Governance of oil and gas contracts in Kazakhstan

The core concept of this two-year project was that the policy imperative of sustainable development (i.e. an integrated approach to securing environmental, social and economic benefits) offers a valuable entry point for multi-stakeholder analysis and dialogue on oil and gas investment in Kazakhstan. The project aimed to identify critical issues and develop policy recommendations for enhancing long-term investment stability in the oil and gas sector in Kazakhstan.

The project was designed and coordinated by IIED in partnership with a range of Kazakhstani experts. Funding for the project was provided by the British Embassy in Astana. The timeline of the project coincided with several important legislative changes in Kazakhstan that will impact on the future stability of oil and gas investment in the country, including a new tax code and, most importantly, parliamentary consideration of a new draft Law on Subsurface Use. The renegotiation of the Kashagan Production Sharing Agreement also occurred during the life of the project.

Key project activities were:

• Preparing analytical research papers by Kazakhstani expert partners - paired with international expertise - across four main themes: legal, economic (especially local content), social (primarily social investment requirements) and environment
• Facilitating multi-stakeholder dialogue in the form of roundtable discussions and smaller meetings on key issues and options for future oil and gas investment in Kazakhstan
• Disseminating project outputs to showcase the process for possible replication in other countries, particularly within the Caspian Region.

The final roundtable discussion of the project took place in Astana in May 2010. The written output of the initiative is a reflection on a number of policy areas, which are central to enhancing long-term stability of oil and gas investment within the context of sustainable development.

All of the project outputs (see downloads and links) are presumed to take into account current government thinking in Kazakhstan, whilst endeavouring to find ways to achieve an optimal acceptable balance across stakeholder concerns.

A range of longer-term impacts has been envisioned and built into the project design:

• A ‘next generation’ of investment arrangements that makes a visibly enhanced contribution to economic, social and environmental sustainability
• Greater sensitivity to sustainable development concerns in the implementation of existing operations
• Local content arrangements and social investment programmes under future oil and gas investment contracts that are grounded in fundamental public policy priorities.