Violent protests against the government are raging in Kazakhstan, some of the largest oil fields on earth and more than 40 percent of the world’s uranium production.
So far the unrest does not appear to have reduced oil or uranium production, but it has the potential to ripple through key energy markets.
Uranium prices, which have risen in recent months in hopes of a resurgence in the nuclear industry in the face of climate change, rose 8 percent on Wednesday amid reports of conflicts in the Central Asian country. U.S. government figures show that 22 percent of uranium purchased by nuclear power plants in the United States by 2020 came from Kazakhstan. “Without Kazakhstan now, uranium would not be available anywhere in the world,” said Jonathan Hines, chairman of the UxC, which oversees the market.
Any drop in oil production from Kazakhstan, which produces about 2 percent of world supply, could already be felt in the tight market. Some oil producers did not meet the quota OPEC Plus was assigned to them under contracts known as the Producers Group.
Kazakhstan, a member of the group, has significantly exceeded its quota and is one of the few producers that could increase production in the coming months.
As part of a reflection of concerns about the Kazakh unrest, oil prices rose more than 2 percent on Thursday in futures trading in global markets.
“This is a distribution risk that is not on anyone’s radar screens,” said Phil Farn-Price, director of intelligence at the energy research firm Enverse. He said oil analysts had largely focused on problems elsewhere, including the recent cuts in production in Libya due to tensions and political turmoil between Saudi Arabia and Iran.
Kazakhstan has been a magnet for Western energy investment since independence with the collapse of the Soviet Union three decades ago. The Dengis oil field in the western part of the country near the Caspian Sea is one of the largest in the world. Chevron and ExxonMobil, two major US oil companies Are in the midst of an estimated $ 37 billion expansion In the Tengiz industry, it is Chevron’s main source of revenue.
Exxon, Shell, France’s Total and Italy’s Eni are all partners in another major sector in the Caspian, Casagan.
These sectors helped turn Kazakhstan into a substantial oil producer, producing about 1.6 million barrels a day (more than Nigeria, comparable to Mexico) and one of the few growing. Oil operations are an important source of revenue for the Kazakh government.
The fields are in remote areas, but oil workers have been protesting in the Chevron-operated tennis sector in protest of the protests.
Tengizchevroil, the country’s Chevron-led joint venture, said in a statement on Thursday that “a large number of contractor workers in the dengue sector have gathered in support of the ongoing protests across Kazakhstan.” It added, “Production activities continue.”
Mr. Foreign-Price said the locations of these fields would prevent disruption. But as the unrest accelerates, oil companies may run into problems, such as difficulties in moving people and delivering goods inside and outside the bases.
Widespread disruption could also affect Kazakhstan’s investment and credit opportunities.
On Thursday, Standard & Poor’s, a credit rating panel, attributed the so-called “structural weaknesses” to domestic unrest in Kazakhstan’s companies. The agency said government policy was subject to so-called “succession risk”, noting that long-time leader Narsultan Nazarbayev was sworn in by another powerful president, Qasim-Jomar Tokayev, in 2019, and that “corruption was perceived to be high”.