Corruption, pollution and repression: how Dutch companies profit from Kazakhstan’s toxic oil industry

Damba

A shiny, luxurious, white passenger bus parks in front of the village hall of Damba, a cluttered hamlet outside the Kazakh oil capital of Atyrau. One by one, the 20 passengers come down the steps. They are employees of NCOC, an oil consortium of Shell and six other oil companies. By the looks of it, they have been sitting in air conditioning. Their foreheads are dry, their white blouses and shirts uncreased.

The employees rush inside, away from the scorching sun. But inside the village hall it’s broiling too. Yesterday afternoon’s 37 degrees are still hanging in the air. The village hall cum village theater, built in the Soviet years and painted with scenes of kolkhozes and fishermen’s collectives, must be the only non-airconditioned hall in the distant area. The two fans that the bus passengers brought with them, they point at themselves.

There comes the crowd, on foot, through the dusty street. They are old fishermen who saw their main source of income disappear: caviar from the Caspian sturgeon. With them is a retired veterinarian, a mechanic, an accountant, a mother with a daughter, a government official, and about 20 more locals. They come for the meeting organized by NCOC, the operator of the giant Kashagan oil field in the Caspian Sea. NCOC must consult residents about a new dredging project, it is required.

From behind a tree near the front door, a man films everyone who enters the village hall.

Although there is not a Dutchman in sight, the Dutch signature stands large and proud under this project. The Shell logo is on the banner in front of the stage. The artificial islands for the drilling rigs were drawn by engineering firm Witteveen and Bos from Deventer and constructed by Boskalis from Papendrecht. The shallow Caspian Sea was dredged by Rotterdam-based Van Oord.

More importantly, the Netherlands has rapidly become a major user of Kazakh oil. Boosted by sanctions against Russia, oil imports from Kazakhstan have increased eightfold in the past two years. The Netherlands now imports more oil from Kazakhstan than from Saudi Arabia. A good portion comes from here, from the Kashagan field near Damba.

They all remember the stories of oil workers who didn’t wake up from their sleep, suffocated in a sulfur cloud

The talk in the village hall on this June day is about dredging a stretch of seabed. Villagers would rather have asked questions about the suffocating air that lay like a blanket over the village in March. People couldn’t breathe, couldn’t smell, windows and doors had to stay shut, they say. Was it toxic hydrogen sulfide from the oil rig or from the desulfurization plant? They all remember the stories of oil workers who didn’t wake up from their sleep, suffocated in a sulfur cloud. People in Damba are sick, have lung problems, cancer, heart problems, but questions remain unanswered.

That is not the topic of this morning. A woman from the oil consortium presents technical sheets on water levels and microorganisms. The print is unreadably small, graphs are missing values. An older woman in the audience with two gold teeth grabs the microphone. “We don’t want a moderator from NCOC,” she says. „We want someone independent.” Her request is denied.

„Why are you yelling so loud?”, another woman wants to know. „And the slides are so technical that no one understands them.” „Why are we sitting in this room where we can’t breathe?”, another asks.

„Who works for NCOC?” someone asks the audience. „Raise your hand. See? No one. We don’t get any work from you guys at all.” A man asks for a job for his grandchild.

The sun is burning on the roof; it’s stuffy in the auditorium. An elderly man in the front row faints. The oil consortium hands out bottles of water, but they mainly reach their own staff.

„All documents can be found online on Ecoportal,” the speaker concludes after more than two hours. And there the oil people go again, in their airconditioned bus, they take the fans with them. The villagers walk home, sweaty.

One woman stays behind, the woman who asked for an independent moderator. It is the locally famous environmental activist Galina Chernova, a 70-year-old woman with a loud laugh. „They hold their talks here, because it is scorching hot here, and away from the city. Hardly anyone comes here to criticize them. That’s exactly how they want it.”

As the reporters leave Damba, a modern Lada 4×4 pulls up behind them. The car continues to follow them well into the city. Only after a stop and three unexpected turns the Lada gives up.

Toxic and shaky relationship

Damba feels no love for the oil field. What does it bring them? Chagrin also reigns in the consortium that operates the oil field. „Everything is toxic about Kashagan,” said a former Shell manager in Kazakhstan who complains about the corruption in the project. „The oil is toxic, the atmosphere in the consortium is toxic, the way of doing business is toxic.”

