Over the years, Central Asia has been selling off mineral deposits and entering into unfavorable contracts in exchange for investment and political immunity.
In previous longreads we have shown that a number of countries in the region are almost completely dependent on the sale of minerals.
In order to assess the extent of other countries’ influence on the production and marketing of these minerals, we will have to find out who owns the licenses for prodcution of oil, gas, and gold deposits and how the contracts were negotiated, as well as who controls the oil and gas pipelines that carry the fuel that feeds the country to other countries.
Kazakhstan is one of the largest suppliers of a number of minerals in the world. According to the World’s top exports 2021, the country ranks 15th in the world in oil exports, 11th in copper exports and 1st in uranium exports. The territory is also home to some of the world’s largest reserves of tungsten: Kazakhstan is among the top three countries in terms of tungsten reserves, but the mining sector is extremely underdeveloped. In 2018, there were reported plans to revive the industry, but in 2019 it became known that the largest tungsten deposit was sold to the Chinese company Xiamen Tungsten and actually fell out of the sphere of influence of national operators.
Looking at the export data, we see that Kazakhstan is at least 56% dependent on the sale of minerals. The largest share of exports is crude oil. In 2021, Kazakhstan sold $31.1 billion worth of it. According to the Committee of National Statistics, oil was mainly sold to Italy and the Netherlands.
There are three major refineries in Kazakhstan — Atyrau, Pavlodar and Shymkent. The first two belong to the national oil and gas operator KazMunayGas, and the last one to PetroKazakhstan, whose history we will discuss below.
In terms of deposits, Kazakhstan’s largest oil reserves are in Kashagan (estimated at 1-2 billion tons), Tengiz (0.75-1.125 billion tons), Karachaganak (1.35 trillion m3 of gas and 1.2 billion tons of oil), Uzen (1.1 billion tons), Kalamkas (67.6 million tons) and Zhetybay (68 million tons).
Nine companies produce most of Kazakhstan’s oil.
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Jusan AnalyticsOverview of Kazakhstan’s oil and gas industry«Despite the high diversification and significant share of the national company’s participation, the majority of oil and gas production is controlled by foreign partners. Annually about 35% of export revenues are paid to foreign investors».
This deal has already raised Ispat International from 32nd to 14th place in the world in terms of steel production in ten years. A number of researchers say that it was the privatization of Karmet that allowed Lakshmi Mittal to build up his empire and make ArcelorMittal the second* largest company in the world.
*It is worth considering that the company produces more than just steel.
In 2022, Kazakh politician Bulat Abilov, who at that time was a non-staff advisor to Nursultan Nazarbayev, said that the deal was criminal. According to him, Lakshmi bought the Karaganda Metallurgical Plant for $200 million, when in reality it was worth more than $3 billion.
*Before privatization.
It should be noted that Karmet also had some kind of debts (about 50 million dollars in debts to creditors and a little over 10 million dollars in wage arrears), but these debts did not significantly change the overall picture. The Karaganda Metallurgical Plant was privatized for dozens of times less than its true value.
Oleg Gusev, a researcher of the Karaganda Metallurgical Plant privatization, points out that Lakshmi Mittal was provided assurance that fines for violation of environmental legislation would not exceed the amount of 200 million tenge.
In 2018, ArcelorMittal Temirtau paid 1.4 billion fines for violation of environmental legislation. According to the contract — the state was to compensate it for the amount of losses exceeding 200 million tenge. It is not known whether this agreement was (is being ?) revised for today, but it was valid in the first decade after the purchase.
Among the pros of selling Karmet, it is often pointed out that Arcelor Mittal Temirtau JSC bears a significant social responsibility. But this thesis should be taken into account that the old Karmet carried a much greater burden of maintaining the city infrastructure, and Arcelor Mittal Temirtau JSC got rid of most of these kindergartens, recreation parks and sports centers.
At a certain moment* the company owned the second largest explored oil and gas reserves in Kazakhstan (after ChevronTexaco’s Tengiz-Chevroil). In 2005 PetroKazakhstan (after years of fight for control over its assets) was acquired by China National Petroleum Corporation and then in 2006 transferred to PetroChina.
*Reserves are periodically updated.
In 1996, the company bought the Yuzhneftegaz JSC and 50% stakes in Kazgermunay and Turgay Petroleum from the government. The latter was a joint venture between the governments of Kazakhstan and Russia. These acquisitions and the use of Canadian technology made Hurricane Hydrocarbons one of the largest players in Kazakhstan’s oil production market.
