Unrest in Kazakhstan Keeps IOCs Guessing
With unrest in Kazakhstan claiming more than 160 lives and Russian troops called in to restore order, the international oil majors operating there — including Chevron, Exxon Mobil, Royal Dutch Shell and TotalEnergies — are asking themselves what happens next?
There's no easy answer as to how things may play out and it's even unclear what triggered the violence in the first place.
President Kassym-Zhomart Tokayev blamed "terrorists" trained in overseas camps, a view shared by Russian President Vladimir Putin, but neither man has presented evidence to support that claim.
The US and EU believe that a hike in fuel prices ignited simmering social discontent — an explanation supported by images of unarmed protesters demanding better living standards and an end to corruption in the former Soviet republic.
In an address on Monday, Tokayev also referred to a failed "coup d'etat" — language suggesting that people within the system were plotting to force him from power.
The weekend arrest of security chief Karim Massimov on treason charges bolstered the theory that Tokayev is locked in a power struggle with his long-serving predecessor, Nursultan Nazarbayev, who appointed Massimov five years ago.
Information Vacuum
Internet service has still not been fully restored after being cut off almost a week ago, adding to the information vacuum.
"Nobody knows what's going on. It's still in lockdown," said a Western contractor with a team of people working in the western oil hub of Atyrau. "We are hearing a lot of rumors. Nothing is clear at the moment."
The unrest broke out after a peaceful protest against a hike in liquid petroleum gas prices on Jan. 2 in the Mangistau region, which borders the Atyrau region.
Production was soon impacted at the Chevron-led Tengizchevroil (TCO) joint venture, Kazakhstan's largest oil producer, which is based in Atyrau.
TCO said last week that there had been a "temporary readjustment" in output from the giant Tengiz oil field, after some workers employed by its contractors assembled to show solidarity with the protesters in Mangistau.
In an update on Monday, Chevron said the situation was returning to normal, with TCO "safely and gradually" boosting production at the field, which had previously been at around 650,000 barrels per day.
Chevron has a 50% interest in TCO, with Exxon Mobil holding 25%, Kazmunaigas 20% and Russia's Lukoil 5%.
Reluctance to Rock the Boat
No disruptions have been reported at Kazakhstan's two other giant fields: Kashagan and Karachaganak.
Kashagan — operated by a seven-member consortium including Shell, Eni, Exxon and Total — produces around 400,000 b/d of crude oil.
Karachaganak produces around 18 billion cubic meters per year of gas and some 250,000 b/d of liquids. It is jointly operated by Shell and Eni.
Over the years, all of the majors operating in Kazakhstan relied on the support of former President Nazarbayev, who handed the presidency over to Tokayev in 2019, but retained considerable influence in the role of "Yelbasy" or Leader of the Nation.
Tokayev is a former long-serving foreign minister and prime minister who speaks English and Mandarin. If he prevails over Nazarbayev, as some analysts predict, he is expected to maintain the status quo with regard to international oil companies.
"He knows the companies very well and respects what they do. I don't think he'll want to rock the boat at all," says a Western oil executive who has been involved with Kazakhstan for almost 30 years says.