That was not the rosy picture Prime Minister Ruud Lubbers painted in the late 1980s, talking of the endless oil reserves behind the Iron Curtain. Lubbers initiated the European „energy charter,” aiming to modernize natural gas and oil production in the Soviet republics „in exchange for long-term supplies to the West,” as NRC Handelsblad wrote at the time. Companies that took the plunge to the East would be protected against nationalization, levies and government arbitrariness by the Charter.

Nine days after the collapse of the Soviet Union, the new and poverty-stricken republic of Kazakhstan signed Lubbers’ charter. Western entrepreneurs could start earning from the Kazakh petrochemical industry – an opportunity many Dutch companies seized. Kazakhstan would develop into a free, stable trading partner and oil supplier for the Netherlands, at a strategic crossroads between China, Russia and the West.

Journalists and activists are threatened, imprisoned, get involved in suspicious car accidents or get killed

But that promise did not come true. NRC interviewed politicians, scientists, diplomats, activists, doctors, lawyers and representatives of the oil industry in the Netherlands, the U.S. and Kazakhstan, visited oil fields and social projects of oil companies and, along with the International Consortium of Investigative Journalists (ICIJ), dug through thousands of documents, including controversial contracts between Kazakh and Dutch companies.

All of this shows that the Netherlands’ relationship with the Kazakh oil industry is toxic and shaky. Yes, the Netherlands earns well in Kazakhstan. Shell’s profits in Kazakhstan amounted to almost $1.5 billion in 2023. The Netherlands is Kazakhstan’s „number one foreign investor”, as President Kassym-Jomart Tokayev told Mark Rutte last May, when the Dutch prime minister visited his cream-white palace. But just as Nigeria has been damaged by oil extraction, so too Kazakh oil is surrounded by disease, environmental damage, repression and corruption.

Kazakhstan did not grow into a prosperous and stable democracy in the last 30 years. The richest families were able to consolidate their power thanks to billions from the oil industry, with help from Dutch companies. Kazakhstan became a corrupt autocracy running on oil money. Anyone who criticizes the regime or the oil industry is shadowed and bugged. Journalists and activists are threatened, imprisoned, get involved in suspicious car accidents or get killed.

And nothing is certain. Neighboring Russia seized control of the main export route for Kazakh oil, the CPC pipeline. Meanwhile, the Kazakh state, no longer poor and weak, is becoming increasingly hostile to Western oil companies. Last year, Kazakhstan imposed multiple billion-dollar environmental fines on the oil consortium. It later added a $160 billion arbitration claim for lost revenues from the Kashagan field. That claim is intended, people at Shell think, to open up the multi-decennial contracts.

Or worse. At Shell, the trauma of Sakhalin is still fresh. The huge oil and gas project on an eastern Russian island was seized by the Russian state step by step, and got nationalized only two years ago. Shell was powerless. Russia began its power grab with high environmental fines and huge claims, just like Kazakhstan is doing now. What does Kazakhstan, heavily dependent on Russia for oil exports, have in mind? Confiscating the oil fields? Giving it away to Russian or Chinese companies? Just as the West is becoming increasingly dependent on Kazakh oil, the relationship is more sour than ever.

Atyrau

„Dear Mr. Richard Howe,” begins the letter the Shell executive receives in spring of 2021. Howe is the head of NCOC, the Kazakh oil consortium of which Shell is a member. „As you know, the Atyrau region is one of the most polluted areas,” the letter continues. „Especially cancer and birth defects are on the rise.”

The letter is written by pediatrician Gulnara Taumanova. She wants to talk to the Shell executive about a clinic she wants to set up, which requires equipment. „Our previous letters of September 11, 2020 and February 15, 2021 went unanswered,” she writes. This letter remains unanswered too.

As early as the 1980s, Taumanova noticed that the health of the children she saw in her doctor’s office was worse than their parents’ and grandparents’. And the children did not yet smoke or drink. Many of them suffered from anemia, despite the nomadic, meat-rich diet. A striking number of children had what she calls „thick blood,” with clots. At that time Taumanova was working in Atyrau, where the small-scale oil industry was well underway. Taumanova comes from a family of oil workers. As a young woman, she heard the stories of oil workers who died in their sleep from unexpected clouds of sulfur. „It sparked my interest in research,” she said.

For her doctoral research, she collected blood samples, urine and hair from children in Atyrau, and compared them with samples from other places in Kazakhstan and from St. Petersburg. Already in the late 1990s, the results were alarming, she said, while showing grainy microscope images of blood samples. Atyrau children had more blood disorders, tuberculosis, respiratory problems, cancer and birth defects than elsewhere in the country. And in those years, the major oil fields were not even in operation yet.