However, already in 1999 the company was on the verge of bankruptcy. All of the company’s oil production at the time passed through refineries owned by Central Asian Industrial Holdings N.V. (CAIH), an offshore branch of Kazkommertsbank (KKB), Kazakhstan’s leading private banking group, which used its monopoly on oil refining to inflate prices and pressure Hurricane Hydrocarbons.
The company was saved from bankruptcy by Canadian businessman Bernard Isotier, a shareholder of Hurricane Hydrocarbons. He successfully negotiated a merger with Central Asian Industrial Holdings N.V. /Factually, we can say that this deal had the character of an aggressive merger, during which the largest group of financiers in Kazakhstan got a stake in a foreign company, but did not completely force foreign partners out of business. This merger opened new opportunities for Hurricane Hydrocarbons./
In 1999-2000 Hurricane Hydrocarbons acquired 88.4% of Shymkentnefteorgsintez OJSC (now PetroKazakhstan Oil Products LLP), which owned the most modern oil refinery in the country at that time — Shymkent Refinery (160,000 barrels per day).
Since 2001, the company, which had become a significant player not only in the production market but also in the oil refining market of Kazakhstan, became the object of a battle between the owners and the government of Kazakhstan. According to media reports at the time, the Kazakh government tried to buy the shares «for a ridiculously low price», and a year before that «armed mercenaries occupied the refinery and held the staff at gunpoint until a peace deal was declared». Later, the company was included in the list that it must contribute money to the National Fund of Kazakhstan (the main fund that serves as a source of transfers for the Republic’s budget).
In 2003, Hurricane was renamed PetroKazakhstan to reflect that all of its operations are in that country.
In 2003, the company was the subject of a successful state-sponsored attack. The attack included fines and mass protests against environmental and labor law violations.
In June 2005, PetroKazakhstan announced that it had been approached about a possible takeover or merger. There were two possible suitors — a Russian-backed subsidiary of India’s ONGC and China National Petroleum Corporation (CNPC), which the Kazakhstani government finally sided with.
As a result, PetroKazakhstan became the largest foreign acquisition of a Chinese company in 2005. On August 21, 2005, China National Petroleum Corporation (CNPC) bought the company for $4.18 billion through CNPC International Ltd. (CNPCI), a wholly owned subsidiary of China National Oil & Gas Exploration and Development Corp. (CNODC)
In 2006 it was raided by Russian business structures.
For 10 years it was under the management of Russians and actually did not function.
In 2021, an extremely popular series of short films «MPP» was released in Kazakhstan, dedicated to the attempted forcible takeover of the plant. The main leitmotif of the film is an appeal to Kazakhstani officials: «Why sell the Motherland?».
In 2006, Dolgalev was dismissed as director in absentia and his stake in the authorized capital was diluted from 20 percent to 0.049 percent. What is happening can be assessed as an attempted forcible takeover.
In 2011, according to the decision of the Russian court, Viktor Dolgalev, a citizen of Kazakhstan, was deprived of participation in the Kazakh company. The reason for this decision was Dolgalev’s refusal of the partners’ offer to apply for a loan at 40% per annum. It was assumed that the loans would be arranged with credit organizations affiliated with his partners.
As a result of Viktor Dolgalev’s dismissal, the MPP was brought to bankruptcy. In 2017, the plant employed 6 people (in 2006 — 313). In case of implementation of the approved work program for the operation of Obukhov Mining and Processing Plant for the period from 2007 to 2016 — the state could have received $46 million in taxes and 350 well-paid workplaces.
In 2015-2016, as a result of legal proceedings, Viktor Dolgalev managed to overturn the Russian court decision and regain control over the plant.
In 2020, a mass brawl took place on the territory of the plant (some of the founders tried to regain control over the plant by force).
From 2016 to 2021, an active fight for control over the plant continued. According to the management and employees of the enterprise, the authorities of the North-Kazakhstan region tried to transfer the enterprise to the Chinese with the support of the Russian shareholders of MPP represented by the owners of PromArsenal, entrepreneurs Dmitry Pyatkin and Alexander Freiman.
