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Journalist

Andrei Matveev is a journalist from Kazakhstan.

Articles

OPEC KazMunayGas Oil Production Oil Market Low Hydrocarbon Prices OzenMunayGaz

Slippery Slope: How Falling Oil Prices Threaten Kazakhstan’s Energy Giant

With global oil markets in flux and prices dipping below $70 per barrel, Kazakhstan’s state oil company faces mounting financial strain. If KazMunayGas (KMG) fails to adapt, it risks edging toward a fiscal cliff. Yet, political constraints, exacerbated by the ongoing specter of potential social unrest, have hindered the company’s ability to implement reforms. OPEC+ Fuels Market Uncertainty The global oil market is entering a new period of turbulence reminiscent of the pandemic era. Despite prolonged efforts by OPEC+ to manage output and stabilize prices, the alliance’s fragile consensus unraveled this April, when Saudi Arabia and Russia led an unexpected increase in production, undermining earlier commitments and tipping the market into oversupply. Meanwhile, U.S. shale producers have continued to expand their output and export aggressively, squeezing traditional suppliers out of lucrative Asian markets. A decelerating Chinese economy, the world’s largest oil importer, adds further downward pressure. As a result, Brent crude fell below $70 per barrel in early May and briefly traded under $65. For Kazakhstan, where oil exports are a key source of budgetary and foreign exchange income, this trend spells trouble, and KMG is particularly exposed. The “Black Hole” in KMG’s Finances Public data shows that KMG’s production costs vary from $40 to $70 per barrel, depending on the field. However, factoring in transportation, taxes, and social obligations, the real breakeven point nears $90 per barrel. Aging infrastructure in the Mangistau region, reliant on constant technical upkeep and subsidies, only adds to the burden. KMG’s debt load compounds the challenge. At the end of 2024, its total debt exceeded 4 trillion tenge ($7.87 billion). With export revenues dwindling, debt servicing is becoming untenable. Even short-term dips to $60-65 per barrel could have systemic consequences, stalling new investments, triggering layoffs, and slashing social spending. A key drain is OzenMunayGas (OMG), KMG’s subsidiary in Zhanaozen, where production costs reportedly hit $90 per barrel. “OzenMunayGas exemplifies how populism, inflated promises, and stagnant reforms can turn a major asset into a financial sinkhole,” Arman Bataev, a former internal auditor at KMG has stated. On his Telegram channel, Finmentor.kz, Bataev warned that a $90 production cost versus Brent at $59 is “not a temporary hardship but a dead end.” OMG required 30 billion KZT in financial aid last year, and Bataev predicts it may require 60-70 billion KZT in 2025. KMG Downplays Risks KazMunayGas officials maintain that the company is “prepared for all scenarios” and holds “sufficient reserves.” At a May press briefing, Deputy Chairman Aset Magauov emphasized that 70% of KMG’s output is sold domestically, insulating it somewhat from global price volatility. “Analysts expect prices to average $65 per barrel this year, but forecasts are inherently uncertain,” Magauov said. “We have contingency plans and cost-optimization measures ready. We are equipped to handle price fluctuations.” Magauov also noted that domestic oil prices are lower than export prices, and products like gasoline and diesel, refined at KMG’s three facilities, are now sold at market rates following the end of state price controls. He added...

2 days ago

tax code President Tokayev Tax Reform VAT

Kazakhstan’s Lower House Passes Controversial New Tax Code Amid Public Backlash

On April 30, the Mazhilis, the lower house of Kazakhstan’s parliament, approved a new Tax Code by majority vote. The draft law, part of President Kassym-Jomart Tokayev’s broader economic reforms, has triggered intense public and political debate. While proponents highlight its emphasis on modernization and fairness, critics warn of increased pressure on businesses and potential inflation. The final decision now rests with the president, following Senate review. Key Reforms and Adjustments According to Berik Beisengaliyev, head of the Mazhilis working group, the final version of the Tax Code diverges significantly from the original draft submitted in August 2024. One of the major changes concerns VAT (value-added tax). The government’s initial proposal to raise the VAT rate to 20% was scaled back to 16%. The threshold for mandatory VAT registration has been raised from 15 million to 40 million tenge. Reduced VAT rates are set for medical services and medicines, 5% from 2026 and 10% from 2027. Goods and services tied to guaranteed free medical care, compulsory health insurance, and treatment of orphan and socially significant diseases will be VAT-exempt. Additionally, the VAT exemption will extend to socially significant food items, books published domestically, and related publishing services. Agricultural producers will benefit from a higher VAT offset, increased from 70% to 80%. Other reforms include a shift from a permissive to a prohibitive activity list, with a unified 4% tax rate that regional maslikhats can adjust by ±50%. Special tax regimes for business-to-business transactions are also being expanded. Corporate income tax (CIT) has been reduced to 5% from 2026 and 10% from 2027 for social sector organizations. The social tax deduction for people with disabilities has increased to 5,000 MCI (19.6 million tenge in 2025). Meanwhile, the CIT rate for banks and the gambling industry has been raised to 25%, though a 20% rate remains on banks’ business lending income. A progressive income tax scale will be introduced: 10% on annual wages up to 8,500 MCI (33.5 million tenge or roughly $65,000), and 15% on income above that threshold. For dividends, the rate will be 5% on income up to 230,000 MCI (1 billion tenge, or $2 million), and 15% thereafter. The code also proposes higher excise taxes on alcohol, tobacco, and heated tobacco products, along with a new excise on energy drinks as part of a health initiative. Land use provisions have been amended to penalize inefficient use of agricultural land, with payment rates increasing up to 100-fold. Mineral resource usage rates will vary based on license duration and the number of plots held. Political Dissent and Criticism The Ak Zhol party opposed the code in both readings, citing disproportionate fiscal burdens on SMEs while sparing large extractive firms. The party also criticized the VAT hike as inflationary and warned about the opaque nature of the risk management system (RMS), which they say allows for discretionary actions by tax authorities. “The code is bloated with over 100 new articles, making it more difficult for entrepreneurs to navigate. This is not...

