World Economy

Apr 30, 2008

The Kazakhstan will break contracts for exploitation of natural resources

Kazakhstan, a former Soviet republic in Central Asia is rich in oil and minerals, wants to break contracts for exploitation of raw materials whose investors have not complied with the conditions, announced Thursday the Prime Minister Karim Massimov.

"On all deposits of natural resources where the contractual obligations were not met, under the order of the Head of State, these contracts will be broken and (deposits) will return to the fold of the State" , Said Massimov at a meeting at the Ministry of Energy.

The head of government, however, has not indicated what agreements were covered, while most Western majors have deposits in the country.

The Minister of Energy, Saouat Minbaïev, announced that 97 contracts - non-specified - had already been "broken" and a "note" had been sent to 180 companies who have committed "crimes" not respecting terms of their contracts, including their investments.

Mr. Massimov said his announcement followed the speech on the eve of President Nursultan Nazarbayev to Parliament in which he called a "reinforcement of state influence in the strategic sector of energy."

Kazakhstan has adopted in autumn 2007 a law allowing it to cancel or modify any contract with investors on the exploitation of raw materials if the economic interests or national security were threatened.

Astana had threatened a Western consortium operating the Kashagan oil field to cancel their contract. But a compromise (increasing the State kazakh in the draft) is finally intervened in January.

Kazakhstan, world number eight in terms of oil reserves which the basement is full also of metals, was until recently set an example in the eyes of foreign investors.

But since this summer, Astana has raised the tone against the majors, including condemning a company controlled by the U.S. giant Chevron (NYSE: CVX - News) to more than $ 300 million fine for non-compliance with the environment.

This week, the giant copper kazakh Kazakhmys (London: KAZ.L - News) also announced the purchase for 1.5 billion dollars in a coal mine and the main powerhouse of the country to American AES ( NYSE: AES - News), which was threatened with a fine of $ 200 million for abusing its dominant position.

by erectusplus at 8:10 AM |