Those fields had been discovered by Soviet geologists in 1979: two gigantic reservoirs, hidden deep beneath the salt layers of the Precaspian Basin. It soon became clear that the fields were inaccessible with the outdated Soviet technology. Nowhere in the world the oil lies so deep, under such high pressure and temperatures. The unusually high percentage of deadly hydrogen sulfide gas also makes oil extraction extremely dangerous.

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Just how dangerous was revealed on June 24, 1985, at well no. 37 in the Tengiz oil field bordering the Caspian Sea. Geologists wanted to drill to a depth of five thousand meters to map the reservoir. But when the drill got to four kilometers, the well filled up with drilling fluid and caught fire. A two-hundred meter column of fire spewed upward, pushed by the hydrogen sulfide gas that squeezed out of the soil under high pressure. The ground around the well became hotter than 300 degrees Celsius, the air boiled. Only in space suits oil workers could reach the leak, but extinguishing proved impossible. The giant pillar of fire burned for 399 days.

In the following years, geologists discovered another mega-field under the northern Caspian Sea, Kashagan. That field was also inaccessible without advanced Western drilling technology. Too deep, too toxic, too risky.

Pediatrician Taumanova witnessed how, after the fall of the Soviet Union, Western oil companies were eager to get a stake in the Kazakh oil fields. American oil giant Chevron was first, signing the Tengiz contract with the new President Nursultan Nazarbayev in 1993. Kazakhstan did not have its own lawyers to conduct the negotiations – Chevron lawyers drafted all contracts.

Anglo-Dutch Shell quickly followed, wanting to get a share in the Kashagan field. But that happened only after the Netherlands negotiated a tax treaty – very unfavorable to Kazakhstan – in 1996. The year after, Shell and other companies signed a 40-year contract for the field.

Clouds of hydrogen sulfide

With the megafields in full operation, Atyrau has become „a living laboratory,” Taumanova says. The 350.000 city residents struggle with heavy metals in soil and water, particulate matter and nitrogen oxides in the air, and an unknown legacy of sulfur and oil waste dumped in recent decades. Plus the clouds of toxic hydrogen sulfide. The oil brings prosperity to Kazakhstan, Taumanova acknowledges. But meanwhile, the population is getting sicker. „Sick children are born to sick parents,” she said.

Taumanova had to stop her laboratory research – no money. She did, however, request thousands of blood test results from various laboratories in recent years. „Sickness and mortality have increased sharply over the past decade because of oil extraction”, she says. „In recent years, we also see more and more chromosomal abnormalities, cancer and infant mortality.” It has to be investigated, she says, as was done in Soviet times. „But the will is not there.”

The measurement stations switched off when the air was highly polluted. Once the pollution cleared, the stations flicked back on again.

What little research is left in Atyrau is extremely complex, ecologists Mansya Yessenamanova and Damilya Ryskalieva of Atyrau State University explain at an Atyrau coffee shop.

To quell unrest over air pollution, the government and the oil consortium installed 20 monitoring stations in the city. Residents can follow the air quality measurements real-time in the free app AirKZ, and on large screens in the city center. But the monitoring stations are not very reliable, the two ecologists saw during their research. The women look each other in the eyes with a cynical smile – some stations of the oil consortium switched off when the air was highly polluted, they say. Once the pollution cleared, the stations flicked back on again.

The higher the concentration of hydrogen sulfide in the air, the more people died of cardiovascular and respiratory diseases.

The two ecologists assessed all measurements between summer 2021 and summer 2022 in Atyrau, the city they call an „ecological disaster area”. The results were alarming despite the missing data. In some instances the maximum allowable concentration for hydrogen sulfide was exceeded by a factor of a thousand, they wrote in an international scientific journal. Often at night, when people were sleeping. In 2021 alone, they saw 238 instances of „high” concentrations of hydrogen sulfide, and four cases of „extremely high” concentrations. They also discovered a significant correlation with mortality: the higher the concentration of hydrogen sulfide in the air, the more people died of cardiovascular and respiratory diseases.

Ryskalieva’s nine-month-old son crawls around on the coffee shop floor. This research concerns him too, she says. „Hydrogen sulfide is heavy, it sinks to the ground. Right where he breathes.”

