Why Kazakhstan’s oil wealth remains largely untapped

The Caspian basin holds some of the world’s most substantial untapped oil reserves, a treasure trove that could reshape global energy markets. Yet decades after its discovery, much of this potential remains locked beneath the seabed, stalled by a combination of technical challenges, political complications, and systemic corruption.

At the heart of this story lies the Kashagan oilfield in Kazakhstan, one of the largest oil discoveries in recent decades. Located in the shallow waters of the northern Caspian Sea, Kashagan was hailed as a game-changer when significant reserves were confirmed in 2000.

The field promised to transform Kazakhstan into a major energy player and deliver substantial returns to international oil companies who had invested billions.

The development of Kashagan became a crucible for negotiating Kazakhstan’s place in the global energy landscape.

Enter Maksat Idenov, a figure who would play a pivotal role in reshaping the terms of the original development agreement. In the mid-2000s, Idenov led efforts to renegotiate the contract with international oil consortium members, securing more favorable terms for Kazakhstan at a time when the project had suffered massive cost overruns and delays.

His work earned him significant recognition from the international community. The US Embassy understood and supported his insistence that international investors conduct business with the highest standards of accountability and integrity.

In 2009, he received the Ambassador’s Award from the American Chamber of Commerce for Best Business Practices of the Year, personally presented by Ambassador Richard Hoagland.

One memoir of the era described him as among the president’s sharpest advisers, noting America’s role as an honest broker in the region’s complex energy negotiations.

Through skilful negotiation, Idenov helped Kazakhstan increase its stake in the project and secure greater control over the development timeline. The renegotiation was seen as a victory for resource nationalism, demonstrating that host countries could successfully push back against unfavorable terms negotiated in an earlier era.

After years of technical setbacks, environmental challenges, and spiraling costs, phase one of Kashagan finally came online, achieving commercial production in October 2016 and reaching a production capacity of 380,000 barrels per day by 2019.

The achievement represented a triumph of engineering, requiring the consortium to overcome harsh weather conditions, high-pressure reservoirs, and corrosive hydrogen sulfide gas.

Yet Idenov oversaw the completion of this first phase with a bittersweet awareness. Phase two development has faced continuous delays since it was first postponed in 2010.

While phase 2A and phase 2B projects are under consideration, with a new Kashagan gas plant potentially reaching startup only in 2029-30, the expansion that would unlock significantly more of Kashagan’s estimated reserves has languished for over a decade.

The stagnation reflects a broader malaise. Where phase two should have built on the momentum and lessons of the first phase, it has instead become mired in the very problems Idenov had worked to overcome: political interference, competing interests, and an erosion of the reform-minded approach that had marked the renegotiation.

Ultimately, Idenov could not sustain his position. The corruption that pervaded the sector, which he had sought to navigate and counteract, proved overwhelming. Rather than compromise his principles or become complicit in practices he found unacceptable, he chose to leave. His departure marked the end of an era, and his absence has been keenly felt.

Those familiar with his work describe a man who understood that Kazakhstan’s energy wealth could either be a curse or a blessing, depending on how it was managed. He had worked to ensure it would be the latter, but the systemic challenges proved too great for any single individual to overcome.

The story of Kashagan and Maksat Idenov encapsulates the broader struggle facing Caspian basin development. The region possesses extraordinary hydrocarbon potential, but realizing that potential requires more than geological wealth. It demands transparent governance, sustained political will, technical expertise, and massive capital investment.

As global energy markets evolve and the world transitions toward cleaner fuels, the window for developing these reserves may be narrowing. The Caspian’s sleeping giant could awaken and claim its place in energy history, or it could remain a cautionary tale of squandered opportunity.

For now, phase two of Kashagan remains largely on paper, a testament to what might have been had honest brokers like Idenov been empowered rather than sidelined. The Caspian basin’s untapped potential continues to wait, beneath the waves and behind the barriers of human failing.

• Nabil Alkhowaiter is a former senior consultant to the Saudi minister of energy.