16. Nationalization and the Role of National Oil Companies: The Case of Kazakhstan

Over the last four decades a number of state-owned enterprises (SOEs) have been declining dramatically in most industries. However, state-owned national oil companies (NOCs) continue to secure dominant positions in most energy-producing countries. In some instances, energy-exporting countries conducted full nationalisation of their resources, while in other cases partial nationalisation took place with governments tightening control over privately owned firms. This chapter begins with general questions on why countries choose to have state-owned enterprises and why countries prefer to nationalize their oil and gas industries. Next, we explore a case of nationalization policies in Kazakhstan’s oil industry in the post-Soviet period. Although there was no full nationalization of the energy sector, the government’s intervention in the industry had become more pervasive. As a result, multinationals in major oil and gas projects were forced to form partnerships with the domestic national oil company (NOC), KazMunaiGas. We then further explore the role of KazMunaiGas NOC in the country’s hydrocarbon sector as the government was determined to ensure more active participation of the domestic NOC in a bigscale energy projects. Despite a special status and a preferential treatment conditions created for the company, KazMunaiGas has to deal with similar challenges that many NOCs face globally. These challenges include improving technological capabilities, access to capital and financial independence, as well as strategic human resource management.