Kazakhstan’s Oil Workers Face the End of TCO Expansion

Tengizchevroil (TCO), Kazakhstan’s largest taxpayer and the operator of one of the largest oil fields in the world, completed its expansion project, something that could seriously affect employment and social stability in the western regions.

Established in 1993, the joint venture between US Chevron and ExxonMobil, Russia’s Lukoil, and state-owned Kazmunaigas, TCO had employed more than 90,000 people over the past decade on its flagship Future Growth Project (FGP), the cost of which grew from $37 billion to a final price tag of $45.2 billion.

The completion of the FGP resulted in mass layoffs, and the lack of new major investment plans in the oil industry in the country has created a critical situation for thousands of people, who risk losing work indefinitely.

The FGP was one of the industry’s most significant initiatives in the history of Kazakhstan. After almost ten years of active construction, the project’s completion allowed TCO to grow production at the Tengiz oil field by more than 25%, up to 40 million tons a year. Last year, Kazakhstan produced 87.7 million tons of oil.

Most of the thousands of jobs that the FGP created were temporary positions. As post-construction operations began, the number of permanent jobs will amount to only around 1,000 positions, according to the company.

“Today the project has finished. So TCO started planned layoffs. Around 72,000 people have already been laid off. All contractors have been released,” minister of energy Yerlan Akkenzhenov told Vlast.

This raises several important questions: Should we expect mass unemployment? Will oilfield service companies go out of business? And how much will unemployment grow in the Atyrau region and western Kazakhstan in general? Will this cause more labor protests?

In response to Vlast’s inquiry, TCO said that the company “will not comment on the details regarding human resources and industrial operations.”

The minister of labor and social protection Svetlana Zhapukova told Vlast that there are no mass layoffs at oilfield service companies: “The plan for 2025 [is to cut] about 4,600 people. We already know where some of their next jobs will be and who will be apply for benefits. There won’t be any tension.”

However, Yedil Uzakbai, deputy chairman of the Atyrau branch of the national labor union said the opposite: Workers are indeed facing mass layoffs. This is happening because there are no equivalent positions for most of them in the Tengiz oil field.

“According to our figures, only 10-20,000 workers will remain on the site. And Kazakhstan’s oil industry no longer has major investment plans to absorb the laid off workers. In other fields, the job market is also oversaturated and local governments require that local personnel be prioritized in the hiring process,” he explained.

Zhapukova added that Tengizchevroil signed a roadmap with the ministry of labor and the government of the Atyrau region in an effort to organize a safe and smooth employee transition out of their TCO jobs and towards other opportunities.

According to Zhapukova, the ministry of labor created a separate page in the Enbek.kz job portal for workers at the TCO site.

“Not only residents of western Kazakhstan but also people from all over the country worked on the TCO site. So the career centers are contacting employees based on their permanent residence address. The laid off workers are well-qualified and they will almost immediately find new jobs. Some of them applied for social benefits from the State Social Insurance Fund,” said the minister.

Uzakbai confirmed that the state is making some efforts to aid Atyrau region residents. But the scale of these measures, which also includes retraining workers or grants for starting up a business, is not enough to re-hire such a large unemployed labor force.

“If there are no new industries and investments, the impact of government measures will remain limited. Employment centers suggest low-paying work, they often work inefficiently and fail to keep up with market demands. Additionally, the central government initiatives are poorly coordinated and don’t consider the specifics of the region,” said Uzakbai.

Minister of energy Akkenzhenov believes that mass closures in service companies are not expected. Various associations, in particular the KazService lobby group, can help them to adapt in the absence of new major projects in the oil industry.

“KazService is actively doing this work. We even envision exporting services. Recently at the Astana International Forum I met with the representatives of many companies from Oman, Algeria, Nigeria, and other countries. We have been promoting our service business,” noted Akkenzhenov.

According to him, the quality of services provided by Kazakhstani service companies has reached a level so high that they can carry out major projects abroad.

Aidos Koldasov, the director of KazService, argued that if the government and big business cooperate, they can avoid a crisis in the service sector. When the FGP had just started, he recalled, KazService and Kazmunaigas, with the support of the ministry of energy, created an expert group that was tasked with involving Kazakhstani service companies at a higher rate.

"After the FGP, work is being planned at several petrochemical projects. The risk is that domestic companies may not be sufficiently involved in new projects. That is why, at the beginning of this year, we created an expert group on petrochemicals," Koldasov added.

Koldasov also noted that several Kazakhstani companies entered markets in the Gulf, Europe, and North America. Gulf states represent the main focus, with oil projects that intend to attract $300 billion in investment by 2030. Kazakhstani companies can and should participate, he believes.

Uzakbai notes that it is quite difficult for Kazakhstani specialists to work abroad for two reasons. Firstly, oil projects in Gulf states and Russia are shrinking in scale, and competition for these jobs is growing. Secondly, workers cannot find work abroad without knowledge of the country’s language as well as globally-recognized certifications.

“Foreign language training and [international] certifications are expensive. It’s quite difficult, especially with today's inflation. Some workers take out loans and then have to carry even higher burdens. It’s really difficult to reorient workers in such a situation,” said the union representative.

As a result, many workers who have finished their jobs with FGP risk remaining unemployed indefinitely, said Uzakbai. Local labor unions predict that unemployment in some parts of Atyrau and Mangistau regions in western Kazakhstan could reach 15-20%.

Additionally, the workers' dilemma is made worse by the fact that they are not permanent employees of TCO or of its sub-contractors.

Because workers are forced to sign short-term labor contracts and can generally be fired at any time, it is difficult for them to unionize and bargain with their employers, notes Markhaba Khalmurzaeva, coordinator of the Central Asian Labor Rights Monitoring Mission.

"Big corporations don't always take responsibility for the workers involved at the lower level. They show profit and growth figures on their websites, but they don't recognize the contributions of the workers to this. They also lack concern for occupational health and safety" she said.

Uzakbai agreed, saying that the main priority for the state is to support business and investment, but not employment and social stability. Therefore, he expects more protests in western Kazakhstan.

The union representative noted that rallies, strikes and collective appeals have intensified in the past few years, especially in the cities of Kulsary and Atyrau.

Khalmurzaeva also expects an increase in protest activity. She recalled that workers in western Kazakhstan have long been discouraged from voicing their demands through political means. They have often faced criminal prosecution or heavy fines when they have attempted to do so. Because of this, many tend to spend all their energy finding another job rather than fighting for labor rights.

“But when a social problem remains unsolved, and all the workers’ attempts to resolve them at the negotiating table are suppressed, their discontent will inevitably grow and eventually manifest,” she said.

An edited version of this article was translated into English by Zeina Nassif.