Despite the destruction of the enterprise’s infrastructure and lawsuits, Obukhov MPP LLP continued its work. From 2017 to 2020, the main debts were repaid (including those accumulated by the previous management team that carried out the forcible takeover), and the enterprise was completely re-equipped. Despite the financial problems, the current management of the plant (protecting the enterprise from forcible takeover) managed to bring it to the stage of sustainable income generation.
In 2021, the employees of Obukhov MPP went on hunger strike. The reasons for the hunger strike were the termination of the contract with Tioline LLP by the Ministry of Industry and Infrastructural Development, non-payment of wages for two months, power cuts, arrest and seizure of the plant’s cargo by the police. The employees of the MPP demanded to return the license for the development of the deposit to the MPP, to remove the Russian investors, and to reinstate the dismissed employees at the enterprise.
According to Viktor Dolgalev, the Russians initially entered into partnership with the plant in order to bankrupt it and take over the deposit.
Turkmenistan ranks 4th in the world in terms of natural gas reserves. London-based pricing agency Argus estimates that the country’s natural gas reserves could reach 25 trillion cubic meters.
Turkmenistan’s export revenues are 67.8% dependent on gas sales.
In 2009 and 2010, gas supplies dropped sharply due to political and economic disagreements. In 2011, they returned to the previous level (in terms of volumes), but smoothly began to change their destination.
One of the most significant gas conflicts in the region took place between Russia and Turkmenistan in the early 2010s. It illustrates the role of Turkmenistan, the relations between the countries and the ambitions of the countries involved.
2006. In January 2006, Azerbaijan Prime Minister Artur Rasizadeh proposes to Kazakhstan Prime Minister Danial Akhmetov that Kazakhstan’s gas be exported to Turkey via the South Caucasus Pipeline and from there to the European market.
2007. Russia, Kazakhstan and Turkmenistan sign a trilateral agreement to export gas from Central Asia to Europe via the reconstructed and expanded western branch of the Central Asian Gas Pipeline. This finally puts an end to the Trans-Caspian gas pipeline project, which could have made Turkmen gas supplies to Europe completely independent from the position of Russia and Iran.
2007. In 2007 Gazprom tries to monopolize the Central Asian gas market by offering to pay Kazakhstan, Turkmenistan and Uzbekistan the European gas price of $160/1000m³. The price increase was linked to Russia’s attempt to put financial pressure on Ukraine. However, shortly after this offer, «European prices» fell and Gazprom argued that prices in Central Asia should be reduced commensurately. Turkmenistan, however, continued to insist on the European gas price.
2008. Iran’s Deputy Foreign Minister states that Iran opposes the construction of any underwater pipeline in the Caspian Sea due to environmental concerns.
2009. The gas conflict between Turkmenistan and Russia unfolds. Until 2009, Turkmenistan exported gas mainly to Ukraine, but then, due to Russian interference, decided to redirect export flows to China. This happened after Turkmenistan accused Russia of blowing up a branch of the Uzbekneftegaz gas pipeline. After that, Turkmenistan signed an agreement with the German energy company RWE AG to transport Turkmen gas to Europe and came to Prague to discuss the implementation of the Nabucco project, a gas pipeline that would connect the EU to Iran via Turkmenistan. Turkmenistan failed to reach an agreement with its European counterparts. Eventually, this year Turkmenistan redirected its gas export flow to China — taking out a loan to build the pipeline and a gas supply contract. Turkmenistan supplies China with about 60 billion m3 annually.
In the same year, the first line of the Central Asian Gas Pipeline appears, bringing gas from Central Asia to China. The first line appears in Turkmenistan.
2010. Turkmenistan agrees to reduce supply volumes for Russia. Volumes are reduced to 10 billion m3 at a price of $200-250 per m3.
2014. Turkmenistan continues to look for new gas markets. The country is focused on trade with the EU, but transportation requires a Trans-Caspian gas pipeline, the construction of which requires the consent of all countries in the Caspian basin. Russia and Iran remain opposed to the construction. Officially they protest «for environmental reasons,» but in reality, analysts say, Russia does not need a competitor in the European market, and Iran needs Turkmenistan’s gas.
This year, China is completing a plant to prepare marketable gas at the Bagtyyarlyk site in Turkmenistan, where CNPC produces gas and sends it through the Central Asian gas pipeline.
2015. Turkmenistan claimed that Russia stopped paying its debts due to the imposed sanctions. Russian representatives accused Turkmenistan of «hysteria» and slander. Turkmenistan’s media later stated that the experts were trying to destroy relations between «brotherly nations».
