Governance of oil and gas contracts in Kazakhstan

This project aimed to enhance the stability of the oil and gas investment climate in the Republic of Kazakhstan. The project identified critical issues and developed policy recommendations for increasing long-term investment stability in the oil and gas sector in Kazakhstan.

2008 - 2010

The core concept of this two-year project was that the policy imperative of sustainable development (ie an integrated approach to securing environmental, social and economic benefits) offered a valuable entry point for multi-stakeholder analysis and dialogue on oil and gas investment in Kazakhstan.

The project was designed and co-ordinated by IIED in partnership with a range of Kazakhstani experts. The timeline of the project coincided with several important legislative changes in Kazakhstan that were expected to 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, and
  • 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 reflected on a number of policy areas central to enhancing long-term stability of oil and gas investment within the context of sustainable development.

All the project outputs were presumed to take into account government thinking in Kazakhstan, while endeavouring to find ways to achieve an optimal acceptable balance across stakeholder concerns.

A range of longer term impacts was envisioned and built into the project design:

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