Waning Oil part 4
Fizzing fuses in Central Asia

The break-up of the Soviet Union led to a free-for-all in the former Soviet republics of Central Asia
The Caspian Basin oil and gas fields of the former Soviet Union in Central Asia, particularly in the new states of Azerbaijan, Kazakhstan, Tajikistan and Turkmenistan, offer temporary alleviation from oil scarcity. These states are in China’s back yard, not the USA’s, and so the US military engages in a three-way chess game with Russia and China as all three scramble for influence within the region.
Kazakhstan, in particular, in addition to oil has the the world’s second largest uranium reserves, perhaps 817,000 tonnes of the world total of about 5.469m tonnes. Everyone wants a slice of Kazakhstan – of its oil, gas, coal, uranium, iron ore, chromium, copper, zinc, silver, gold, and other vital components of industrial technology. A large country in the interior of Central Asia, with a population of 15.4 million, Kazakhstan was a republic of the Soviet Union until declaring independence in 1991. There is a religious divide, with rather more Moslems, 47 per cent of the population, than Russian Orthodox Christians, 44 per cent. Kazakhstan is not a western-style ‘democracy’: President Nursultan A Nazarbayev, first elected in December 1991, has been in power ever since, and was re-elected for a further seven years in December 2005, with a stated 91.5 per cent of the vote. He is an executive president who appoints ministers and makes the big decisions. The Nazarbayev family control uranium, oil and gas, electricity, the rail and postal services, air transport, banks, and more. Political opposition is not encouraged.
The uranium in Kazakhstan is of intense interest to China. The China Guangdong Nuclear Power Group Company and China National Nuclear Corporation, for example, have made uranium deals with the state-owned nuclear company Kazatomprom. Alarmingly, corruption within Kazakhstan’s nuclear industry is endemic: the former chief of Kazatomprom, Mukhtar Dzhakishev, went to jail for 14 years in March 2010, for stealing large quantities of uranium and selling it to the highest bidders.
The US had announced in 2004 that was helping Kazakhstan to build a military base to protect the oilfields in the west of the country, and said that joint military training exercises would continue in the future. NATO, the North Atlantic Treaty Organisation, signed a liaison agreement with Kazakhstan in October 2005, following the July 2005 decision of Kazakhstan’s southern neighbour, Uzbekistan, to order the US military to vacate its airbase at Karshi-Khanabad within 180 days. This expulsion order, backed by Russia, was followed in September 2005 by joint Russian-Uzbek military exercises, and an order for the American news organisation Internews to quit Uzbekistan. The BBC was ordered out of Uzbekistan the following month.
Oil companies from around the world have significant investments in Kazakh oil fields. They include Rosneft and Lukoil of Russia; Eni, Shell and Total from Europe; and Chevron and ExxonMobil from the USA. China gained a significant stake in the Kazakh oil industry late in 2005 when China National Petroleum Corporation (CNPC) bought Petrokazakhstan – which was based in Alberta, Canada – for $4.2 billion. As part of the deal, the Kazakh government (over which the Nazarbayev family has such a hold) received a holding of 33 per cent. A pipeline to carry Kazakh oil to China came into use in December 2005. An earlier pipeline, opened in 2001, takes Kazakh oil west to the Black Sea and Europe. Many of the oil transactions made in Kazakhstan have been channelled through jurisdictions where secrecy is entrenched, such as Bermuda, and Switzerland.
The USA and its allies certainly do not have control over Kazakhstan, where Chinese as well as Russian influence is growing rapidly. The Shanghai Cooperation Organisation, including among its members China, Russia, Kazakhstan, Tajikistan, Uzbekistan and Kyrgyzstan, is set on curtailing American influence in Central Asia. In 2009 China lent $10bn to Kazakhstan and bought into the energy company Mangistau Munai Gas. A coup in Kyrgyzstan in spring 2010 replaced president Kurmanbek Bakiyev with Rosa Otunbayev, whose interim government lost no time in announcing its intention to close the US air base at Manas, north of the capital Bishkek. The states of Central Asia, or rather their rulers, are inclined to play the dominant powers off against each other, for material rather than ideological ends. At the end of January 2010 Kazakhstan, for example, made an appeasing gesture to the US and its allies in NATO by agreeing to allow Afghanistan-bound military flights to cross its airspace, and non-lethal cargoes to cross overland, in return for supplies and training for Kazakh military forces.
With competition hotting up for the oil, gas, uranium and other resources of Central Asia, long periods of political calm and good governance are about as likely as Gordon Brown starting a new career as a stand-up comedian, or Silvio Berlusconi becoming a monk. It’s probably not a wise move to rely too much on Central Asia for our future fuel and power.
REVISED FROM ‘EMPTY PLATES TOMORROW’, April 11th 2010