2017. Gas supplies to Iran are stopped — the latter delayed payment.
2019. Gas supplies from Turkmenistan to Russia are restarted. According to insiders, Turkmenistan had to «make serious concessions in the price to the Russian monopolist». The statement was made on the day the Turkmen government canceled gas, electricity, water and table salt benefits for 5.7 million citizens. According to an unnamed expert, the decision is related to the signing of the Caspian Convention.
«On August 12, the Caspian Convention was signed. In terms of security issues, Moscow ensured non-interference of outside forces in the Caspian Sea, but it had to make some concessions on the issue of the Trans-Caspian gas pipeline. At least Moscow has formally left the other member states the option of laying gas pipelines along the Caspian Sea bed. By restarting purchases of Turkmen gas, Moscow will help Turkmenistan in a difficult economic situation and will be able to dissuade Ashgabat from building the Trans-Caspian gas pipeline in the near future, and, most importantly, will make Turkmenistan dependent on Russia’s own gas exports».
2020. Russia announced that it has doubled its gas imports from Turkmenistan. Representatives of Turkmenistan’s Fuel and Energy Complex said that Russia’s plans to build the Power of Siberia-2 gas pipeline to China is an attempt to force Turkmenistan out of the Chinese gas market.
«China, in turn, according to analysts, buys gas at low prices and also receives gas as compensation for financing the construction of the Turkmen part of the Central Asia-China gas pipeline and building infrastructure for gas production and processing. Nevertheless, China buys significant volumes of gas, which in turn make up the lion’s share of Ashgabat’s exports,» the media wrote.
In 2021, Turkmenistan’s Deputy Prime Minister Shakhim Abdrakhmanov said that Turkmenistan had fully repaid the loan to China, allocated to finance its share in the project to build the Turkmenistan-China gas pipeline and develop the Galkynysh gas field. According to experts’ calculations, the debt amounted to about 10 billion dollars.
At the same time, due to the lack of reliable data, experts, including the World Bank, do not assess Turkmenistan’s situation without guesswork. The World Bank, for example, does not include Turkmenistan (and Venezuela) in the World Economic Outlook report, which uses data on Turkmenistan’s output, income and GDP growth.
Turkmenistan has been a big mystery for more than two decades.
«That is, there is no such thing that [there was] marketing and [we] purposefully tried to occupy some niche in the big gold market,» the Deputy Minister said.
The Central Bank of the country has been given the priority right to buy all locally refined gold.
According to the Observatory of Economic Complexity (OEC), in 2020, almost all gold was sold to the UK (91.6%), where the largest international gold trading hub operates, while 7.4% of gold was sold to Russia.
In 2021, 52% of gold was exported to Switzerland and 39.1% to the UK. Uzbekistan hides data on final buyers. It is known that gold received, for example, in Switzerland, is sold on an international exchange.
«The country that bought the gold does not want to disclose how much it bought on the international market. Accordingly, it is not disclosed,» the government says.
Navoi Mining and Metallurgical Company is Uzbekistan’s largest mining enterprise. The enterprise mines gold, uranium and rare metals. The reserves of gold are 3700 tons. The company accounts for 10% of all industrial products produced in Uzbekistan and 18% of budget revenues. The company ranks third among the world’s gold producers.
Gold production is about 80 tons per year with total production of 100 tons. The enterprise is also the leader in uranium exports in Uzbekistan.
Shareholder — UzAssets investment company of the State Assets Management Agency of the Republic of Uzbekistan.
In 2021, it became known that 10% of shares are likely to be sold
It is a plant that has been taken over by oligarchs with the assistance of the authorities. Uzbek journalists rely heavily on insiders to tell such stories.
Based on the history of the enterprise, we tell why there is little similar information about other enterprises in Uzbekistan.
Russia bought gas from Uzbekistan quite cheaply — $125 per thousand cubic meters (the low price was set as a kind of preference in exchange for Russian investments). Russia resold this gas in Kazakhstan.
Gazprom sells Uzbek gas in the southern parts of Kazakhstan, and in return receives feedstock for its gas processing plant in Orenburg on the Kazakh-Russian border in the north. The venture is heavily dependent on these foreign supplies, which average 8 billion cubic meters a year, and the substitution scheme, whereby these supplies are partially met by gas from Uzbekistan, remains in place, although the Kazakhs are gradually establishing their own gas supply in their southern regions, making imports from Uzbekistan less critical than they are now,» RusEnergy partner Mikhail Krutikhin said in interview to The New Times.
