Kazakh law enforcement officers are seen on a barricade during a protest triggered by fuel price increase in Almaty, Kazakhstan January 5, 2022.
Pavel Mikheyev | Reuters
Over the span of just two days, what began as protests over spiking fuel prices have snowballed into the most serious unrest the Central Asian nation of Kazakhstan, a major energy producer and long a symbol of stability among the former Soviet states, has faced in decades.
“I’ve never seen anything like this in Kazakhstan,” Maximilian Hess, a Russian and Central Asian expert and fellow at the Foreign Policy Research Institute, told CNBC on Thursday. “It’s absolutely unprecedented.”
Dozens of protesters are reported to have been killed, according to Kazakh media. On Wednesday, protesters lit government buildings in the business capital of Almaty ablaze and took over Almaty airport, which was retaken by military forces by the end of the night. Videos on social media showed demonstrators facing off against hundreds of security forces in riot gear and crowds pulling down the statue of longtime strongman and former president Nursultan Nazarbayev.
Kazakh law enforcement officers block a street during a protest triggered by fuel price increase in Almaty, Kazakhstan January 5, 2022.
Pavel Mikheyev | Reuters
Nazarbayev, who stepped down from the presidency in 2019 but still holds significant power, was removed on Wednesday from his position as head of the country’s powerful Security Council by the current Kazakh president — his hand-picked successor, Kassym-Jomart Tokayev. Kazakhstan’s entire cabinet has resigned, but this has not quelled the protesters.
The internet has been suspended by the authorities, and by the evening of Jan. 5, Tokayev had requested support from Russia, which has responded by deploying forces from the Collective Security Treaty Organization, a Moscow-led military alliance of former Soviet states. Russian paratroopers have now rolled into the country, which for many brings back chilling memories of Kazakhstan’s days under Soviet rule.
Unrest began after Kazakhstan’s government announced it would lift price controls on liquified petroleum gas, which is what the majority of Kazakhs use for their cars. Letting the market dictate LPG prices meant that most Kazakhs were paying nearly double for their gas during the New Year period. The impact was particularly acute in Kazakhstan’s western Mangystau province, where despite living in a country rich in oil and gas, living standards are low. Monthly salaries average a few hundred dollars per month, and price increases in a basic amenity like gas are painful.
Kazakhstan, a country of nearly 20 million people about four times the size of Texas and the second-largest oil producer among the ex-Soviet states in the OPEC+ alliance, has always been seen as operating under an authoritarian system. Upon taking up the presidency in 2019, Tokayev pledged political and economic reforms — but critics and country analysts say that has been slow to come.
Demonstrators ride a truck during a protest triggered by fuel price increase in Almaty, Kazakhstan January 5, 2022.
Pavel Mikheyev | Reuters
Protests sparked by anger over the lifting of price controls on LPG are now taking an increasingly political tone, with reports of demands for democratic reforms.
“The protesters’ slogans went well beyond objecting to recent loosening of price controls for transport fuel to challenging the country’s leadership,” said Nick Coleman, a senior editor for oil news at S&P Global Platts who spent several years living in Kazakhstan. “In that regard the concerns are not dissimilar to those in a number of other ex-Soviet countries over the years.”
Kazakh authorities are having none of it. Tokayev has already accused the protesters of being part of a foreign terrorist plot, and has pledged to be “as tough as possible” in the face of the demonstrations. Some Russian state media outlets have already accused the West of being behind the unrest.
Kazakhstan is Central Asia’s largest producer of oil and has the 12th-largest proven crude oil reserves in the world, according to the International Energy Agency. Its offshore Kashagan oil field in the Caspian Sea is the fifth-largest crude reserve in the world. In 2018, Kazakhstan was the world’s ninth-largest coal producer.
Until 2015, Kazakhstan was one of the top 10 fastest-growing economies in the world, and its GDP per capita has increased six-fold since 2002, thanks to investment in its oil, gas, coal and metals sectors. Major international companies including Chevron, ExxonMobil and Shell all operate in the country, and Chevron is Kazakhstan’s largest private oil producer.
Workers at an oil well operated by a subsidiary of the KazMunayGas Exploration Production JSC in Kazakhstan, January 21, 2016.
Shamil Zhumatov | Reuters
Kazakhstan is also home to some key infrastructure, including gas pipelines from Central Asia to China. But while there have been solidarity strikes at some of the oil fields, including the massive Tengiz site — one of the world’s deepest operating supergiant oil fields in which Chevron has a large stake — there is so far no indication of those being disrupted, analysts say.
“In theory U.S. companies could be most affected by a hit to Kazakhstan’s energy production, as they are the leading crude producers in the country,” said Matt Orr, Eurasia analyst for risk intelligence firm RANE.
In 2019, U.S. oil producers accounted for roughly 30% of the oil extracted in Kazakhstan, compared with about 17% produced by Chinese companies and just 3% by Russia’s Lukoil, Orr said.
While the oil workers taking part in protests or strikes “may not be essential to maintaining production, it is unclear for how long production can remain unaffected amid the possibility of more workers striking,” Orr added, “particularly if the protests drag on into next week and beyond.”