The Week in Kazakhstan: It Came out of the Sky

Large-scale cryptocurrency miners will have to share profits with the government to have privileged access to electricity, according to a July 18 decree.From August 1, crypto miners will need to prop up the country’s own digital asset reserve to obtain long-term electricity supply contracts at a subsidized tariff.Digital asset manager Astana Hub will receive 10% of the mined assets and regulate the relationship with the miners.Kazakhstan’s government warned the top manager of the North Caspian Operating Consortium, which operates the Kashagan oil field, that he could be criminally prosecuted, should the consortium fail to pay a 2.3 trillion tenge ($5 billion) environmental fine.Sources reached by Reuters showed a warning regarding “administrative and criminal liability” towards managing director Giancarlo Ruiu.The consortium argued that the fine is not yet final, pending a ruling by an arbitration panel.The Central Bank decreased interest rates by 0.25 percentage points on July 24.The decrease to a new base rate of 16.75% is part of the regulator’s policy of following the slowdown of inflation.This is the second consecutive time that the Central Bank lowers the base rate.Oil ProblemOn July 21, sources told Bloomberg and the FT that the operators at the biggest oil fields in Kazakhstan had stopped shipping and loading oil through the Caspian Pipeline Consortium and the marine terminal at Novorossiysk, where the pipeline terminates.Four separate drone attacks over the course of a few days hit tankers en route to and from the Russian Black Sea port.Oil output in Kazakhstan dropped significantly after the Black Sea export routes were attacked by drones on multiple occasions between July 17-20.According to industry sources reached by Reuters, production shrank by around 21% from 1.63 million barrels per day, compared to a July average of 2.07 mbd.Oil output at Tengiz, the largest oilfield, decreased by 56%, according to the sources.On July 23, the ministry of energy confirmed that overall output had decreased.The economic damage of the drone attacks in the Black Sea had negative repercussions, from diplomacy to fuel supplies.Kazakhstan’s energy and foreign ministries condemned the attacks.US representative Bill Huizenga told the Times of Central Asia that “the Administration must be clear with the Ukrainians: Targeting the CPC Terminal poses a risk not only to civilians, but also to US interests.” According to oil sector analyst Olzhas Baidildinov, when Kazakhstan’s production drops by 20%, the budget loses around $32 million per day.Economist Adrian Negrescu, said that Romania “ risks a major fuel market crisis” because Kazakhstan supplies 63% of its oil imports.Court Cases and FreedomsBakhytzhan Baizhanov walked free on July 22 after being granted an amnesty through a local court.In 2024, Baizhanov was sentenced to four years in prison for concealing the murder of Saltanat Nukenova, the wife of former minister of economy Kuandyk Bishimbayev.Bishimbayev was sentenced to 24 years in prison at the end of a widely televised trial.On July 21, a court in Semey sentenced civil society activist Nurzhan Sembayev to six years in prison for taking part in the activities and financing of an extremist organization.Sembayev was detained in February.The charges are based on his Facebook posts, according to court proceedings.Azamat Omarov, the creator of the YouTube channel “Akhal Today,” was arrested for two months under a charge of “inciting hatred” on July 18.The court ruling stated that “he made satirical remarks about the president.” Omarov said his online materials constitute “ordinary humor.”