CAR [Central Asian Republics] oil and gas legal, regulatory, and institutional reform : Republic of Kazakhstan -- final report

Six years after its declaration of independence, its ability to export oil and gas to world markets remains virtually controlled by Russia. Yet Kazakhstan has progressed significantly beyond Russia in addressing the needs of a market economy and, as a result, may be in a better position to attract investment in its energy resources -- due to its ability to negotiate production-sharing agreements, adopt an internationally acceptable oil pipeline tariff methodology, standardize tax issues, etc. During the course of this contract, USAID has assisted in a number of efforts to dramatically advance Kazakhstan"s goal of transitioning to a market-oriented oil and gas sector. The Prospectus for an Aral Sea Consortium and the International Aral Sea Consortium Agreement, when negotiated and signed, could lead to the exploration and development of the Aral Sea; the anticipated adoption of international offshore oil and gas rules and regulations will allow for the safe development of oil and gas in environmentally sensitive areas; the planned creation of an export pipeline working group demonstrates a clear recognition of the obstacles that prevent access to world markets; the request for technical assistance in the evaluation of the Kazakhstan/China Pipeline demonstrates the need to economically justify the project; and the adoption and utilization of an international oil pipeline tariff methodology and public hearing process provides financial confidence to producers and shippers. A need still remains for concentrated efforts in: broadening the tariff methodology to gas pipelines and gas distribution systems; the creation of an independent oil and gas regulatory authority; rewriting a complete set of result-oriented rules and regulations; the establishment of multiple export pipeline routes; and creating a competitive environment for oil and gas shipments to world markets. (Author abstract)