*We wrote about gray export flows in our other review.
Kumtor is the largest gold ore field in Central Asia with gold reserves of about 700 tons. Its share in Kyrgyzstan’s GDP as of 2021 is 10%, its share in industrial production is 23% and its share of total exports is about 30%. This field is one of the reasons for the coups in the country and a crucial element of the criminal cases against the two deposed presidents.
Now it is the world’s largest public uranium company.
2002. Cameco created a subsidiary company Kumtor Mountain Holdings Corporation. The company began to handle most of the issues.
2003. Kumtor Mountain Holdings Corporation was renamed Centerra Gold. One of the shareholders is Kyrgyzaltyn Government OJSC.
2004. Restructuring and investment agreement with the Kyrgyzstan government comes into effect. After the restructuring, Kyrgyzaltyn’s share decreased to 33% and Cameco’s share decreased to 66%. Kyrgyzaltyn transferred part of its shares due to outstanding debts to the International Finance Corporation (part of the World Bank) and the European Bank for Reconstruction and Development.
Forensic economic examination, which was conducted in 2013, showed that at that time the share of Kyrgyzaltyn in Centerra Gold should have been 58.7%, not 33%, that is, it was understated by 25.7%, in monetary terms — by $171.5 million.
«International lawyers and auditors drew attention to some dubious payments that could be, in their opinion, a way to pay for the «services» of KR officials in concluding agreements on restructuring of the Kumtor project. The investigation and the verdict handed down by the court against the officials confirmed the facts of corruption,» they wrote in 2013.
At that time, Askar Akayev was the President of Kyrgyzstan. After his overthrow and subsequent escape from the country, criminal cases were brought against him, including on Kumtor.
2009. Cameco sold its shares to its subsidiary Centerra Gold.
At that time, Kurmanbek Bakiyev was the President. After his overthrow in 2010, it was said that in 2009 «conditions adopted were knowingly disadvantageous for the state». In 2023, he was sentenced in absentia to 10 years in prison for corruption at Kumtor.
2012. The Kyrgyz Parliament created a temporary commission to check the activities of Kumtor.
2013. The government was instructed to revise the 2009 agreement in favor of Kyrgyzstan. 500 residents of villages in Jeti-Oguz district of Issyk-Kul region blocked the road to the mine, they demanded the termination of the 2009 agreement. By the end of 2013, the Kyrgyzstan government negotiated with Centerra Gold and presented a project to create a 50/50 joint venture. The project was rejected by MPs, who demanded that Kyrgyzstan’s share be increased to 67%. Legal proceedings began.
2014. The former Minister of Finance was convicted for bribes of 4 million dollars for the conclusion of the deal on Kumtor. A year later they were released «in connection with the expiration of the term of the charge».
2019. Kyrgyzstan’s share fell to 26%.
2020. Kyrgyzstan passed a resolution to impose an interim external manager at Kumtor, Centerra Gold was accused of violating environmental regulations. They were ordered to pay $3 billion in compensation for illegally dumping waste on glaciers.
Centerra Gold filed claims in a court in Canada and an international arbitration tribunal for «seizure of the mine by the Kyrgyz government». The company alleged that Kyrgyzaltyn OJSC attempted to withdraw approximately $29 million from the company’s accounts through a forged payment order.
Centerra Gold declared bankruptcy of Kumtor Gold Company’s subsidiaries and sought arbitration with the UN Commission on International Trade Law.
2022. Centerra Gold left Kyrgyzstan and agreed to pay $50 million in a lump sum.
Investigations continue.
