Andrew Kramer has a report on Uncle Nazzy’s latest attempt to soothe Zhanaozen with sweet, sweet cash:
Prime Minister Karim Q. Massimov said in a telephone interview last week that the government would give oil workers raises of up to several hundred dollars a month and would invest about $300 million in the town. “I strongly believe this issue will be resolved soon and it will not spread to the foreign companies working in Kazakhstan,” he said.
He said the state oil company resisted meeting worker demands earlier in part because salaries in this town were already about 20 percent higher than those of state oil company employees elsewhere, the result of earlier, successful strikes.
We’ll see what happens. The thing with this is, it will probably work, at least in the sense of defusing the worst of the tensions that inspired protesters to be throwing rocks at the SWAT teams. So far, Nazarbayev’s advisers — who include Tony Blair’s consulting firm — seem to be giving sound advice: firing people at the top, launching investigations, and promising reforms.
That being said, the Kazakh government is still behaving unacceptably. The women who alleged abuse by the Kazakh police need to be acknowledged and the police responsible need to be punished. The award ceremony for the policy involved in the crackdown was worse than tacky: it was openly insulting to the families who lost loved ones when those warmly rewarded police shot them in the back then beat them to death. And away from Zhanaozen, the Kazakh government is still harassing and constraining its opposition movement, which is hardly the behavior of a mature, adult country (whatever its paens to democratization).
The Kazakh government has a long way to go, in other words. Kramer tries to tie this latest move to the current round of haggling over access to Kashagan, a rich oil field in the North Caspian. Last year, Shell closed its Kashagan office last year over a difference in price estimates between the Dutch company and Astana. The move led to a flurry of renegotiations with international oil firms, and led to an announced breakthrough last
ExxonMobil and ConoccoPhillips have the big U.S. stakes in Kashagan (all the oil companies involved there, which include Eni, Shell, and Total, share a 16.8% ownership). Last year, during the intrigue over Shell closing its office, there were rumors that ExxonMobil would reduce its stake in the project, but those never panned out.
The stakes at Kashagan are huge. It, along with the Tenghiz field Chevron famously got access to through disgraced broker James Giffen, was one of the largest oil fields discovered in the last 30 years. Like Tenghiz, the international wrangling over developing the field has been drawn out and halting. Still, the numbers are hard to argue. Kramer notes in his piece:
The latest conflagration exploded just as a consortium of oil companies including Exxon was completing investment decisions on a huge new field just offshore in the Caspian Sea, called Kashagan. The companies have already invested $33 billion in the project, and say they will need to invest $154 billion more over the next decade or so.
Kazakhstan represents a potential new source of significant amounts of crude oil. Critically important for the United States, that oil lies outside of the Middle East and Kazakhstan is not a member of the Organization of Petroleum Exporting Countries cartel.
Much as people gripe and moan about countries strategically developing energy sources, it is difficult to write off such eye-popping numbers. Most of the striking oil workers have accepted new jobs, going along with the same bargain Nazarbayev has promised his country the last two decades: forget about liberty or freedom or speech, and in return I’ll keep you employed. It’s kind of worked so far, but as the Zhanaozen protests (and the initial hints of terrorism) show, that bargain is clearly beginning to fray.
Nazarbayev does not have infinite time to initiate reforms and open his country’s politics and economy up like the rest of the developed world. I hope he decides to begin that transition before there’s another tragedy like Zhanaozen.
Image: the Eusebi Group’s Kashagan platform.