Wrangling Kashagan

by Joshua Foust on 12/7/2007 · 1 comment


Surprising no one, it is now obvious that “environmental concerns” were not at the heart of the Kashagan dispute, but rather about Kazakhstan’s burgeoning oil nationalism. In this, they are not alone—most oil-rich countries are adopting some form of resource nationalism, from Venezuela to Russia.

Kashagan, however, is an interesting case. Most of the large multinational oil corporations have adopted a capitulation strategy, assuming that a slightly smaller piece of a functioning field was better than a bigger piece of a non-functioning one. Most them, except for ExxonMobil.

Kazakhstan on Tuesday exposed ExxonMobil as the only member of an international oil group led by Eni of Italy unwilling to surrender part of its equity in the giant Kashagan oilfield to KazMunaigas, the Kazakh state oil company.

“ExxonMobil does not share the opinion of other members of the consortium,” Sauat Mynbaev, Kazakhstan’s minister of energy, told reporters in Astana, the Kazakh capital.

Given every other company’s behavior, Exxon’s choice to try for the status quo is puzzling. As Steve LeVine explains:

Does Exxon Mobil know something that the rest of Big Oil doesn’t? Or is Exxon on a noble but ultimately quaint and quixotic quest for the old days?

It would be foolish to pass judgment on Exxon’s strategy. But it does seem to be betting the house against the tide.

That’s the question: why? Obviously, they think they can maintain current margins. But that simply is not how the world works anymore; too many of the countries they have actively antagonized over the decades have learned to fight back the only way they know how—nationalism. It would be a mistake, however, to view this as some sort of sinister movement. Rather, it is the essence of cause and effect: the oil companies caused so much anger and resentment through their exploitative relationships with impoverished but oil-rich states, they deserve very little of our pity when the tide goes against them.

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This post was written by...

– author of 1848 posts on 17_PersonNotFound.

Joshua Foust is a Fellow at the American Security Project and the author of Afghanistan Journal: Selections from Registan.net. His research focuses primarily on Central and South Asia. Joshua is a correspondent for The Atlantic and a columnist for PBS Need to Know. Joshua appears regularly on the BBC World News, Aljazeera, and international public radio. Joshua's writing has appeared in the Columbia Journalism Review, Foreign Policy’s AfPak Channel, the New York Times, Reuters, and the Christian Science Monitor. Follow him on twitter: @joshuafoust

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{ 1 comment }

Steve LeVine December 9, 2007 at 12:30 am

Josh, you raise the central question in the clearer and clearer news on the passing of Big Oil. Do we care? And if so, why? Lots of people say it’s because Big Oil is more efficient, and the state-owned oil companies won’t produce as much. I don’t find that quite compelling. We’ll have to keep watching.

Steve LeVine, author
The Oil and the Glory

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