Kazakhstan unrest spikes fuel price increaseEverstream Team
January 10, 2022
Civil unrest in Kazakhstan breaks out over fuel price increases
On January 2, 2022, protests commenced in Kazakhstan’s oil producing Western Mangistau region amid concerns about rising liquified petroleum gas prices. The price per liter of liquefied gas doubled to 120 tenge (USD$ 0.27). In the following days, protests quickly spread from the Western region throughout the country, and escalated to involve looting, arson, and illegal occupation of government buildings. In response to the unrest, President Tokayev declared a two-week nationwide state of emergency, including a curfew from 23:00 to 07:00 local time and banned entry to and exit from Almaty, the country’s commercial hub. Protesters have since responded by disrupting roads and production at oil and gas facilities throughout the country.
Escalated violence disrupts flights, roads, railways, and telecommunications
The protests have caused widespread disruptions to air, rail, road transportation, and telecommunication services throughout the country. As the protest spread to every major Kazakh city, several airlines decided to suspend all flights to the country from January 6. This includes Turkish Airlines, Kuwait’s Jazeera Airways, and Uzbekistan Airways. Domestic traffic was also suspended between the country’s two largest cities Nur-Sultan and Almaty. Aktobe International Airport, serving an important industrial area in Western Kazakhstan, was temporarily closed due to the protest and some of the airlines cancelled flights until January 7 amid associated telecommunications internet outages. On January 5, Almaty International Airport (ALA) and Aktau International Airport (SCO) both decided to close temporarily as well. At ALA, the decision to close was made after anti-government protesters stormed the airport building. Almaty Airport carries 68 percent of Kazakhstan’s aviation logistics and is the country’s largest international aviation hub. On January 10 Russian airlines S7, Aeroflot, and Ural Airlines have resumed connections with select Kazakh cities such as Nur-Sultan and Almaty. However, the Almaty airport remained closed to the arrival of other airlines at the time of reporting.
The protests also affected ground passage at various border points throughout the country. While indefinite closures have been reported at the Ken-Bulun and Tokmok border crossings with Kyrgyzstan, the Ak-Jol, Ak-Tilek, Chaldybar, Chon-Kapka, and Karkyra remained passable. Due to the border disruptions, Belarusian and Ukrainian meat imports to Uzbekistan, normally reliant on ease of transit through Kazakhstan, have been delayed. This has already resulted in reported increases in meat prices across Uzbekistan. Kazakhstan’s largest railway operator, Kazakhstan Temir Zholy, confirmed that the passage of trains was halted through the Makat, Aral-Teniz, Beineu, Mangistau, Sekseul stations. At the time of reporting, rail cargo into Kazakhstan from China was operating at reduced capacity, though not suspended, while air cargo between the two countries was significantly disrupted. In December 2021, there were 75 direct cargo flights from China to Kazakhstan, but that number has declined to only eight in the first six days of the new year. Cargo flights have already been suspended for the week of January 10.
On January 5 Kazakhtelecom JSC, the national and largest telecommunications company cut internet across the entire country. The Russian telecommunications company “Beeline Kazakhstan” also confirmed that their internet and mobile phone services were experiencing technical difficulties across Kazakhstan. As of January 10, limited internet access has been restored; however, banking systems remained offline.
Demonstrations lead to reduced output at critical oil and gas fields and metallurgical sites
The protests have impacted the country’s three main oil and gas fields, including Tengiz, Kashagan, and Karachaganak. On January 5 protesters held a demonstration at the Tengiz Drilling Base and associated oil fields, which experienced a temporary reduction in oil output due to disrupted railway lines. Chevron, the largest foreign oil producer in Kazakhstan with a 50 percent stake in Tengiz, reported that Kazakh contractors blocked the rail lines used to export oil from the field. Additionally, the Balkhash Mining and Metallurgical Combine, a copper-smelting combine located on the northern coast of the Lake Balkhash, temporarily closed as workers joined the nationwide protests.
As unrest persists, authorities take stronger measures to restore calm
On January 4, the government conceded that it would restore the fuel price ceiling in the Mangystau Region where the violence first erupted. Further, President Qasym-Jomart Tokayev accepted the resignation of the country’s government in a presidential decree the following day. As these efforts were not immediately successful in quelling the protests, international military units from Russia, Belarus, Kyrgyzstan, and Tajikistan intervened to try to quell the uprising. Reinforcements are expected to remain in Kazakhstan through the week of January 17 to prevent an escalation of looting, arson, shootings, and explosion detonations.
At the time of reporting, most Kazakh airports have begun to resume limited flight operations, though foreign nationals remain banned from entry. Internet service has been partially restored throughout Almaty following the five-day outage, allowing airports to reopen. Air Astana has resumed limited domestic and international service to and from Nursultan Nazarbayev International Airport on January 7. Flights to Dubai and Moscow have already resumed, with plans to restore routes to Frankfurt, Kutaisi, and Istanbul over the week of January 10. As the civil unrest continues to spur fears about reduced production at oil and gas facilities, uranium and oil prices have spiked. Kazakhstan is the world’s largest supplier of uranium, accounting for about 40 percent of global output. Though Kazatomprom, the world’s largest uranium miner, confirmed that production has not been impacted and deliveries will be fulfilled in-full and on-time, uranium prices still jumped 8 percent on January 5.1 Crude oil prices also increased by 6 percent this week following the news of protests at Tengiz. Should further protests break out, the markets are likely to be disrupted even more considerably.
President Tokayev claimed on January 10 that control had largely been restored throughout the country. Public transportation has resumed, traffic blockades have been lifted, and shops have mostly reopened. Despite claims of the gradual restoration of peace, affected cities like Almaty remain under strict military control with a curfew established. Sources indicate that there is a high degree of uncertainty about what will happen when the international coalition of military forces withdraws from Kazakhstan. As the uprising was controlled using violence and brute force, and protesters’ demands have not been entirely addressed, it is possible that the unrest will escalate once more once reinforcements have departed the country.
Companies with interests in the region should stay up to date on developments to air, rail, and road disruptions throughout the country. As the unrest means fluid and uncertain, companies should stay abreast of any new outbreaks of violence and protests which could lead to newly instituted airport closures, flight cancellations, or rail and road blockades. Those with interests in the continuity of the oil and gas sector should monitor new plans for protests and production stoppages at critical facilities across the country. Everstream Analytics’ Intelligence Solutions monitors these developments in near-real time to facilitate companies’ preemptive actions.