Russian-Born Kazakhstani Expert: Tengiz, Karachaganak, And Kashagan Will Become Russian Assets – OpEd

“EU is closer to using Russian asset profits for Ukraine arms”, the foreign (non-Russian) media reported Thursday based on the outcomes of the first day of the two-day EU summit. The European Union could use proceeds from frozen Russian assets to help Ukraine within a few months under a plan that includes buying arms for Kyiv, EU leaders said at the end of the first day of the gathering. They agreed at a summit in Brussels to go on with work on the plan, presented this week by the EU’s executive body, the European Commission.

That plan involves transferring 90% of profits from the frozen Russian assets to an EU-run fund used to finance arms for Kyiv. The remaining 10% would go to budget aid for Kyiv. It is assumed that the first 1 billion euros ($1.09 billion) from the scheme could be disbursed as soon as July 1. The idea of using the proceeds of frozen Russian assets to benefit Ukraine, if implemented, would, as Moscow says, be theft.

The question is: What will be Russia’s answer to it? There is now a feeling that the Russian side may soon come up with an alternative plan or present a different vision to the Western community of nations on the use of frozen Russian assets. It would seem what does that have to do with Kazakhstan? Let’s consider things in order.

Here is what this author in an article entitled “What Is Putin’s ultimate plan with regard to Kazakhstan?”, which appeared in the March 13, 2023 edition of the Eurasia Review, said: “Ukraine and Kazakhstan are the two most important post-Soviet countries for Moscow. Ukraine’s Donbas region is of particular importance to the Russian side. That’s pretty clear. In Kazakhstan, only its western region, Western Kazakhstan, can be compared with the Ukrainian Donbas in terms of economic prowess, mineral wealth, and geographical proximity to the Russian capital, Moscow. So it is understandable that the Russian side might also be willing to meddle in the internal affairs of the region that plays a key role in the economy of Kazakhstan. They seem to be already doing that, albeit in discrete forms… West Kazakhstan is strategically important to the US and EU, so the attempts by Moscow to oust the Westerners from the region cannot be excluded”.

So here we are a year later, and such a strategy now starts taking very real shape. The Russian-language media are now vying to say that under the present circumstances, the transfer of the Western energy companies’ assets in western Kazakhstan to the Russian companies might be the best choice for Astana. It is claimed that Russia could buy out the shares of foreign companies in the Tengiz, Karachaganak, and Kashagan oil and gas projects using its frozen assets held in the EU and US.

A video interview entitled “[The] Tengiz, Karachaganak, and Kashagan [oil and gas fields] will become Russian ones – Pyotr Svoik” is being circulated in the Russian-speaking media. Here is what Pyotr Svoik, who has experience as a high-ranking Kazakh official, and as a member of the country’s Parliament and who has been called by some ‘an ambassador of the Russian world in Kazakhstan’, said to a journalist: “I will say to you this way: [The] Tengiz, Karachaganak, and Kashagan [oil and gas fields] will become the Russian ones in coming years… There are two possible outcomes. The first one: Western companies will be driven out from there. They will be replaced mostly by Russian companies with the addition of the Chinese and Kazakhstani companies. The second one: Western companies will start working according to local regulations. But they will most likely have to leave”.

The bulk of oil production in Kazakhstan has been and is being made by TCO (630.1 b/d) from the Tenghiz oil and gas field, NKOK (407.4 b/d) from the Kashagan oil and gas field, and KPO (391,7 b/d) from the Karachaganak oil and gas condensate field, which are all controlled by Western corporations. Last year, Kazakhstan was producing 1.7 million barrels per day. It turns out that three main oil fields, Tengiz, Karachaganak, and Kashagan in the Caspian Sea region, which are being operated by the American and West European oil and gas giants, account for almost 80% of Kazakhstan’s total crude production.

Yet now the Russian side seems intent on getting hold of them, TCO, NKOK, and KPO, from the American and West European oil and gas giants. And that idea is being presented by the Russian side, as is the case with Ukraine, as a potential move to free yet another post-Soviet nation from exploitation by the West. in an article entitled “Throwing off ‘the shackles that were willingly worn’: how far can Kazakhstan go in reviewing the oil contracts, and what has Russia to do with it?”, said: “Astana has long dreamed of revising the major oil agreements [on Tehghiz, Kashagan, and Karachaganak fields] signed at the dawn of independence. According to the expert, the best option would be to transfer these assets to Russia”.

That way, the Kazakh side seems to be behind that initiative. At least, this is how it appears to an outside observer. But the answer to the question of who benefits from it perhaps lies in the following words by Igor Yushkov, a Russian expert, whom asked for comment on the initiative: “[Interruptions in the Caspian Pipeline operations] showed that if total sanctions are introduced against Russia, the West may lose not only Russian oil but also Kazakh oil, too. If Russia is a shareholder, then these risks for Kazakhstan go away. Russia will be interested in ensuring that the CPC [the Caspian Pipeline consortium] operates normally, that the fields are developed, and that Kazakh oil is exported”.

Yet Russia’s interest in that part of Kazakhstan most probably doesn’t end with the oil and gas fields. Western Kazakhstan is economically the most important part of not only Kazakhstan but the whole Central Asian region. This is a part of Kazakhstan that is closest to the Russian heartland (Central Russia). Through it runs the shortest road from Russia to four other Central Asian nations. It also is a main bridgehead for Kazakhstan, as well as for Uzbekistan, Kyrgyzstan, and Tajikistan, to establish and maintain bilateral and multilateral partnerships with China, Turkey, and the West via the South Caucasus. In the latter case, it refers to the ‘Middle Corridor’, also known as the China-Central Asia-West Asia Corridor, which links China and the markets of East Asia with Georgia, Turkey, and the markets of Europe, and, according to Russian media, is intended to be used for the economic blockade of Russia.

In short one can say that all these factors make Western Kazakhstan, and not just its major oil and gas fields, uniquely important for Moscow as a region of the Central Asian neighboring country, oversight of which in some form might enable the Russian leadership to continue to influence formation of the Kazakhstan’s (Uzbekistan’s and so on) relations with the West and Turkey.

The Russian policy and decision-makers would probably not have rushed things in the normal course of events. Yet Russians are in a situation now, where they need to be hasty in their actions. Therefore, one can assume the following. Amid Russia’s war on Ukraine and its consequences, and Turkey’s feverish efforts to quickly get the Central Asian Turkic countries out of the Russian Federation sphere of influence through persuading them to join the Trans-Caspian International Transport Route (known as the ‘Middle Corridor’, and aimed at becoming a viable alternative to the long-established northern route through Russia) and the creation of the ‘Turan Army’ (a kind of military alliance under Turkish leadership), it doesn’t take a rocket scientist to figure out that, with a high degree of probability, Western Kazakhstan can become the place at which Russia’s next outward action will be directed.

All that talk about the Tengiz, Karachaganak, and Kashagan oil and gas fields seems to just be the start of it.

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