The ecologists suspect that NCOC is responsible for roughly half of the air pollution in the city, but it’s hard to be certain in a city with so many sources of pollution – a very convenient fact for the companies. NCOC declines to comment on the study because the methodology and data are unclear. Nor does NCOC respond to pediatrician Taumanova’s studies. NCOC says its own research shows that the consortium hardly contributes to air pollution. NCOC refuses to share the research, but does send a powerpoint presentation with the conclusions.

The city government isn’t doing anything against the faltering monitoring stations, which NCOC says it cannot turn off by itself. Yessenamanova, diplomatically: „We see a government weighing economy against health.”

Resistance to their research was strong, the women say. Only after long persistence did Ryskalieva receive health statistics from the local government, with the warning to „be careful.”

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Intimidation of activists

Be careful for what?

The visitors of an environmental congress also didn’t know for sure, when they were sitting in a dark, half-empty conference room in Atyrau. The atmosphere was menacing, that day. People entering the venue were being told the meeting had been canceled. Some of them had been visited by mysterious men the night before, who knocked their doors in the middle of the night, urging them not to go. On the day of the congress, the power in the entire block was cut off, keeping the lights off and preventing international speakers from dialing in.

It’s this kind of intimidation that stifles every last bit of dissent in a city that runs entirely on oil money. Galina Chernova feels this every day. She is the 70-year-old leader of the local environmental movement she founded the year Shell started in Kazakhstan.

The fear gets stuck in your head, Chernova knows. What if your child is not admitted to college? What if you lose your job? Does the fate of Max Bokay await you, the famous local activist who was detained in a penal camp for five years for sedition after protesting foreign investments? Or of the Kazakh dissident who was shot dead in Kyiv this summer?

Chernova also received a visit the night before the environmental forum she had organized herself. President Tokayev would come to Atyrau, and the environmentalists wanted to prepare a statement on the dramatic environmental situation in the region. The authorities apparently didn’t want that to happen. The night before the congress, around midnight, someone rang Chernova’s doorbell, she recounts. She was home alone. It was her colleague standing at her doorstep, a young, enthusiastic man with whom she worked closely and in whom she saw a successor. He asked her to come with him to his car. When she got in, she saw a second man in the car. The two men started asking: Why don’t you blow off tomorrow’s meeting? The young colleague started to cry, saying his family would be hurt if she wouldn’t cancel the forum. It wasn’t until four in the morning that they let Chernova go.

The next day she saw her colleague at the venue, telling visitors the forum had been canceled. And the day after she saw him sitting next to the visiting president. „He was glowing! That’s when I knew he had used me. I think he has been a traitor all along, spying on the organizers of the forum.”

Chernova only advocates for clean air, for nature, for the seals. But she’s fighting a battle on a different stage. From the presidential family to the local mayor, from high to low: politicians personally benefit from the oil industry. Any criticism threatens their shared interests, which drives repression. Chernova: „I realize every time: environment is politics, and that’s why environmentalists are constantly being threatened.”

Crooked soccer field and empty school

Anyone trying to understand those shared interests should look at the social projects funded by oil companies, Chernova said. These are tossed out across the region like sprinkles, and are often absurd. Take the hospital built years ago by an oil company in Dossor, a small village on the steppe. „The building was there, but the equipment came years later,” Chernova said. „All those years, people had to go to the hospital in Atyrau, a hundred kilometers away.”

Everyone interviewed by NRC can name a bizarre project. Do you know that soccer field that was built askew? The swimming pool that was not 25 meters but 23 meters long, so that no professional swimmer could train normally? The soccer stadium that is barely used? A school in the middle of the steppe where no child comes? The akim, the local governor, who badly wanted a new road to his own village? Another local governor who wanted to build a hippodrome?

In Kulsary, a town down the road, a brand new, fully equipped hospital with scanners, incubators, operating rooms and airco was built, paid for by an oil consortium. Last year it was festively opened by local governors and Chevron executives. But when reporters peered through the windows six months later, this hospital, too, was totally abandoned. It was never put to use.

These projects follow their own logic, Chernova said. Oil companies like Shell and Chevron are required to spend a fixed percentage of their annual investment costs on social projects. The akimat, the local government, chooses a project that serves the interests of officials, politicians and their friends; the oil companies pay the bill. The local elite often remains in power for just a few years. „That’s why social projects are mostly construction projects,” Chernova said. „They make quick money.”

Entrance to the hospital paid for by Tengizchevroil. The door is closed. June 2024.

Photos Nicole Sadek (ICIJ)

Golden taps in the fountains

At Shell, they also know that these social projects are fumble. One Shell manager said: „The consortium paid for the renovation of the central square in Atyrau. It got so expensive, did they put golden taps in the fountains?” Another said: „You had to be extremely careful. Contractors who charged two hundred dollars locally suddenly charged a thousand for NCOC.”

