Expert: China’s engagement in Kazakh oil production is fraught with problems

Oil&Gas Materials 5 July 2013 13:07 (UTC +04:00)

Kazakhstan, Astana, July 5 / Trend D. Mukhtarov /

By letting China enter into oil production and in particular the Kashagan field development project, Kazakhstan runs the risk of opening a 'Pandora's Box', Russian expert, head of the Chair of the Civilisation Development of the Russian Higher School of Economics Alexey Maslov said.

He told Trend it is fraught with problems.

The expert stressed that Canada and Australia operate in a similar way to Kazakhstan's scenario today. They also let China enter their oil sectors.

"But Canada or Australia are located geographically far away from China," he said. "Russia sells its hydrocarbons to this country, but does not deliver oil-producing assets to Chinese companies."

According to the expert, it is important not only to trade in energy resources, but to transfer oil and gas fields to any other country, not only China.

He said that China has been actively present in Kazakhstan during the global financial crisis in 2008 - 2009, by delivering loans for energy and uranium supplies.

"Basically, the country must retain its monopoly in such basic sectors as coal, gas, oil, steel and military technologies," Maslov added.

According to him, it is possible to transfer oil and gas transportation. That is pipelines, but in any case China should not be allowed to engage in oil production.

"This is very dangerous because this disrupts the balance in the country's national economy," he said. "Kazakhstan's economy must not depend on China's economy."

According to him, it would be preferable for Kazakhstan to keep a distance from China.
Maslov believes that China's too close rapprochement with any other country could cause the economic collapse of the latter.

It was previously reported that in an interview with Reuters, head of KazMunaiGas (KMG) national company Lazzat Kiinov said that the Chinese company CNPC will buy a stake in the Kazakh Kashagan oil field in the Caspian Sea, paying over $5 billion.

KazMunaiGas will sell a package, but KMG will receive a package of another participant, U.S. company ConocoPhillips which will leave the project.

Kashagan is a large oil and gas field in Kazakhstan, located in the north of the Caspian Sea. Its geological reserves are estimated at 4.8 billion tons of oil and its common oil reserves amount to 38 billion barrels, or six billion tons and the recoverable reserves out of these amounts to about 10 billion barrels. Kashagan also has large reserves of natural gas amounting to more than one trillion cubic meters.