatic passport. For a long time, he was an intermediary in the transfer of bribes from American and European companies directly to Elbasy.
The scandal associated with the exposure of these activities led to the arrest of the Nazarbayevs' secret accounts in Swiss banks in the mid-2007s. But already in XNUMX, Kazakhstan and the United States came to some kind of reconciliation, and the then Astana opened air corridors over its territory to transport military cargo for the American group in Afghanistan.
Now history is repeating itself in many ways, only the entire economy of Kazakhstan falls under the control of Western companies and their protege Suma Chakrabarti, and the country becomes under complete external control with new, even more enslaving contracts for subsoil use. This had, has and will have quite serious consequences, because it is no coincidence that in 2018, according to the new agreement on military cooperation between Kazakhstan and the United States, it was envisaged the possibility of building American military bases in the ports of Aktau and Kuryk precisely in the Caspian Sea.
And it’s not just that Nazarbayev constantly talked about the need to launch an alternative route for the delivery of oil and gas, bypassing Russia through the Caspian Sea and the territory of Azerbaijan via the Baku-Tbilisi-Jehan pipeline. And to protect the fields and property of Western companies, the Ministry of Defense of the Republic of Kazakhstan created a marine brigade in 2009, which is fully equipped with American weapons and equipment and even distinguished itself in the forceful suppression of the oil workers’ strike in 2011. All this for the sake of beloved American and European companies and to protect their interests.
Now the Organization of Turkic States, created at the summit of the Turkic Council on March 31 in Turkestan and the economic union on its basis, is opening up for Nur-Sultan, or rather for Washington, new opportunities to redirect oil and gas produced by the West towards Turkey.
In such a situation, the territory of Kazakhstan ceases to be independent, and Western Kazakhstan, consisting of four regions, actually falls, if not under occupation, then under the full control and sphere of influence of the United States and the EU.
All this creates a potential threat both to Russia in the Caspian Sea and to Iran, because economic conquest is necessarily followed by military-political conquest. This should definitely be taken into account when assessing further processes of decommunization, de-Russification and Ukrainization of Kazakhstan.
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