It’s not just social projects that follow this logic, several former Shell executives tell NRC independently. It’s the same with large, commercial tenders. The Kashagan contract the consortium signed with the Kazakh state in 1997 gives the state the right to appoint a technical committee to approve all expenses. This committee, which has an office in the oil consortium’s headquarters, abuses its power to direct contracts to specific parties, say five former Shell executives. One: „Technical specifications are constantly being played with. They demanded, so to say, only phones with a small apple on the back. If we didn’t do what they wanted, they didn’t approve the award.” Another executive spoke of „bizarre specifications.”

On paper, the contracts look fine. „But you know it’s not right,” said a former employee. „I’m sure we paid too much.” Another said: „We looked each other in the eye when we saw some of these contracts and said, ‘Of course this is a corrupt mess.’ I knew it, everybody knew it.” Ultimate owners of suppliers were not closely investigated. „We looked a little into the ultimate beneficial owner, but didn’t ask more questions than strictly necessary. We had to make a plausible case.” Another said: „If we didn’t know who was behind a company, that was no reason to refuse the contract. The project had to go ahead.”

Kashagan has been a real headache for years. The project faced big delays in the construction of the drilling rigs. Once the offshore installations were completed – cost: $50 billion – the pipe to bring the oil ashore was leaking within days. The oil was so acidic that it had corroded the steel. Two years and several billion dollars in lost revenue and renovation costs later, extraction could finally begin in 2016. The Kashagan project was nicknamed „cash all gone”.

Because of that delay, oil companies do not tolerate any further delays, employees say. The more and the faster oil is pumped up, the better, before the contract expires in 2041. The oil companies won’t allow their employees to stand firm, to refuse a corrupt deal. „‘You need to manage your contacts better,’ I was told. ‘Give me solutions, not problems.’ Bosses stuck their heads in the sand.” Another said: „I once wanted to tell Shell’s head of legal affairs what I saw. ‘Shhh,’ he said with a finger on his lips. ‘I don’t want to hear it.’”

Shell didn’t respond to questions and referred to NCOC. The consortium said it has „a robust process in place” to ensure fair competition in tenders and that it closely examines the ultimate owners of its vendors. „Should there be any connection observed between vendors and Politically Exposed Persons, the subject matter is escalated and reviewed. If the clearance is not provided, the vendor is not invited to tender.”

The ‘oil prince’ of Kazakhstan

Certain Kazakh families strongly benefit from this way of doing business. One name keeps coming up in conversations: Timur Kulibayev. TK, as the oligarch is called, is the exorbitantly wealthy son-in-law of former President Nursultan Nazarbayev, who ruled the country from 1991 to 2019. Kulibayev and his wife have a estimated combined fortune of $10 billion. TK – the „oil prince” – is befriended with Britain’s Prince Andrew, whose estate he bought in 2007.

Just like Angola’s presidential daughter Isabel dos Santos acquired her wealth thanks to her position, presidential son-in-law Timur Kulibayev obtained major interests in the Kazakh commodities, banking and construction sectors. The multimillionaire owns a majority stake in the Kazakh investment bank Halyk, and his web of bank accounts and assets stretches from Kazakhstan to the UK, Singapore and the British Virgin Islands.

And the Netherlands. Almaty International Airport – wholly owned by him for years – was registered at an office in Almere Danswijk, as was a huge Kazakh engineering and construction company owned by him. His interests in pharmaceutical companies and oil companies were registered in a barn in Oldenzaal.

None of the NCOC employees NRC interviewed ever spoke to Kulibayev. But he’s always there in the background, they said. „You can’t get around him,” said one. „He was extremely dangerous, he pulls your visa in an instant if he wants to,” said another. „He was known for his shady deals.” His nickname is „the 10-percent man,” because he would take a tenth off every contract. „His corruption was much more sophisticated, he concealed it in his companies.”

Several former Shell executives mention a remarkable, controversial deal: a small port in the mouth of the Ural River near the hamlet of Damba, right next to a protected nature reserve. Environmental activist Galina Chernova fiercely opposed the construction. The port is being used by the NCOC consortium for oil spill response. „We were forced to partner with strange local companies,” said a former manager. „Tenizservice, a Kulibayev company, had to build that base,” said another. After construction, which was completed in 2012, that company became the owner of the little port and the oil consortium had to pay millions in annual rent to use the base. „It was a ridiculously high amount for such a simple little concrete site with some boats and warehouses.” A colleague: „It was a bottomless pit into which we were forced to throw money.”

