Oil and Human Rights Don't Mix for Kazakhstan

The British government got an earful from Kazakhstan this week despite Prime Minister David Cameron's economic outreach. The prime minister arrived Sunday in Kazakhstan to help launch one of the largest oil projects in the world. With pop diva Jennifer Lopez in tow, Cameron also brought out $1 billion worth of trade deals to Astana. The Kazakh government, however, said it was in no mood for a human rights lecture from Cameron's administration, meaning the prime minister will likely return home with few assurances to show for his efforts.

The British government was accused of wasting billions of dollars worth of revenue from North Sea oil and natural gas reserves while the Norwegian government across the ocean is sitting on top of a sovereign wealth fund worth an estimated $750 billion.  Kazakhstan relies on Britain as one of its main investors in a burgeoning oil sector and Cameron arrived during the weekend to help launch a plant tied to the Kashagan oil field in the Kazakh waters of the Caspian Sea. Last week, a consortium led by British energy company BP made decisions in the Azeri waters of the Caspian Sea that will likely have sweeping effects on the European natural gas sector. Kashagan, with an estimated 9 billion barrels of oil reserves, would be no less of a game changer.

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Cameron's visit marks a first for a sitting prime minister in the backyard of the former Soviet Union. His visit was pre-empted by a chorus of human rights voices expressing concern over Kazakhstan's record. More than a dozen people were killed during strikes launched by oil workers in western Kazakhstan in late 2011. Human Rights Watch said in an open letter to Cameron he should carry as much political capital with him to Astana as economic capital.

"While the government has acknowledged some missteps during the December 2011 violence, it has yet to address the underlying causes of the oil strikes such as burdensome collective bargaining requirements and the broad ban on strikes in certain sectors of the economy," the rights group said. "It has also yet to hold law enforcement officers accountable for ill-treatment and torture in the aftermath of the violence."

Cameron said he discussed the rights issue with the Kazakh president. Nazarbayev, however, said he was not amused.

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"Nobody has a right to instruct us how to live," he said.

Kashagan player North Caspian Operating Co. said it will use a mix of existing pipelines and rail to get oil out of the country. A southwest export route could eventually tie into the Baku-Tbilisi-Ceyhan oil pipeline to tap into the international market. Last week, China National Petroleum Corp. emerged as a potential stake holder in Kashagan, where it would take over for ConocoPhillips for a $5 billion investment. That $5 billion would give CNCP a say in oil field that would eventually give up 450,000 barrels of oil per day.  Cameron said he was in Kazakhstan as part of a "global race for jobs and investment" but, backed into a corner, that economic race may be lost to broader human rights concerns - or in China's case - a lack of concern at all.

By. Daniel J. Graeber of Oilprice.com