Energy politics and Security in Kazakhstan - Essay Example

Energy Sector in Kazakhstan The infrastructure of energy production in Kazakhstan is underdeveloped as a result of being part of former Soviet Union which strived to “optimize energy supply within member states rather than to achieve self sufficiency in the energy supply of each member state”. Post independence Kazakhstan had to depend heavily on energy exports for economic development. However, this dependence on energy sector caused wide disparities of income between the rich and the poor.

As part of solution, Kazakhstan is bringing the oil and gas sector under the ownership of the government (Doi, 2-3). Oil Industry Restrictions from Russia Kazakhstan faces a major problem regarding the full development of its oil export industry. The oil from this country can be exported only on routes through other countries. Currently, the only route that is economic and viable goes through Russia. Russia has however imposed partial restrictions through its Transneft pipeline system. One-third of Kazakhstan’s current oil export capacity cannot move through Russia.

The oil industry of Russia has also demanded a share in the profit by 30 percent from all oil exporting countries in the former Soviet Republics. The development program for Tengiz field has been postponed because of such demands and restrictions imposed by Russia. There have been considerations of using pipelines of other countries like Iran and Russia, but they are politically unviable and will take a long time. Also, Turkey will not allow movement of larger number of oil tankers that are necessary for utilization of full export capacity of Kazakhstan.

In addition, oil industry requires high amount of capital investment so positive results cannot be achieved in the short run (Office of Technology Assessment, 139). China as export route China lies in the eastern border of Kazakhstan and is a major market for its oil reserves. China has introduced a ‘non-commercial element’ in the field of oil export competition for Kazakhstan. In 2004, China constructed its first oil pipeline to encourage exports from other countries. In August, 2005, China signed a deal for acquiring PetroKazakhstan for the valuation of $4 billion.

It is an oil company that is based in Canada and has all its activities within Kazakhstan. Since then China holds the second position of being the largest oil producer in Kazakhstan after the latter’s national oil company. With China as an oil export route, Kazakhstan has faced positive evolution in its oil industry as supply to the world market has increased (Committee on Foreign Relation, 44). Natural gas There has been a steady increase in the production of natural gas which has transformed Kazakhstan from net gas exporter to a net gas importer.

Development in the natural gas sector has been lagging behind oil because of insufficient ‘domestic gas pipeline infrastructure’ that links the gas production countries in the West to industrial region in the East. Also, there have been insufficient export pipelines. This has been a major issue as Kazakhstan does not have access to seaports. However, in 2014 when Kazakhstan-China gas pipeline will be completed, gas can be transported to the industrial region of Kazakhstan. This will also enable Kazakhstan to export gas to other countries.

China and Russia are the important export partners of