Tenizservice is indeed intertwined with Kulibayev in many ways (see box). Kulibayev confirmed he had a stake in Tenizservice when the company got the Damba contract in 2009. He said he sold the stake at the end of 2010.

The Kazakh press continues to refer to Kulibayev as the „unofficial owner” of Tenizservice; local activists and people in the oil industry also know him that way. A former Shell executive is also sure that the former president’s son-in-law is behind it. But, he also said, you won’t find his name on the ownership papers.

The prohibitively expensive port contract was unjustifiable, an NCOC manager thought. But canceling such a contract was difficult because the relationships were so intertwined. For years, Kulibayev was also the vice president of the Kazakh state oil company KazMunaiGas that participates in the oil consortium – which in turn was the client of Tenizservice. Mr Kulibayev denies any suggestion that he might have used bribes or his government position for steering contracts to Tenizservice for NCOC’s oil spill response base or for any other contract. Any suggestion that Mr Kulibayev was able to force western companies to do business with TenizService or engaged in bribery is strongly denied.

„The award of the contract for the oil spill response base was approved in accordance with the Tender Procedures”, NCOC said. That may well be the case, former Shell executives said. But „it’s corruption without envelopes under the table,” two of them said. Bribery wrapped up in vague consortia with state-owned companies and congested private owners, in unfair tenders and inexplicably escalating costs. On paper it appears to be fine, the reality is different.

Prorva

Tenizservice has been a fine business partner for Dutch engineering firm Witteveen en Bos. Project director Krijn de Brabander enjoyed talking about it in an Almaty villa with gleaming white tiled floors converted into office. „Build with nature”, said a banner in the hall. „Look,” he said as he walked over to a large wall map and points to Damba. „Witteveen and Bos designed that harbor for Tenizservice.” Then he pointed to a port city on the east coast of the Caspian Sea. „Also done for Tenizservice.” And a little further south another port, also for Tenizservice. „We did a lot of engineering work for them,” said De Brabander. They also did the biggest job together: the construction of a canal and port in Prorva, a stretch of uninhabited Caspian coast near the Tengiz oil field. Witteveen and Bos was involved in the project „from the very beginning.”

‘Prorva is a good example of the way Kazakh power intertwines with the oil industry, a connectedness that people in Kazakhstan feel but rarely see unraveled. Der Spiegel shared thousands of internal documents on the Prorva project. NRC also requested documents from the Dutch Ministry of Finance. These show how the Kazakh elite manages to wriggle into large oil contracts with Dutch companies, acquiring influence and wealth. Kulibayev distances himself from that. He states he never participated in the intimidation of activists or others, or corruption or bribery to secure contracts, nor did he misuse his perceived connections to government to assist the NCOC and other western oil companies to obtain approvals and circumvent environmental protections.

Container village for oil workers

The only road from Atyrau to Prorva is hundreds of kilometers long and runs in a straight line across the bone-dry steppe to the cluttered oil town of Kulsary. The road passes the consortium’s desulfurization plant, with its giant flaring flames and its own train station. Every day, a train leaves with dozens of cars full of bright yellow sulfur nuggets extracted from the acid oil. The road leads along jackals and meters-high monuments with black oil droplets.

After Kulsary, with the fully furnished, abandoned hospital, come the sprawling container villages erected in the middle of the barren Tengiz oil field, built for the roughly forty thousand oil workers. Hardened British expats, who worked in Angola, Iraq and Nigeria before coming to Kazakhstan, hang out at the bar at night. They talk about the air over the field being „thick,” making them dizzy and sleepy and giving them headaches – complaints the consortium „has never received”, said the consortium’s spokesperson at headquarters in Atyrau with a steely face. But the work pays very well, so the workers stay – 28 days in the oil camp, 28 days off.

After the container villages, the oil field begins. Here are the mega plants with big flames, the pipelines winding over each other, a dilapidated cemetery of a village that had to give way. And then, after another hour and a half of driving, in the middle of the sandy plain, a checkpoint where the car is halted. A man appears to be hiding behind a pole, using his cell phone to film the reporters’ approaching car. Behind that checkpoint is Prorva.

