Kazakhstan's oil industry

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Kazakhstan, which is the size of Western Europe, has "the largest oil and gas reserves in the Caspian Sea basin, and is producing 1.5 million barrels of oil a day today. It is projected to produce 2.5-3.5 million barrels of oil a day by 2015, surpassing today's output by Qatar or Iraq," Ariel Cohen wrote September 27, 2006, in the Washington Times.

"Kazakhstan contains significant quantities of gas and oil in particular. Kazakhstan sits near the northeast portion of the Caspian Sea and claims most of the Sea's biggest known oil fields. Kazakhstan's combined onshore and offshore proven hydrocarbon reserves have been estimated between 9 and 17.6 billion barrels (comparable to OPEC members Algeria on the low end and Qatar on the high end)."—MBendi.

Attraction: "huge oil reserves"

Kazakhstan—and its oil industry—have "grown in importance because of its huge oil reserves," the Associated Press reported September 25, 2006. "With the other four former Soviet Central Asian nations being more authoritarian, too unstable, too poor, or a combination of all three, Kazakhstan emerges as the West's logical ally in the strategic energy-rich region north of Afghanistan and Iran."

President George W. Bush is "pursuing closer ties to oil-rich Kazakhstan despite what human rights observers have said is a disturbing backslide toward autocracy in the former Soviet republic," the AP said.

Oil Investment Climate

"Kazakhstan's investment climate and production sharing agreements (PSAs) with Western companies are much more liberal than that of neighboring Russia, which cracked down on the Yukos oil company in 2003, and now is severely limiting the Sakhalin Island energy investment projects by Exxon, Shell and others," Cohen wrote.

"Kazakhstan is light years ahead of the neighboring Uzbekistan and Turkmenistan in terms of economic reform and growth. It boasts a thriving non-energy sector, including small- and medium-size enterprises, and has a great potential in agriculture.

"It has grown consistently at 9 percent a year since 2000, and has quickly reached a GDP per capita of $3,000, with further growth projected. The U.S.-Kazakhstan trade volume doubled since 2004," Cohen wrote.

Bush administration, Kazakhstan's oil and the "Wayback Machine"

In 1994, when Vice President Dick Cheney was a member of Kazakhstan's Oil Advisory Board, he "helped broker a deal between Kazakhstan and Chevron, a company where Secretary [of State] Condoleezza Rice served on the Board," Mark Ames wrote June 1, 2006, in The eXile.

"Today, US oil companies have large stakes in Kazakhstan's oil fields. But most of the oil being pumped goes through Transneft lines out of the Russian port in Novorossiisk. America has been battling with Russia to get Kazakhstan to pump its oil through an alternate pipeline, the Baku-Ceyhan pipeline, that goes through Azerbaijan, Georgia and Turkey," Ames wrote.

In 1998, "with the heads of Chevron Corp. and Texaco Inc., Cheney [was] one of just a dozen members of Kazakhstan's Oil Advisory Board, created by the country's president as a sounding board." [1] On June 13, 1998, in Amarillo, Texas, when he was CEO of Halliburton, "Cheney spoke at the annual meeting of an influential group of oilmen, the Panhandle Producers and Royalty Owners Association," Harkavy posted in 2004 on The Village Voice Blog Bushbeat.

"Greg Rohloff, a business writer for the Amarillo Globe-News, covered the speech and wrote at the time that 'the current hot spots for the major oil companies are the oil reserves in the Caspian Sea region.' Rohloff's story continued:

"The potential for this region turning as volatile as the Persian Gulf does not concern Cheney.
"'You've got to go where the oil is,' he said. 'I don't worry about it a lot.'"


2006: Via the Atalaw Pass to China

The first phase of a 3,000-kilometer cross-border pipeline from Kazakhstan to China has been completed via the Atalaw Pass, which is located in Northwest China's Xinjiang Uygur Autonomous Region. The pipeline "will transmit 10 million tons of oil a year, a figure that will double when the entire project is completed in 2011", then capable of producing "5.5 million tons of refined oil a year," Zhu Minjie, "a customs officer at the Alataw Pass told Xinhua" in September 2006. [2]

"The 960-kilometer pipeline was jointly developed by the China National Petroleum Corporation (CNPC) and the Kazakh state energy company, Kazmunaigaz [was] designed to transmit 20 million tons of oil a year, 15% of China's total crude oil imports for 2005."

