Huge U.S. Investments at Risk in Kazakhstan Unrest

For years, Kazakhstan’s vast natural riches and relative political stability have made the country a ripe target for U.S. investments. The current wave of protests, which has led to dozens of deaths, is now making those investments a riskier proposition.

Since 2005, the value of U.S. investment in the Kazakh economy has surpassed $45 billion, according to Kazakh authorities. Some 600 U.S. companies operate there, including

Chevron Corp.


Exxon Mobil Corp.


Dow Inc.


DuPont Inc.

Before the pandemic, the Central Asian nation attracted more annual U.S. investments than some European Union member states. No U.S. company has said it plans to exit Kazakhstan and many have stated they are waiting to see how the crisis will unfold before making decisions on their investments in the country.

While political and social risks in the former Soviet state have long been seen as high, due to its authoritarian system, endemic corruption and low living standards among swaths of the population, foreign investors have instead focused on its plentiful natural resources.

Kazakhstan is a key contributor to global energy supplies, producing around 2% of the oil that the world consumed each day last year, and has large reserves of precious metals and coal. It represents 40% of the world’s uranium production alone.

The current crisis, which Kazakh officials said was caused by outside forces who hijacked initially peaceful demonstrations, hasn’t led to major economic disruptions yet. But protests temporarily limited production at the Tengiz oil field project, whose operator is 50% owned by Chevron. The operating consortium, Tengizchevroil, is the country’s largest contributor to government revenues.

Chevron executives were surprised by how quickly the situation in Kazakhstan deteriorated and are evaluating how exposed their operations are to continued protests, people familiar with the matter said. But the people said that Chevron has experience working in challenging locales, noting it has retained its assets in Venezuela despite its political instability, for example, and said Chevron has the wherewithal to wait out the turmoil in Kazakhstan.

A Chevron spokeswoman said the company is committed to Kazakhstan and that production had been fully restored and the workplace environment is stable.

Troops from the Russia-led Collective Security Treaty Organization guard an electricity-generating facility in Kazakhstan.


Russian Defence Ministry/Zuma Press

Manfred Stamer, a senior economist at insurer Euler Hermes, said that demonstrations could continue over the coming weeks and while the Kazakh government will seek to protect foreign investment’s crucial role in the economy, political instability is now a risk.

“Such an event reminds investors of the risks of doing business there,” said Mr. Stamer. “You must expect that this isn’t an one-off.”

Kazakh officials have sought to reassure foreign investors in the wake of the crisis.

“The president of our country clearly stated that all foreign investments, not only the U.S., but Russian and from other countries as well, will be well-protected,” Kazakhstan’s ambassador to Russia, Yermek Kosherbayev, told Russian state news agency TASS on Saturday.

Following the dissolution of the Soviet Union, newly independent Kazakhstan looked to the West to help it develop its oil reserves and other resources. Chevron entered the Kazakh market in 1993, signing a 40-year concession through the Tengizchevroil joint venture, which also includes Exxon, state-owned KazMunayGas and Russia’s Lukoil.

Since then, U.S. engineering companies have built infrastructure while U.S. banks and consumer-goods companies have opened a presence in the country.


What do you think will be the outcome of the uprising in Kazakhstan? Join the conversation below.

In the nine months of available data from 2021, the U.S. was the second-largest investor in the country after the Netherlands, with $3.2 billion in direct investment, according to the Kazakh central bank. Trade between the two countries has also grown, amounting to $2 billion in two-way trade in 2019.

“The Kazakhs have always understood that they need to have good relations with Russia, China and the U.S. because they have vast amounts of wealth in the ground,” said

William Courtney,

a former U.S. ambassador to Kazakhstan and adjunct senior fellow at the Rand Corporation.

Successive governments have focused on the U.S., seeking both its capital and technical expertise. In September, Kazakhstan’s deputy prime minister met with managers from

Tyson Foods

Inc, Nebraska-based manufacturer

Valmont Industries Inc.

and some U.S. banks to promote the country as an investment destination, saying that the government would create the necessary conditions for attracting more U.S. funds.

Tyson, which has been exploring involvement in a beef processing plant project in Kazakhstan, said that it was too early to determine any impact on its interest in investing there. Valmont said it is continuing with a multiyear joint venture announced last year to produce irrigation machines and equipment and that the safety of its team on the ground is its top priority.

Following days of protests over fuel prices and falling living standards that snowballed into violent rallies and looting in some of Kazakhstan’s biggest cities, health authorities say 160 people have died. Photo: Pavel Mikheyev/Reuters

The focus on U.S. funds has also been part of Kazakhstan’s longtime goal to balance out major powers on its territory. Despite its close links to Russia, Kazakhstan, the largest of the former Soviet states in Central Asia, has sought to keep up good relations with China and the West as a counterweight to Moscow’s influence.

Neighboring Russia has sent paratroopers to help restore order at the request of Kazakh President

Kassym-Jomart Tokayev,

which comes as tensions between Moscow and the West reach their highest point in years over President

Vladimir Putin’s

assertion that Russia has a privileged sphere of influence over the former Soviet Union.

If the unfolding turmoil results in a regime that is more oriented toward Russia or China, the relatively open field that oil companies and others have enjoyed in Kazakhstan could become more challenging, said Ed Chow, a former Chevron executive who is now a senior associate at the Center for Strategic and International Studies

“If you are a Western oil company your risk profile may have just changed,” Mr. Chow said. Moving forward, those companies will prioritize the country’s stability and the security of their oil concession, he added.

The Tengiz oil concession expires in 2033. A Chevron spokeswoman said it is focused on a $45 billion Tengiz expansion project, set to finish in 2023, and that any contract extension must create value for all stakeholders.

Write to Georgi Kantchev at [email protected] and Christopher M. Matthews at [email protected]

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