Two words that any oil company dreads to hear are “export duty.”
Especially if the word “increases” or “introduced” is floating around
So when Kazakhstan introduced an oil export duty to meet shortfalls in the national budget, the mood wasn’t exactly jovial.
On July 13, the Kazakh government brought back the tax that had been
abolished during the financial crisis. A US$20 tariff will be levied on
every ton of crude oil exported from the Central Asian nation. The
hope: collect some US$406 million in additional revenue by the end of
The energy-rich, former Soviet republic has some of the largest oil
and gas reserves in the Caspian Sea basin, producing 1.43 million
barrels per day (bbl/day) in 2008. And as the giant Tengiz and
Karachaganak fields are developed further, an additional 1.5 million
bbl/day will be coming off the production line.
With the country holding 3% of the world’s proven oil reserves and
the majority of its Caspian Sea holdings still unexploited, it’s no
wonder oil companies – both major and minor – are flocking to it like
moths to a flame.
Of course, this new tax has everyone from Chevron and ENI, whose
long-standing agreements have been unilaterally revised in effect, to
the small-scale producers in an uproar. The move has been dubbed as the
latest example of resource nationalism in Kazakhstan, analysts say,
and the feeling is that the country seems to be taking its cue from Mother Russia
There’s worry, too, that this is only the beginning of the end.
There’s no guarantee to say that the tax will not rise as more and more
oil begins to flow out of the country. And the thriving uranium
industry might be next to get heavy taxes slapped onto it.
Bringing it back to an American context, the question of energy
security rears its head yet again. Oil from Kazakhstan flows through
two pipelines: one winds through Russia, the other through China. Not
exactly the two countries you’d want controlling the taps of your oil
Today’s realities – be they economic or security-related – mean that
the natural shopping ground for U.S. oil are the Canadian oil sands in
Alberta. According to the EIA (U.S Energy Information Administration),
Canada remained the largest exporter of oil in April, exporting 2.486
million barrels per day to the U.S. The majority of these barrels come
from the Canadian oil sands.
While protestors may get up their flags and launch advertising campaigns
technological breakthroughs mean the environmental impact from oil
sands is far less than before. Canadian laws also protect the
environment, ensuring that all disturbed land is returned to a
productive state. Carbon revenue, too, is reinvested into clean energy
research, paving the way to the future.
As we wait on alternative energy sources to take center stage in
world energy plays, the truth remains that oil and gas must power our
lives. And for the United States, Canadian oil sands mean a secure and
most of all, reliable, source of energy.
With Canada looking ready to pick up the slack from the Gulf, it’s
worth knowing which companies operating in the Great White North are
worth adding to your portfolio. These are the ones that combine the
latest technology with good site locations and excellent cash flow.
Their inclusion will benefit any portfolio and rake in some promising