Government Unlikely to Take Harder Line on Investors
Government Unlikely to Take Harder Line on Investors
The new Kazak prime minister’s criticism of energy-sector contract arrangements will not necessarily translate into a tougher approach to the majority of foreign investors, according to NBCentralAsia analysts.
Addressing a January 18 meeting at the Ministry for Energy and Mineral Resources, the new prime minister, Karim Masimov, voiced unhappiness at the way some oil and gas contracts are implemented. Without naming specific projects, Masimov said it was “unsatisfactory” that exploration periods are dragged out, and the start of commercial exploitation consequently delayed, in breach of contractual terms
Some NBCentralAsia analysts say Masimov’s remarks indicated that his new government might take a tougher line on foreign investors, who are involved in most of Kazakhstan’s oil and gas projects.
One energy consultant said it was possible Kazakstan would copy the example of Russia, where international players were pushed out and replaced by the government and Russian commercial investors. But he noted that in Kazakstan, “this would affect only the lesser investors, because the authorities would not want to harm their relationship with their major partners”.
Other analysts, though, are sceptical that Masimov is really going to get tough on foreign investors, even though he has ordered the economy and energy ministries to monitor the progress of energy-sector contracts more closely.
“The new prime minister needs to demonstrate he’s a man of principle, that he’s prepared to be hard on investors – nothing more,” said NBCentralAsia analyst Yaroslav Razumov. “These kinds of statements are no more than the inevitable political rhetoric.”
Razumov added that in light of slipping oil prices, and the high cost of Kazakstan’s most promising oil projects where foreign investment is essential, “pressuring investors would be dangerous”.
In any case, he said, the arrival of a new government should not herald a fundamental policy shift in the gas and oil industry. “Energy politics in Kazakhstan is decided by the president, not the prime minister,” he said.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
Addressing a January 18 meeting at the Ministry for Energy and Mineral Resources, the new prime minister, Karim Masimov, voiced unhappiness at the way some oil and gas contracts are implemented. Without naming specific projects, Masimov said it was “unsatisfactory” that exploration periods are dragged out, and the start of commercial exploitation consequently delayed, in breach of contractual terms
Some NBCentralAsia analysts say Masimov’s remarks indicated that his new government might take a tougher line on foreign investors, who are involved in most of Kazakhstan’s oil and gas projects.
One energy consultant said it was possible Kazakstan would copy the example of Russia, where international players were pushed out and replaced by the government and Russian commercial investors. But he noted that in Kazakstan, “this would affect only the lesser investors, because the authorities would not want to harm their relationship with their major partners”.
Other analysts, though, are sceptical that Masimov is really going to get tough on foreign investors, even though he has ordered the economy and energy ministries to monitor the progress of energy-sector contracts more closely.
“The new prime minister needs to demonstrate he’s a man of principle, that he’s prepared to be hard on investors – nothing more,” said NBCentralAsia analyst Yaroslav Razumov. “These kinds of statements are no more than the inevitable political rhetoric.”
Razumov added that in light of slipping oil prices, and the high cost of Kazakstan’s most promising oil projects where foreign investment is essential, “pressuring investors would be dangerous”.
In any case, he said, the arrival of a new government should not herald a fundamental policy shift in the gas and oil industry. “Energy politics in Kazakhstan is decided by the president, not the prime minister,” he said.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
