OREANDA-NEWS. On 20 February 2008 was announced, that Kazakhstan's Prime Minister Karim Masimov threatened to seize oil fields and mineral deposits from private investors yesterday following a series of disputes with top Western energy majors.

"If contractual obligations for the development of mineral resource deposits are not respected, the contracts will be cancelled and (the deposits) will be returned to the state," Masimov told a government meeting.

  Kazakhstan, a former Soviet republic in Central Asia located between China and Russia, is rich in natural resources including oil, gold and uranium. Western investors have flocked to the country since independence in 1991.

  But the climate for foreign investors has worsened in recent months and the authorities have accused Western energy majors such as Italy's ENI and U.S. company Chevron of failing to respect contracts for some of the biggest new oil fields in the world.

  President Nursultan Nazarbayev, who has ruled Kazakhstan with an iron fist since 1990, has called for a bigger role for the state in the energy sector. Critics have accused the authorities of engaging in economic nationalism.

  A bitter dispute between Kazakh authorities and Western oil majors over the massive Kashagan oil field was only resolved last month after Kazakh state company Kazmunaigas was given a bigger role in the project.

  Restoring the balance:

  Referring to the wrangle over Kashagan, Masimov said Kazakh authorities could do the same again with other foreign investors in order to "restore the balance of interests in favor of the state."

  Kazakhstan last year adopted a law that allows the authorities to scrap or change any contract with investors in the natural resources sector based on economic interests or national security.

  Energy Minister Sauat Minbayev said at the meeting yesterday that so far 97 contracts have been cancelled and 180 companies in the natural resources sector have been informed that they are in breach of contract. Masimov also warned that no new natural resource contracts will be signed with investors before an overhaul of the country's tax system is completed later this year.

  "I order all negotiations to be stopped," Masimov said.

  The prime minister's comments fit a pattern of rising pressure on investors as Kazakhstan strengthens as a regional economic and political power. Kazakhstan is estimated to have the eighth largest oil reserves in the world.

Earlier this week, U.S. energy giant AES was forced to sell a power plant and a coal mine to local group Kazakhmys for $1.5 billion dollars after being threatened with fines of up to $200 million.
  Last year, Chevron was fined more than $300 million for not respecting environmental regulations in its joint venture project to develop the vast Tengiz oil field.