1 week ago

opinion Agreements Oil Production

Kazakhstan Signals Early Review of Oil Production Sharing Agreements

The question of revisiting Kazakhstan’s production-sharing agreements (PSAs) with foreign oil companies is once again gaining prominence both within the country and internationally. While the Ministry of Energy is formally responsible for managing these contracts, growing pressure is coming not only from civil society but also directly from President Kassym-Jomart Tokayev, who has publicly questioned the long-standing terms of these deals since 2022. Confidential Terms, Public Scrutiny Recent revelations have further fueled this debate. The International Consortium of Investigative Journalists (ICIJ) recently detailed the ongoing arbitration dispute between Kazakhstan and the North Caspian Operating Company (NCOC), which manages the Kashagan field. The stakes are high: $160 billion is under contention. Yet what shocked the Kazakh public most was not the litigation itself, but that the state receives just 2% of the field’s profits, with a staggering 98% flowing to foreign stakeholders. Such findings offer context for why the Ministry of Energy is reluctant to release details of these 1990s-era agreements, originally negotiated with significant involvement from Kazakhstan’s first president, Nursultan Nazarbayev. In a recent court case, the ministry successfully blocked a lawsuit by Vadim Ni, founder of the Save the Caspian Sea movement, who demanded public disclosure of PSA terms affecting environmental interests in the Caspian. The ministry argued that Kazakhstan’s adherence to international confidentiality clauses is essential to avoid multibillion-dollar lawsuits and maintain its reputation as a stable investment destination. However, the ministry also emphasized that confidentiality does not shield violators from environmental penalties. Calls for transparency and revision have come from various quarters. Members of the Ak Zhol party and the Parasat Business Alliance have joined the chorus, urging the government to review the PSAs. In this context, President Tokayev’s consistent remarks suggest a coordinated state policy shift. A Change in Presidential Tone Tokayev first broached the subject in a 2022 interview with Russia 24, reflecting on the constraints Kazakhstan faced during the early years of independence. At the time, the country had no legal framework for foreign investment and had to rely on companies like Chevron to develop its energy sector. The president acknowledged the success of some ventures but also suggested the need for a “correction” to reflect current realities. Fast forward to 2023, and the government launched a $5 billion lawsuit against NCOC over alleged environmental violations. Although Kazakhstan has been temporarily barred from collecting the fines pending arbitration, the case marks a significant escalation. In April 2024, the Parasat Business Alliance held a public briefing demanding more local participation in procurement contracts tied to oil fields such as Karachaganak, Kashagan, and Tengiz. Kazakh companies reportedly receive less than 5% of $12 billion in annual procurements, a figure viewed as unacceptable by domestic businesses. By January 2025, Tokayev’s rhetoric had hardened. Speaking at an expanded government meeting, he instructed his cabinet to actively renegotiate PSA terms before their expiration. "The implementation of these agreements has helped Kazakhstan become a reliable global energy supplier,” he said, “but large investments require updated terms that benefit our nation.”...