Canal through vulnerable area

Here Witteveen and Bos did its biggest project ever after the Amsterdam North/South metro line. The now-retired engineer Bernard van Leeuwen, a former colleague of Krijn de Brabander, can still clearly recount how his firm got the immense job. He was there from the very beginning, in 1997, when Witteveen en Bos arrived in Shell’s wake to design the Kashagan rigs. A few years later, the firm opened three offices in Kazakhstan and sought cooperation with Tenizservice.

‘Prorva’ began for Witteveen and Bos on October 4, 2012, when Van Leeuwen gave a presentation to senior Chevron executives, together with delegates from the dredging company Van Oord and a director of Tenizservice. They were in time trouble. Consortium Tengizchevroil was working on an expansion of the oil field, which had to increase production from 591,000 barrels to 851,000 barrels per day. The consortium was pulling out all stops to speed up the process. The oil concession expires in 2031, and each year of delay would cost billions. Giant 1,800-ton plant components had been ordered from South Korea and Italy. The question on the table was how to bring these ashore as quick as possible.

Chevron had already started designing a port near the city of Atyrau, but that proved difficult: it’s a vulnerable, remote area. Would they have to remove all telephone cables in the villages when the trailers with the giant modules would pass? State company KazMunaiGas, a participant in the consortium, explicitly opposed to the plan. The state company wanted the consortium to consider Tenizservice’s alternative in Prorva.

The canal would pass through ecologically vulnerable areas, past bays where the protected Caspian seal swims, past breeding grounds for sturgeon and through places where rare migratory birds forage

The three companies presented the plan on a powerpoint, in a room with as many as 30 people, 25 of whom said nothing, Van Leeuwen recalled. Actually, the port was not Tenizservice’s idea, but an elaboration of a quick plan Witteveen en Bos had drawn up at the request of the oil consortium years earlier, Van Leeuwen explained. Now they had pulled it out of a drawer at Tenizservice’s request. The plan was „no more than a thick line on the map,” running from 75 kilometers off the coast of the shallow Caspian Sea straight to the Tengiz oil field, Van Leeuwen said. Witteveen and Bos quickly put together a presentation. „We made it in two weeks.”

The slides showed photographs, maps and schematic drawings. The canal would pass through ecologically vulnerable areas, past bays where the protected Caspian seal swims, past breeding grounds for sturgeon and through places where rare migratory birds forage. Tengizchevroil had previously dismissed the idea of building a port here as „unrealistic”: too harmful to the fragile ecosystem, too difficult to get the roughly 170 signatures on the necessary permits.

But Tenizservice boasted with „good relations with the authorities” and guaranteed to be able to obtain all permits within 62 weeks. The presentation was an „invitation to bribe”, according to documents about the project shared by Der Spiegel. Building a port so quickly, in an ecologically sensitive area, getting all the permits, while the sea is frozen for five months of the year? That couldn’t be right.

The oil from Kazakhstan’s fields contains extremely high levels of sulfur, which is extracted from the oil in factories. Yellow sulfur nuggets are exported by train.

‘Bright green light’

Nevertheless, one month after the presentation the oil consortium signed a contract with Tenizservice to develop the port. Tenizservice had no experience with such large-scale projects, but that didn’t bother Tengizchevroil. The project was not tendered. An employee wrote that Tenizservice’s „connections to circumvent legal requirements” were the only reason it got the contract. „Nothing else.”

Even though Tenizservice was hired as the general contractor, it did next to nothing, said a former Witteveen and Bos employee who worked on the project. „They only applied for the permits. You had to work with them to get permits.”

And they did get the permits. All paperwork was in place to begin construction in 2014. Then came the big deal for the three companies: Tenizservice got the $1 billion construction contract. It immediately hired Witteveen and Bos for the final design, and also hired Van Oord to dredge the canal. Tengizchevroil lawyers frowned: again, the contract was not tendered, but awarded directly to Tenizservice. And there were concerns about the „potential indirect connection to a

Government Official,” according to a memo from the project’s managing counsel to oil consortium directors. And what exactly did Tenizservice do? The company only put a handful of people on the project, according to one of the documents. „It was the general contractor in name only.”

In 2013 the project also landed on the desk of Atradius Dutch State Business in Amsterdam, the special branch of insurer Atradius that guarantees capital-intensive deals on behalf of the Dutch state. Van Oord applied for export credit insurance.

To Atradius DSB it was also clear that Tenizservice would do virtually nothing. In internal documents an employee wrote, abbreviating Tengizchevroil to TCO: „Tenizservice is the official executor of the project. In practice, things are different; in fact, no decision is made without TCO’s approval. TCO has put about 200 of its people on this project to make sure everything goes well.” And, the employee wrote: „TCO has inserted Tenizservice as a vehicle. TCO keeps full control of the project.”

