They love me, they love me not: Sometimes the best way to gauge danger in unfamiliar territory is to study the eyes of your guide -- if that person has a deer-in-the-headlights look, or gallops away screaming in the night, it generally means something is amiss. In concrete terms, when should we understand that a petro-ruler we are observing -- even one saying, "What, me worry?" -- is actually in serious political peril? For that answer, let's measure the political waters of Kazakhstan.
Trouble there began last weekend, when police shot and killed at least 14 striking oil workers in the western city of Zhanaozen. Locals said the police action was unprovoked, but President Nursultan Nazarbayev sided with his forces, dismissing the violence as the fault of "hooligans." Meanwhile, he shut off the Internet and phones, and blocked all the roads in and out of the trouble spot. Then, an amateur video surfaced showing that police had in fact shot strikers in the back as they were running away. In short order, Nazarbayev flew out to Zhanaozen, fired the regional governor and several senior executives of the state oil company, known as KMG, whose local subsidiary was a target of the strikes. Nazarbayev also said he was firing his powerful billionaire son-in-law, Timur Kulibayev, as head of Samruk-Kazyna, the national wealth fund that controls KMG. Watching action and reaction, I saw the proverbial galloping guide -- it is a far cry from "[they are] a group of hooligans," to offing the head of your probable chosen successor. Nazarbayev is worried. But why? Parliamentary elections are scheduled Jan. 15, and if that viral video tars his personal narrative as Kazakhstan's guarantor of stability, what does Nazarbayev have left?
Still, let's retain our equilibrium. It is notable that this is not the first time that Nazarbayev has fired Kulibayev. Since the 1990s, the sphinx-like playboy son-in-law has steadily risen as a young banking executive, to a variety of positions in private and state oil companies, a progression interrupted throughout by dismissal from his posts. Given that history, one is led to consider what posts are more senior than head of Samruk-Kazyna, which controls two-thirds of Kazakhstan's economy. Have you selected a more senior spot? Should Nazarbayev weather the storm, look for Kulibayev to appear there within about 18 months.
Go to the Jump for more on Kazakhstan, and the rest of the Wrap.
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The great Arctic oil race is under way. In Russia, where one needs only Vladimir Putin's signature to drill in the most environmentally vulnerable region on the planet, ExxonMobil a month ago sealed a deal to explore underneath the Kara Sea. Now, the United States may allow Shell to explore the Chukchi Sea offshore from Alaska. At stake are the world's largest remaining untapped oil and gas reserves, and for Russia a chance to extend its economic and geopolitical power.
In the U.S., these big economics are interwoven with big local politics. A U.S. regulatory agency -- the Bureau of Ocean Energy Management -- yesterday sided with Shell and against environmental groups worried about whales, polar bears, walruses and fish in the proposed drilling area. A federal judge now can decide whether to allow the permitting process to advance. But significant judicial and regulatory hurdles remain before the company can drill exploratory wells as planned next year, not to mention the rigorously contested U.S. presidential election: President Barack Obama recently lifted a drilling moratorium in the Gulf of Mexico -- a key talking point of his Republican critics -- but he is also attempting to appeal to his own political base, and that could lead him to a different decision in the Arctic.
The Chukchi lies above a tremendous store of oil -- 15 billion barrels of recoverable reserves, according to the U.S. Minerals Management Service. A 1-billion-barrel field is regarded as a supergiant. All in all, there are some 134 billion barrels of recoverable oil and natural gas liquids within the whole of the Arctic Circle, according to the U.S. Geological Survey.
Given that no actual drilling has yet taken place anywhere, it's not surprising that the industry hasn't assembled a spill-action mechanism. But given the scale of U.S. environmental activism opposing Arctic drilling, this is a case in which companies wishing to drill on U.S. territory will have to demonstrate proactively that they are prepared for any eventuality, as they more or less have in the Gulf of Mexico.
When it comes to foreign companies, local politics are a feature of oil development in Russia too. Russia's geopolitical influence is based largely on the 10 million barrels of oil and 1.6 billion cubic meters of natural gas it produces every day, so Putin will want to proceed with development of the Arctic. But he also will force Exxon to take the same steps as Shell when drilling proceeds underneath the Kara.
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Steve LeVine is the author of The Oil and the Glory and a longtime foreign correspondent.