"Experts say the move will help enhance China's oil supply and provide an ideal outlet for Kazakhstan's oil exports," Asia Times reported. "The new oil shipping route will link Chinese consumers with the oil fields of the Caspian Sea, as well as alleviate China's excessive reliance on the Strait of Malacca, a traditional route for 80% of China's imported oil."

"In 2004, commercial and security ties between Kazakhstan and China were strengthened when Beijing signed a deal with Astana to build a pipeline from the Caspian Sea to western China," Gundzik wrote in the June 9, 2005, Asia Times.

"The pipeline deal with Kazakhstan prompted Beijing to pledge increased military and technical assistance to Kyrgyzstan, through which this pipeline passes. Despite its small size and lack of natural resources, the geostrategic importance of Kyrgyzstan, which hosts military bases for both Russia and the US, is enormous," Gunkzik wrote.

1999: To Europe, Oil to the US

"The oil of the Middle East, as well as that of the former Soviet Union (the Caucases, the Caspian Sea and Kazakhstan)! Three pipelines are competing to bring oil from the former Soviet Union to Europe. Around these pipelines wars are breaking out everywhere—Chechenya, Georgia, Nagorny-Karabakh, Kurdistan," Michel Collon wrote in March 1999, in Solidaire (translation).

"Controlling such a pipeline brings in fees for 'rights of passage' amounting to $20 million a DAY! Above all it is the US who wishes to control this black gold by depriving their European rivals of it. This is why they have just got themselves 'invited' to install a military base in Azerbaijan," Collon wrote.

Settling U.S. Bribery Investigations

In April 2007 Baker Hughes announced that it had paid $44.1 million to settle investigations by the United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) into the company's operations in Angola, Kazakhstan and Nigeria. [1] In its statement the company announced that:

  • a company subsidiary "pled guilty to violations of the Foreign Corrupt Practices Act (FCPA) as a result of payments made between 2001 and 2003 to a commercial agent retained in 2000 in connection with a project in Kazakhstan";
  • "The company agreed with the SEC to the entry of a Consent Judgment charging violations of the anti-bribery provisions of the FCPA arising from the engagement of agents to obtain contracts in Kazakhstan. The Consent Judgment also charges violations of the books-and-records and internal-controls provisions, and the terms of a September 12, 2001 cease-and-desist order, arising from these and other activities in Kazakhstan, Angola, Nigeria, Indonesia, Russia, and Uzbekistan." [2]

Radio Free Europe reported that a quarter of the fine related to Baker Hughes' activities "developing the huge Karachaganak natural-gas field in northern Kazakhstan" and the the court was told the company had "paid $4.1 million in bribes from 2001-03 to an intermediary, who in turn transferred money to a high-level executive of KazakhOil, the state oil company at the time. Additionally, the complaint says, in the period of 1998-99, kickbacks of more than $1 million were paid to a KazTransOil executive." [3]

Oil Companies in Kazakhstan



  • Baker Hughes (an oil services company)
  • Chevron [3]
  • Greenoak (Norway)
  • Eni SPA (Italy)
  • Exxon Mobil
  • INPEX (Japan)
  • Petrokazakhstan (Canadian registry; owned by China National Petroleum Corporation (CNPC) via its wholly-owned subsidiary China National Petroleum Corporation International (CNPCI))
  • ConocoPhillips
  • Petrom (Romania; majority owned by Austria's OMV)
  • Royal Dutch Shell
  • Tasbulat (subsidiary of Petrom)
  • Too Kom Munai (subsidiary of Petrom)
  • Total SA (France)

Related SourceWatch Resources

External links





  1. "Baker Hughes Settles Previously Disclosed FCPA Investigations", Media Release, April 26, 2007.
  2. "Baker Hughes Settles Previously Disclosed FCPA Investigations", Media Release, April 26, 2007.
  3. Nikola Krastev, "Kazakhstan: U.S. Firm Pleads Guilty In Bribery Case", Radio Free Europe, April 30, 2007.