British Gas celebrates 10 years of activity in Kazakhstan this year
BG first came to Kazakhstan at the very beginning of the 1990s to evaluate business options in the country. In 1990 a team of BG geologists first visited Kazakhstan. And in 1991 BG delivered a week-long seminar in Almaty on Legal, Commercial and Economic issues in the Petroleum Industry. The first Agreement between Kazakhstan authorities and BG and Agip was signed on July 1, 1992 giving these two companies the exclusive rights to negotiate the Production Sharing Agreement (PSA) on the super giant Karachaganak gas condensate field. This date is the official start of BG activities in Kazakhstan.
Today BG is joint operator of the giant Karachaganak oil and gas/condensate field in Western Kazakhstan. BG is also a shareholder in the Caspian Pipeline Consortium (CPC) which is now operating the oil pipeline linking reserves in western Kazakhstan to the Black Sea, thereby providing access to world markets. In addition, BG is a partner in the consortium that is currently exploring acreage in the Kazakh sector of the Caspian Sea. Appraisal of the potentially giant Kashagan oil field began in May 2001 following the encouraging results of the Kashagan East-1 discovery well and the subsequent Kashagan West-1 well. BG has already invested over one billion US dollars in these projects in Kazakhstan.
BG is involved in a broad range of social programs in Kazakhstan. Firstly, we do it through our operators in the regions. Karachaganak’s social commitment is $10m each year and the North Caspian social program to date has been valued about $5m each year. We are also supporting communities we work in. As an example in Almaty we support an orphanage, and in Astana we help a school for disabled children. Our environmental commitments are also serious. The BG Chair of Environmental Technologies at Almaty Institute of Power Engineering and Telecommunications is a strong reflection of it. The BG Wildlife Photographer Competition and Exhibition is also a demonstration of our care about the global environment. In sphere of education BG supports Master’s program in Ecology at AIPET and different Master’s programs at Strathclyde University in the UK, providing scholarships to distinguished students.
Today BG Kazakhstan is member of the following associations: Kazakhstan Foreign Investors Council Association; Kazakhstan Petroleum Association; European Business Association; American Chamber of Commerce. All Associations have been formed for various specific purposes. These include representing the point of view of their members (both foreign and domestic) in Kazakhstan, through a strong collective voice. They aim to foster business relations and to provide support and non-commercial information for companies-members of the Associations. Their mission furthermore includes taking steps to improve the levels of communication and contacts between Government and business community here in Kazakhstan. At the same time, the associations do not neglect the interests of the small and medium sized businesses. One of their primary goals is to cultivate and develop positive relationships between international and local companies and the Government.
For oil and gas sector investors the Republic offers the opportunity to participate in the development and production of large proven oil and gas reserves, situated in the Caspian region. In addition the potential of unexplored areas, especially in the Caspian offshore, is huge. These factors coupled with the favorable investment climate make the investors seriously consider Kazakhstan.
Kazakhstan has made great progress in the transition from the command economic of the Soviet period toward a market economy within which investors, both local and international, are working. The leadership and the Government have made significant effort to create a robust legal and fiscal framework, which allows for business to operate in a reasonable way. Additional legislation is being introduced by the Government to further strengthen the legislative base and investment climate. It is notable that in this process there is a strong and positive dialogue between the Government and the investment community.
Kazakhstan is situated close to the Caspian region with huge oil and gas reserves and a wide range of other significant mineral resources and a well-educated and motivated workforce. These features coupled with strong leadership, which has a clear vision, that includes the development of a healthy business climate, make for a business friendly environment.
The process of transition continues to take a great deal of effort, but assuming continued positive structural reform and institution building does take place together with stability, in the contractual framework, then Kazakhstan will continue to stay attractive for foreign investors.
The best advertisement for the investment climate of country is the word of the current investors. The investors that are here for the long term, like the BG Group, do express a strongly positive comment about Kazakhstan’s business climate and BG is very pleased to be a partner of the Republic of Kazakhstan.
Table of contents
A few aspects of Russia’s policy in the Caspian region * Viktor Kalyuzhny
Kazakhstan’s Position Regarding the Legal Status of the Caspian and Outlook for Economic Development of the Region Bulat Sarsenbayev
Legal Framework Of Kazakhstan’s Telecommunications Sector Thomas C. O’Brien, Victoria P. Simonova
Alternatives in international dispute resolution* Sigvard Jarvin