1 week ago

Public Holidays Day of Unity May Day Holiday Celebration

May Day in Central Asia: From Soviet Parades to a Celebration of Unity

In Soviet times, May 1 and 2 were public holidays. May 1 was International Workers' Day, marked by large-scale parades celebrating the proletariat, while May 2 served as a day to recuperate before returning to work. Today, three of the five Central Asian republics have preserved the tradition of celebrating May Day, effectively marking the arrival of spring twice, once through Central Asian customs – Nauryz - and again through European ones. Workers of the world, unite! Coined by Karl Marx and Friedrich Engels in The Communist Manifesto, this famous communist slogan once appeared on the coats of arms of the Soviet Union and its republics. International Workers' Day became the living embodiment of this phrase. Celebrated on 1 May, May Day began as a European festival of spring but gained global significance through the labor movement. The Second International, formed at the 1889 International Workers Congress in Paris, called for an annual demonstration advocating an eight-hour workday. The date honors the U.S. general strike that started on 1 May 1886 and led to the tragic Haymarket massacre on 4 May. The date became a powerful symbol of working-class solidarity and a yearly tradition across large swathes of the globe. [caption id="attachment_31352" align="aligncenter" width="1174"] Soviet-era poster for International Workers' Day[/caption] Before the Bolsheviks came to power, political agitators in the Russian Empire used May 1 to call for change with slogans such as “Down with the Tsar” and “Give us freedom.” After the October Revolution, May 1 and 2 became official state holidays, with May Day becoming synonymous with International Workers' Day and mandatory parades. Unlike the more formal and solemn celebrations honoring the October Revolution, however, May Day events were often met with genuine enthusiasm. After the collapse The fall of the USSR brought about a widespread reevaluation of Soviet holidays. The celebration of the October Revolution on November 7 was widely discarded, but many post-Soviet republics retained May 1 as a public holiday, albeit with new interpretations and meanings. In Central Asia, Turkmenistan and Uzbekistan do not officially celebrate May 1. Turkmenistan has developed a distinct holiday calendar, while in Uzbekistan, May 1 is observed symbolically as the Day of Fountains. [caption id="attachment_31353" align="aligncenter" width="2560"] Day of Fountains, Tashkent; image: TCA, Stephen M. Bland[/caption] Though celebrations are more modest and it is no longer officially a day off, Tajikistan has retained the holiday’s Soviet-era name, International Workers’ Day. Some traditions, such as honoring outstanding workers, persist. Kyrgyzstan calls the holiday Labor Day, in line with its American equivalent. It is marked by festive events and activities organized by trade unions. Kazakhstan has taken a different approach, reimagining May Day as the Day of Unity of the People of Kazakhstan. The name reflects the country’s emphasis on stability and interethnic harmony, a model promoted by the Assembly of the People of Kazakhstan, an institution established on March 1, 1995, at the initiative of the country’s first president, Nursultan Nazarbayev. Since 2016, March 1 has also been celebrated as Thanksgiving...

2 weeks ago

Corruption Crime History Ablyazov Tatishev Ruslan Berdenov Assassination Attempt Shymkent Contract killings independent Kazakhstan

Shadows of Power: Assassination Attempt Exposes Kazakhstan’s Turbulent Past

The assassination attempt on the deputy akim (head of the local government) in Shymkent, Kazakhstan’s third-largest city with a population exceeding one million, has drawn intense public attention. Shymkent, designated a city of republican significance, rarely sees violence of this nature targeting high-ranking officials. Ruslan Berdenov, the official in question, was wounded by shotgun fire from a smoothbore weapon on the steps of the city administration building, which struck him in the thigh and the shoulder. The attack appears less like a calculated contract killing and more like an act of personal retribution. Despite its entrenched presence in Russian criminal culture, the phenomenon of contract killings has not firmly taken root in Kazakhstan or the broader Central Asian region. Nonetheless, several contract-style assassinations have left a deep imprint on the public consciousness. The following cases are among the most significant. Alexander Svichinsky On December 28, 1992, Alexander Svichinsky, the general director of the Karaganda Metallurgical Plant, was gunned down in Temirtau. This was the first confirmed contract killing in post-Soviet Kazakhstan. Svichinsky, who had risen through the ranks at Karmet Combine from mechanic to general director, had recently succeeded Oleg Soskovets, who later served in both the Kazakh and Russian governments. He was shot in the back of the head at the plant’s gatehouse. President Nursultan Nazarbayev took personal control of the investigation. Gabdrakhim Mendeshev, a veteran criminal investigator, eventually uncovered the truth: the hit was arranged by a demoted former deputy of Svichinsky. The intermediary, a driver at the plant, enlisted three Lithuanian nationals staying at a local hotel to carry out the murder. Following Svichinsky’s death, the plant’s fortunes declined. It was eventually sold to Indian industrialist Lakshmi Mittal’s Ispat Corporation. Iosif Milgram A year later, in December 1993, Almaty saw its first major contract killing. Iosif Milgram, the head of the Almatygorstroy construction firm, and his driver Dmitry Tarasov were murdered in the courtyard of Milgram’s home. The case went unsolved until 1998 when a traffic stop led to the arrest of Zakir Salakhutdinov. After killing a police officer during the stop, Salakhutdinov was detained and eventually confessed to the murder of Milgram. Investigators discovered that Milgram had accused his business partner, Valentin Li, of embezzlement. Li allegedly paid Salakhutdinov $20,000 to carry out the killing. In 1999, Salakhutdinov was sentenced to death and Li received a 15-year sentence, although he was released early due to illness. Nurlan Turysov In 2002, businessman Nurlan Turysov and his wife Bayan Atabaeva were murdered in their Almaty apartment. Turysov was the son of Karatay Turysov, a prominent political figure in Soviet Kazakhstan who had served as vice-premier of the republic’s Council of Ministers. Investigators believe Turysov was acquainted with the killers, as he let them in himself. He was shot twice in the temple and once in the back of the head. Hearing the shots, his wife attempted to flee and was attacked at the window, stabbed, and then shot in the head. The apartment was ransacked, suggesting the killers...

3 weeks ago