Comments on: Déjà-vu

By: News Roundup - August 22, 2007 « Silk Road Intelligencer

News Roundup - August 22, 2007 « Silk Road Intelligencer — Fri, 19 Oct 2007 17:46:10 +0000

[…] The bureaucrats blame violation of environmental laws on investors, including Italian Eni… NewEurasia.net: Deja-Vu We have seen it before at Tengiz, and now it’s Kashagan’s turn. The Kazakh government […]

By: kazakhstan.neweurasia.net » Playing hardball

kazakhstan.neweurasia.net » Playing hardball — Mon, 27 Aug 2007 22:54:37 +0000

[…] just written a comment to my earlier post - I only come to read today’s news now. And there’s a new […]

By: Ben

Ben — Mon, 27 Aug 2007 22:30:15 +0000

Arthur, thanks for your comment. In essence, no one can stop these kind of takeovers apart from the host government. But I don’t think that Kazakhstan will flex its muscles just as Russia has over Sakhalin. KMG is no Gazprom, and I don’t think it can operate Kashagan as of yet.

One has to be careful not to be too critical with countries like Kazakhstan (or Azerbaijan for that matter) - as they sealed many of the oil and gas deals under opaque circumstances in the bonanza-90s. It’s only natural that they’re not happy with getting less than 50% of the overall profits when governments in the Middle East can put their hands on as much as 80%. I think the same goes for Kashagan, although it was only found in 2000.

I can imagine Kazakh bureaucrats are extremely unsatisfied that the contracts made in the 90s are actually water-proof. That’s most probably the reason behind this environmental charade we’re seeing now. It’s not that they want to get rid of Western oil companies - they just want to change the terms under which they operate.

By: Eric

Eric — Thu, 23 Aug 2007 01:39:00 +0000

Kazakhstan has a big profit demand in mind. Western oil companies are no longer in the driver’s seat, regardless of their superior technology; if they want to continue to operate in the former Soviet Union — in Russia, Kazakhstan and probably Azerbaijan — they now have to agree to better terms for the countries. That’s according to Steve Levine: http://oilandglory.com/2007/08/russian-solution.html

By: Arthur

Arthur — Wed, 22 Aug 2007 12:22:20 +0000

This story reminds me of a debate in one of my old globalization and development classes as an undergrad. We were talking about the “evil” multi-national corporations and how they harm local communities, and the professor made the point that actually the multi-national firms, along with being more technologically advanced, are often more concientious of local concerns than domestic companies. The reason being that they feel more like guests, and realize that they are more vulnerable to criticism and bad press than homegrown psuedo-private enterprises, who can’t be thrown out of the country. It’s kind of like how some Mexican locals destroy their beaches on Friday nights, in a way that would make most American tourists embarrassed (though admittedly not the drunk 20-year-old Spring Break crowd).

I think you are absolutely right– KMG taking over these operations would lead to more environmental damage, not less. This is about money and power, just like Gazprom in Sakhalin II. But the question is, can the anyone stop these kind of takeovers? And will it lead to any reduction in investment on the part of the multi-nationals? That was predicted in Russia, but I don’t know of too many big projects being called off, post-Sakhalin. You are better informed than I on this topic, so maybe you could comment on that…