Turmoil Could Be Brewing in Kazakhstan Over Oil Workers Agreement

Energy investors from Russia, China, and Western areas will learn if Kazakhstan has the ability to squelch turmoil in the oil sector. The country’s government is holding negotiations with Kazakhstan’s western energy producers. Threats of protests loom because the unions disagree with the labor codes that may be changed by government. Employers are also fighting for more rights to determine wages and employment. This situation proves to be an especially difficult one with low energy prices, forcing all to make cutbacks somewhere.

Kazakhstan’s well-being affects many other countries and economic factors. Astana finds the instability to be of concern. Russia looks at Astana as a close ally due to its position between Russia’s southern border and close proximity to Asia. Kazakhstan is a primary energy-producing state to Central Asia and China. With the world’s 11th-largest energy reserves and some of the largest mineral reserves globally, China also sees Kazakhstan of importance to fulfilling future energy needs and transportation passageways. Central Asian workers migrate to the country. Kazakhstan then becomes a contributor to other Central Asian economies.

The country’s exports total 25 percent of Kazakhstan’s gross domestic product and 60 percent of the government’s budget. Since oil prices drastically dropped, the country enforced a severe currency devaluation of 19 percent earlier this year. The country also slashed the state budget by 10 percent.download (19)

Astana fears the social unrest. Kazakhstan is looking to prevent another upheaval like the Zhanaozen riots. The country has watched many other disruptions hit the governments of former Soviet Union states in the last few decades and has experienced some of these in its own borders.

A May 2011 battle by oil workers resulted in a bloody three days of battle between the police and UzenMunaiGaz workers in Kazakhstan. Fourteen people were killed. The government cut off phone and Internet services and instituted curfews to stop the violence.

The government eventually settled on allowing stable salaries and jobs, the rights of oil workers to form unions, and negotiating a government contract with these unions. In addition, President Nazarbayev removed many members of the country’s elite from government.

Those negotiated items are being tested now. Many companies have suffered 65 percent profit drop. The government had ordered no job cuts from foreign or domestic firms in operation there. However, the low oil prices cannot support this concession.

Kazakhstan has offered incentives for foreign investors as a way to keep energy firms at current operating levels. But, the incentives didn’t work. Workers argue now that changes in the labor agreement is breaking the contract and sets the country on edge for fear of riots.

The government is cooperating with union leaders and are setting up a group to discuss the issues. In the past, Astana leaders usually simply made decisions with no outside input. The government hopes meeting with union leaders will show that the country is a good choice for doing business and try to avoid protests. However, workers have more concerns than they did when the riots occurred in 2011, which could still upset the country.

The higher oil prices have been affecting people all over the world, especially in our local city of of Winnipeg. The hardest hit company has been winnipeg limos who have had to increase their prices to recouperate for the higher gas prices. We wish them the best of luck.


Here are some beautiful images from the great country of Kazakhstan:

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Kazakhstan to Spend Annually for Nuclear Fuel Bank

The Interfax-Kazakhstan news agency reported that Kazakhstan would be spending from $10,000 to $15,000 annually for maintenance of the International Nuclear Fuel Bank.

The Nuclear Threat Initiative, a nonprofit organization, was created to strengthen global security by decreasing nuclear, biological, and chemical weapons and first proposed the idea of the nuclear fuel bank in 2006. This idea was to provide countries with low-enriched uranium access. Such access would discourage them from needing to build their own enrichment facilities, thus, reducing the risk of such facilities being used for building a nuclear weapon. International Atomic Energy Agency (IAEA) member states voted in 2010 approving the initiative.

The basis of the program is for countries with enrichment capabilities to give enriched fuel to the bank for countries without such capabilities for their power reactors.download (4)

Kazakhstan’s President Nursultan Nazarbayev proposed in 2009 that the country host the fuel bank. Kazakhstan voluntarily forfeited and disassembled its inherited fourth largest nuclear arsenal of the world after the collapse of the Soviet Union. In 2011, the IAEA gave the approval for the nuclear fuel bank to be hosted by the country.

The final sign-off was anticipated in 2013. However, some details are still being negotiated and that signing was delayed. In May 2015, the draft agreement was signed. The IAEA will provide funds for the purchase and delivery of the low-enriched uranium, equipment purchase and technical support for proper function of the fuel bank. Kazakhstan will shoulder costs as well. These costs will be for the storage of the fuel. Such costs include providing personnel, office space, and utility costs, such as electricity and heating.

Kazakhstan’s costs will be about $10,000 to $15,000 annually under the current agreement. Special Envoy of the Kazakh Ministry of Foreign Affair Barlybay Sadykov states that funds will be used for “storage, physical protection of the material, heating, lighting and communications.”

The fuel bank will be built at the Ulba Metallurgy Plant site. This facility is a member of the country’s KazAtomProm, a large atomic company that manufactures nuclear power plant fuel pellets. It is located in eastern Kazakhstan close to Ust-Kamenogorsk.

Foreign Minister Yerlan Idrissov assured the fuel bank would not have any adverse effects on the already polluted environment in that area or negatively impact the residents there.

The nuclear fuel bank will officially launch on August 27th with a ceremony. The International Atomic Energy Agency’s Director General, Yukiya Amano will be there and the finalized agreement will be signed. Sadykov said two further agreements regarding technical details would be written as well.

“Of two technical agreements one will be signed with the operator (of the bank, which is the Ulba Metallurgy Plant) on the terms of electricity, gas and water supply, and provision of office space, and the terms of IAEA’s payment for the services provided by the Ulba Metallurgy Plant. And the second agreement is about the implementation of IAEA’s recommendations.”

Foreign Ministers of donor-countries, top managers of the Nuclear Threat Initiative, and permanent members of the United Nations’ Security Council have all been invited to the ceremony, according to Sadykov.

The Kazakhstan fuel bank will have the capability to hold 90 metric tons of low-enriched uranium. Such an amount will run a 1,000-megawatt light-water reactor.

Financing for the fuel bank will be from voluntary donations, not IAEA budget allocations. So far, the Nuclear Threat Initiative has donated about $150 million. The initiative’s advisor, Warren Buffett, has given Fifty million dollars. The U.S. donated $49.54 million. Other support includes $10 million from the United Arab Emirates, $10 million from Kuwait, $5 million from Norway, and the European Union countries’ $25 million. These contributions will be enough to ensure 10 years of operation for the fuel bank.

In just a few days, the first country across the globe to host an international nuclear fuel bank will be Kazakhstan.

A similar plan is being discussed for another post-Soviet country. The IAEA is considering the International Uranium Enrichment Center at Angarsk, Siberia, as a host of another nuclear fuel bank.