«It became known that on June 24, 2004, $11 million was transferred by Cameco Corporation and Centerra Company to the account of Kyrgyzaltyn JSC. Four days later, the head of Kyrgyzaltyn, Kamchybek Kudaibergenov, illegally transferred the funds to Aizkraukles Bank in Riga, the capital of Latvia. The money went into the account of Eckerd, a company controlled by Aidar Akayev,» Deputy Prime Minister Akylbek Zhaparov said in 2021. «Centerra Gold, after its formation, on June 28 of the same year, without any explanation, gave Central Asia Gold shares worth 3 million 800 thousand dollars to the company. Some time later they were sold for 44.6 million dollars. All this was established during the investigation. The Mushkat law firm also studied the case, and in its conclusion it noted many dubious points and the need to bring Askar Akayev’s family to justice. But all this remained the same. This company sold its shares, returned to Kyrgyzstan and acquired licenses for the development of 5 deposits, such as Ak-Zhylga, Turuk, Altyn-Zhylga. Among them, the largest gold field is Taldybulak Levoberezhny. Later this mine was acquired by Kazakh investors. Because they turned out to be close to the President of Kazakhstan Nursultan Nazarbayev, the authorities stopped investigating them so as not to spoil relations between the states,» Radio Azattyk wrote in 2021.
Dzheruy is the second gold deposit in Kyrgyzstan after Kumtor. Confirmed gold reserves are more than 100 tons. The history of the deposit is a lot of investors coming and going, huge fines, corruption scandals, criminal cases. After each revolution the mining license is taken away or attempted to be taken away from the mining companies.
1993. Construction of Talas Gold Ore Plant was stopped due to lack of financing. Without competition, the tender for the development of the mine was given to the American company Morrison Knudsen Gold. Two years later, the company went bankrupt. The established joint venture was taken over by Lavalin. It, in turn, demanded tax benefits, which the Kyrgyz government refused to grant. The joint venture closed.
1996. Oxus from the UK became a new investor. Together with a partner from Australia, they formed a joint company, Norox Mining. Together with Kyrgyzaltyn they formed a joint venture, Talas Gold Mining CJSC. In 1999, the price of gold fell dramatically and the Australians withdrew from the project, Oxus started looking for money.
2005. Revolution in Kyrgyzstan. A representative of Oxus was assassinated — 6 shots were fired.
In 2023, the investigation found that the assassination attempt was carried out on the order of Kurmanbek Bakiyev, the President of Kyrgyzstan at that time.
2006. The right to mine was given to Global Gold. In 2007, the shares owned by Global Gold in the joint company were acquired by the Kazakhstani company Visor Holding. Global Gold owned 60% of the shares of Dzheruyaltyn CJSC. Global Gold sold the shares because it «faced constant rallies and blocking of roads, with numerous threats from some MPs to kick the investor out of the country». The company operated for only 4 months during the year.
2010. Revolution in Kyrgyzstan. Dzheruyaltyn’s license was taken away because the company never started construction work. Kyrgyzstan fell under arbitration fines.
2016. The right to develop was sold to a subsidiary of the Russian Corporation, Russian Platinum. The license was bought for $100 million, the investor also committed to pay the government’s fines for Dzheruy — $600 million. The development was undertaken by a subsidiary of Russian Platinum, Alliance Altyn LLC.
Kyrgyzstan has no stake in the company.
2020. Revolution in Kyrgyzstan. The launch of the Talas Gold Ore Plant was postponed. A warehouse at the deposit was looted and a factory building set on fire.
Aibek Buzurmankulov, a former government plenipotentiary representative in Talas region, said that the mine is «billions of dollars that will not go to Kyrgyzstan, but to Russian oligarchs» because «Kyrgyzstan has no share in this project». He added that the agreement was concluded «under Putin’s pressure».
Adding to the discontent was the fact that in 2014, Russia’s Gazprom bought the assets of Kyrgyzstan’s gas operator, Kyrgyzgaz, along with all property, including gas distribution stations, for $1. According to Gazprom’s explanation, the company was bought together with an external debt of $65 million, and therefore the amount of the transaction is not $1, but $65 million. According to other data, the external debt was $40 million. Kyrgyzgaz, according to the member of Zhogorku Kenesh, was also sold on the terms of gasification of all of Kyrgyzstan, but the conditions were not met.
2021. The Plant was launched. The opening ceremony was attended by Russian President Vladimir Putin and Kyrgyz President Sadyr Zhaparov.
Like other Central Asian countries, Kyrgyzstan is a transit territory for gas from Turkmenistan to China. Typically, countries take out a loan to build their part of the pipeline, create a joint company with China that becomes the general contractor, and then charge a fee for gas transit. Kyrgyzstan did the opposite — they leased the land and did not take a loan. This caused indignation. Authorities explained that Kyrgyzstan would receive $75 million annually for leasing the territory for transit, but opponents of the agreement, who insist on repeating the neighbors’ actions in terms of joint construction, questioned the calculations.
