Who really controls Kazahkstan’s oil fields?

Among the most literary of the diplomatic cables released this week by WikiLeaks come from the U.S. embassy in Kazakhstan. Of those, most interesting for me is the unusual, realtime window into the emotion, the ambition and the palpable anger embedded in the struggle for control of the country’s oil and the power that goes with it in this nascent petrostate. Front and center on stage are among the biggest oilfields in the world — Tengiz, Kashagan, and Karachaganak — in addition to Chevron and Shell, President Nursultan Nazarbayev, and his powerful son-in-law, the princely Timur Kulibayev.

The takeaway: Not much has changed since Richard II.

One main pawn in the dramas is Maksat Idenov, a super-competent administrator who was put in charge of the Kazakh oil company KazMunaiGas, or KMG, but who is exposed in a pair of cables to be slow to grasp political reality: Nazarbayev obviously had flattered Idenov by telling him that his job was to administer the state’s crown jewels — its oilfields. And Idenov — willfully ignoring the history of Nazarbayev conveying just such nonsense to one foolish minister after another over the last couple of decades in order to keep the trains running on time, while in fact his trusted son-in-law, Kulibayev, actually ran things — had chosen to believe him.

It is painful to read these cables, written two years apart. The first is from Feb. 14, 2008, a narrative signed by then-U.S.Ambassador John Ordway, in which we witness the beginning of Idenov’s self-immolation. The scene is a meeting with Guy Hollingsworth, Chevron’s president for Eurasia and the Middle East, who obviously realizes who is truly in charge of oil, along with another Chevron executive named James Johnson.

Idenov is asking for Johnson’s cellphone number, which a businessman might ordinarily regard as a positive sign. Instead, Johnson tells Idenov that his secretary’s number will suffice. Hollingsworth, meanwhile, reminds Idenov of his recent social outings with Kulibayev, ranging from “the Astana golf course to the beach in Spain.”

This impudence should be a dose of reality — albeit a condescending one — for Idenov, and maybe it is. What we absolutely know is that he is infuriated, and summarily throws the two men out of his office. (Chevron claims that it was the executives who excused themselves voluntarily.) Idenov then fires off a fax to Chevron Chairman Dave O’Reilly with two copies to Ambassador Ordway. 

“What really appears to be at issue here is Idenov demonstrating that he, not Timur Kulibayev, is now the ‘go to’ guy in Kazakhstani oil and gas,” writes Ordway. In fact, the ambassador writes, “Idenov’s actions are designed not only to demonstrate that he’s up, but that Timur Kulibayev is down, if not actually out.”

The other shoe drops in the next cable, dated Jan. 25,2010, in which we see Idenov dining with Ordway’s successor as U.S. ambassador, Richard Hoagland. In a classic tactic to avoid surveillance, Idenov asks Hoagland to switch off his cellphone, then discloses that Kulibayev and three other powerful gatekeepers have conspired to block his access to Nazarbayev.

Idenov is again seething. He has to be convinced not to resign by Nazarbayev himself, who again persuades Idenov (do they never learn?)  that it is he, and not Kulibayev, who is running the oil show. He will correct the behavior of his wayward son-in-law. Idenov returns to the fold, and attends a reconciliation meeting with Kulibayev. The latter suffers from “an avarice for large bribes,” the cable reports Idenov saying, and the Kazakh official is going to tell him that that sort of behavior will no longer fly. “Please watch your image and reputation,” Idenov tells Kulibayev. “You have a real opportunity to improve your own image and the image of the nation.” Ambassador Hoagland observes: “Idenov said Kulibayev was ‘like a Buddha with a Paris manicure,’ and [that] both understood life would continue.”

Mmmm … no. Idenov understood that. Kulibayev understood something different (clue: the Buddha expression). In spring of this year — roughly three months after that dinner –I heard word through friends that Idenov had basically fled Kazakhstan. He was laying low — I heard he was in New York, the Middle East, Europe — and was thus far incommunicado. Some said he was afraid. He was not replying to e-mails then, and hasn’t since, though he did manage to land pretty well, in the senior vice president’s office at the Italian oil company ENI.

And Kulibayev? He is in charge of Kazakhstan’s crown jewels.

Other notes from the dinner: Idenov educates Hoagland regarding Nazarbayev’s habit of signaling to both Kazakhs and foreigners that he’s looking around for a successor. In the cable, Hoagland relates that he asks Idenov whether the bureaucratic struggle is part of a “succession struggle.” Idenov responds: “Of course not. It’s too early for that. As it’s always been, it’s about big money. Capitalism – you call it market economy – means huge money.”

Geopolitics are never far from the center of discussion. Idenov tells Hoagland that Russia and China “continue to circle like vultures” in hopes that the foreign consortia developing the Kashagan and Karachaganak oil and gas fields “will implode, and then they can pick up the pieces.” “Won’t happen on my watch!” Idenov assures Hoagland.

Back to Ambassador Ordway. In yet another cable, dated April 17, 2008, Ordway provides a description of Kazakh officials at play. In London, the Daily Telegraph regards this particular cable as really dishy, which tells you that its reporters need to get out of the building occasionally. We observe the ambassador to the United Arab Emirates telling Ordway that President Nazarbayev has obtained a palace in the UAE in exchange for Kazakh land; a Turkish emissary informs the ambassador that Nazarbayev also has a mansion in Antaliya (News: Nazarbayev is rich). Then we get Prime Minister Karim Masimov and two other ministers entering a nightclub with their wives (shame, shame); Masimov gets up on stage and dances. (Masimov himself has responded to the WikiLeaks disclosure positively: “First I am on the Internet with my wife,” he told Agence France Presse. “I like dancing with my wife, and to advertise in the traditional way I have to pay a lot of money for that. But this time it’s free. And I am very happy for that.”)

Finally, we observe Ordway making repeat visits to the home of billionaire metals magnate Aleksandr Mashkevich. Mashkevich is the 334th richest man in the world at the time, according to Forbes, but Ordway is not impressed. “It is not clear what Mashkevich is spending his billions on, but it is certainly not culinary talent,” Ordway sniffs, because all four times he visits the home, he is fed beshbarmak, the traditional Kazakh dish of boiled lamb and noodles.

I’m not sure what to make of that. Every time I’ve been over at my in-laws in Almaty, I’ve been served beshbarmak. It’s the national dish. It’s an honor to be served the national dish. That’s one lesson Idenov did not impart: Never criticize the beshbarmak.