Attempts Already Being Made To Embitter Population Against US And European Oil Investors In Western Kazakhstan – Analysis

Western Kazakhstan which is the backbone of the Kazakh country’s economy and the basis of the well-being of its population has been and is heavily dependent on Russia in terms of its economy and livelihood opportunities for its inhabitants.

Yes, it is also true that the level of economic prosperity not only in that region, but throughout the nation, is directly related to the activities of Western energy majors which are developing the oil and gas fields of Kazakhstan. But their interest squarely rests on the sale of extracted raw materials on the open market, and the transit routes to get there lie mainly through Russia. 

This means that those Western energy majors too are highly dependent on the will of Moscow in their exports. Kazakhstani oil producers sit in a similar position. For example, it has been said for months that Kazakhstan’s company Kaztransoil would deliver 300,000 tons of oil to Germany via the Druzhba pipeline, the world’s longest oil pipeline running from Russia to various points in Eastern and Central Europe.

On February 2, “Russia’s Transneft mentioned that oil shipments to Germany from Kazakhstan via the Druzhba pipeline, exempt from recent Western sanctions, are expected to begin in February 2023, RIA Novosti reported. The firm said it had agreed upon a contract to supply 20,000 tons of Kazakh oil to Germany in February”. We are now more than two weeks into February.

Here is the latest news regarding the delivery of the Kazakhstan oil to Germany: “A test batch of Kazakh oil that was meant to be delivered by pipeline to a refinery in eastern Germany still hasn’t arrived, highlighting the challenges the plant near Berlin could face in procuring crude to make fuels for the region. Eni SpA, one of three shareholders of the PCK refinery, won a tender for the shipment of 20,000 tons of crude, according to people familiar with the matter, who asked not to be identified because the matter is private”.

This story is a clear example of what kind of forms the dependence of Western energy majors, operating in Kazakhstan, on the will of Moscow can take. Even more dependent on Russia is the population in Western Kazakhstan. Most of the water that people there consumes, is supplied from the Volga River and the Ural River which are mainly managed and controlled by the Russian side. In 2021, drought caused massive livestock losses among the pastoralists in Mangystau and Atyrau provinces, which are the largest oil-producing and the only two provinces-donars of Kazakhstan. At the time, the press wrote: “[Vainly] seeking water, the livestock die”. Western Kazakhstan depends on Russia and the Volga and Ural waters to the same extent as the Crimea depends on Ukraine and the Dnieper water.      

The bulk of oil production in the Kazakh republic has been and is being made by TCO (700,000 b/d), NKOK (400,000 b/d) and KPO (226,000 b/d), which are controlled by Western corporations. In March last year, Kazakhstan was producing 1.7 billion barrels per day. It turns out that three main oil fields, Tengiz, Karachaganak, and Kashagan in the Caspian Sea, that are being operated by the American and West European oil and gas giants, account for almost 80% of Kazakhstan’s total crude production. It is therefore hardly surprising that over 70% of Kazakhstan’s oil exports go to the European Union. In other words, Kazakhstan’s oil and gas industry as a whole is mainly working for the EU economy.

Until recently, Moscow did not attach much importance to such division of roles between the Western side and its key military and political ally on the Eurasian continent, Kazakhstan. This was because the Russian Federation itself was then selling large amounts of oil and gas to the West and did not feel bypassed. Besides, over 90% of the Kazakh energy exports went through Russia via the Caspian Pipeline Consortium (53.1 Mt out of 67.6 Mt) and the Atyrau – Samara pipeline (11 Mt) in 2021.

In relation to the above two issues (energy export routes from Western Kazakhstan to Europe through Russia and water supply from Russia to Western Kazakhstan), the will of Moscow matters a lot. Until recently, it seemed to show its good will in that connection. True, even then there was no particular benefit from this.

Now the time has come when things are rapidly being changed. This author wrote recently that “it can be assumed that in the light of that situation, Moscow may be tempted to contribute to the emergence of ‘something’ in Western Kazakhstan”. This apparently is already happening.

Eurasia.expert, in an article entitled “Economist explained how the West is destabilizing the economy of Kazakhstan”, quoted Vasily Koltashov, a well-known Russian economist and political expert, as saying: “Due to its economy, critical industries, including mining, having been got under foreign control, Kazakhstan experienced a wave of strikes in the midst of a rise in world oil prices in 2021. The revenues of the oil companies were growing. They were earning more than ever before, while the oil workers were constantly on strike because they were not being paid, they were being fired. All of this was coming from foreign companies. Up there, this type of business is not bound by any social obligations. This predetermined the protests of December 2021 and then the unrest of January 2022, which was actually a civil war”.

If you believe Vasily Koltashov, it turns out that all the blame for the Kazakhstani unrest of January 2022 should fall on foreign [Western] companies. Yet the facts on the ground do not bear this out. But who is going to sort this situation out?! Foreign [Western] oil companies have been branded as greedy exploiters of the Kazakhstani people. Probably this is only the beginning. It looks like Russia has just begun a campaign to discredit Western oil majors operating in Western Kazakhstan before the Kazakh population. The consequences could be very serious. Especially considering the fact that Kazakhstan’s information space is largely controlled by the Russian media.

Here is what the influential Russian internet edition Lenta.ru told its readers in this regard: “Kazakhstan absolutely does not control more than half of the television network and almost the entire book market, not to mention the Internet. The information environment [in the Central Asian country] now is quite friendly to the authorities of Kazakhstan solely thanks to the support of Moscow, which protects the republican elites”. Anyway, it is clear that attempts are already being made to embitter the Kazakh population against US and European oil investors in Western Kazakhstan.

Here is what Zhandarbek Кakishev, a member of the Republic of Kazakhstan Parliament Senate in 2002-2008, said about this issue: “If this continues, then a bleak prospect awaits us. In the future, it is quite possible that young people who are unemployed or underpaid, even when they have a job, may tomorrow rise up and try to seize the property of the capital’s oligarchs by force. And the day after tomorrow they can go against foreign companies”.

Akhas Tazhutov, a political analyst