«In 2018, when we raised a fuss, the authorities said Kyrgyzstan would receive 30 million dollars a year. Then, when the fuss got stronger, they said we would receive 75 million a year. But this amount is not specified in any clause of the agreement. But worst of all, paragraph 7 of the agreement states that if necessary, we will allow the Chinese to expand the pipeline through construction,» said former Deputy Prime Minister Bazarbay Mambetov.
Marat Zheenbekov, a spokesman for the State Committee for Industry, Energy and Subsoil Use, replied to Mambetov that the amount depends on the volume of gas being transferred.
«The amount will change every year. In the first year it will be little, in another year more, in general, it will be decided depending on the volume of gas. If you subtract three years for construction, they will pay for 32 years. If you average out the payment, it would be $50-60 million a year».
In any case, authorities say the country has no money to take out a loan.
Kazakhstan-China
The first pipeline for direct import of Central Asian oil to China.
Belongs to Kazakhstan-China Pipeline LLP, the founders of which are KazTransOil JSC (50%) and China National Oil and Gas Exploration and Development Company Ltd (50%). The pipeline runs from Kazakhstan’s Caspian coast to Xinjiang in China.
Construction began in 1997, the first section from Aktobe region to Atyrau was built in 2003. The next pipeline — from Kazakhstan’s Atasu to China’s Alashankou — was completed in 2005. The last section Kenkiyak-Kumkol was built in 2009. The length of the pipeline is 2228 km, capacity — 14 million tons per year.
Tengiz-Novorossiysk
The pipeline that carries Kazakhstan’s main oil exports. Controlled by the Caspian Pipeline Consortium (CPC). CPC’s shareholders are Russia (Transneft — 24% and CPC Company — 7%, LUKARCO B.V. — 12.5%, Rosneft-Shell Caspian Ventures Limited — 7.5%) — 51%; Kazakhstan (KazMunayGas — 19% and Kazakhstan Pipeline Ventures LLC — 1.75%) — 20.75%; Chevron Caspian Pipeline Consortium Company — 15%, Mobil Caspian Pipeline Company — 7.5%, BG Overseas Holding Limited — 2%, Eni International N.A. N.V. — 2% and Oryx Caspian Pipeline LLC — 1.75%.
The pipeline receives crude oil from the Tengiz, Karachaganak and Kashagan fields and feedstock from Russian producers.
The oil arrives at the Marine Terminal in Novorossiysk port and is loaded onto tankers that ship the oil to world markets.
The length of the pipeline is 1,511 kilometers.
Kenkiyak – Atyrau
Belongs to the North-West Pipeline Company MunayTas LLP, whose founders are KazTransOil (51%) and CNPC Exploration and Development Company Ltd. (49%), owned by China National Petroleum Corporation.
Kazakhstan-China. Starts at the borders of Uzbekistan and reaches the Khorgos border post.
The gas pipeline consists of three lines. The first section transmits 40 billion m3 of gas from Turkmenistan per year. The second section — Beineu — Bozoy — Shymkent gas pipeline — connects the West with the South, it transmits 10 billion m3 of gas from Kazakhstan per year. Gas is exported to China through this section, and in the future the pipeline will help to gasify the southern regions of Kazakhstan.
The pipeline is owned by KazTransGas JSC and Trans-Asia Gas Pipeline Company Limited (50% each).
Central Asia — China. Goes through the territory of Turkmenistan, Uzbekistan, Kazakhstan and China. It mainly connects Turkmenistan and China. Design capacity is 40 billion m3 per year.
The agreement on construction and gas supplies was signed in 2007, it was decided that Turkmenistan would join the Kazakhstan-China gas pipeline project.
The pipeline was built by China Petroleum Pipeline Bureau, China Petroleum Engineering and Construction Corporation and Swiss company Zeromax, which started its work in Uzbekistan. Some sections were built by Gazprom.
Central Asia — Center. Controlled by Gazprom. Starts in Turkmenistan and runs through Uzbekistan and Kazakhstan to Russia. In 2021, Turkmenistan supplied about 10 billion cubic meters through this pipeline and Kazakhstan supplied about 4.6 billion cubic meters to Russia.
Trans-Caspian gas pipeline. Planned gas pipeline. Should link Turkmenistan and Azerbaijan; construction of an additional line from Kazakhstan’s Tengiz is under discussion.