Atradius DSB went to great lengths to insure the project for Van Oord. The project’s environmental and human rights risks were large, but according to Atradius DSB, Van Oord had „a good reputation” and Tenizservice was „transparent.” An extensive report by an American NGO about the enormous environmental risks was dismissed by an Atradius DSB employee as „extremely biased bla bla.” The employee raved about the measures Van Oord was taking to protect the environment. „Good for the sturgeon, and that’s important because we want to keep eating caviar.” The project got „bright green light.”

Tenizservice’s murky ownership structure seemed to be a stumbling block. Atradius called the company „transparent,” but when the insurer asked questions about its ultimate owners, it received no answers. Moreover, the Dutch embassy warned that Tenizservice was politically „connected.” Still, Atradius insured the project for 276 million euros. Atradius got „sufficient comfort” from the fact that Tenizservice passed Tengizchevroil’s due diligence.

A criminal investigation is now underway in the Netherlands into bribery by Van Oord for the dredging job at Prorva. Journalistic platform Follow the Money revealed on the basis of Swiss court documents that the public prosecutor suspects the dredger paid bribes to connections of „the father of former President Nazarbayev’s son-in-law.” Van Oord said in a response that it could not comment on the investigation. The company states it got the dredging job only „after an international tender with several parties”, a spokesperson said.

The conversation with Krijn de Brabander of Witteveen and Bos got more strained when NRC’s questions turned to the owner of Tenizservice. „I don’t know,” he said coyly. And the amount Tenizservice was paid? Was that fair? „We had no insight into that. We weren’t in a position to ask about it.”

Did Stephan van der Biezen, managing director of Witteveen and Bos, know with whom his company has done close business for years? „Well to know, to know … we mainly want to know: is it a reliable client and is it a customer you can do good business with?”

The Prorva project eluded every business logic. The oil consortium, unhappy with Tenizservice, took over almost all coordination, emails and contract amendments show. The consortium even paid most of the fees for the subcontractors hired by Tenizservice because the small company was underfunded, the documents show.

The only task left for Tenizservice was to take care of „all land use rights, licenses, authorizations, consents, decrees, waivers, government approvals and acts of acceptance”, a renewed contract states. But instead of less money, it actually got $700 million more, contracts show. And the budgets further ballooned. „They set just crazy amounts of money,” wrote an oil consortium employee. The compliance and due diligence risks surrounding the Prorva contract with Tenizservice are „very bright on a lot of radars,” a concerned Chevron employee wrote.

The budget for the port and canal ultimately doubled from $1 billion to $2.4 billion. The project was completed in 2018. But then the consortium still had nothing. Tenizservice owned the facilities, and Tengizchevroil had to pay rent to use the port. Just like in Damba, the little port that Tenizservice built years earlier.

Galina Chernova

Well, said Galina Chernova, the activist who also protested against the small Damba port: „Once a scheme works, of course they’ll try it again.”

In documents seen by NRC the modus operandi is described as corruption „hiding within repeated contract amendments and behind manipulations of financial analyses.” Again, no envelope of money was passed over the table, no Ferrari or super yacht was given as a present, making such dubious deals harder to grab.

Stephan van der Biezen, director of Witteveen and Bos, said he knows nothing about huge price increases and called the planning realistic. „Otherwise, we wouldn’t have done it.” Witteveen and Bos only checks whether its clients are on sanctions lists – the company doesn’t check whether clients have political connections or have previously been investigated for corruption. „That is not relevant to us. The projects we do are not politically sensitive, we design a dam wall or something.” The questions by NRC about Tenizservice worry him though, Van der Biezen said: „Not concerning our role, but the perception. The reputational risk.”

Atyrau

The air is hot and full of mosquitoes when the reporters walk with Max Bokay along a brand-new boulevard along the Ural River in Atyrau. The route follows sleek walking and biking paths past playgrounds and fitness equipment. The road was paid for with money from Shell and the other companies in the Kashagan consortium. Suddenly, the new bike path stops. This is where the social project ends. The asphalt promptly turns to sand. Bokay grins. „This is what you get.”

Bokay wanted to walk, because that makes it harder for the Secret Service to listen in. When the reporter tries to cross an empty street, Bokay drags her back. Not here! There, at the crosswalk. Bokay organized protests against the sale of land to foreign investors in 2016, and was jailed for five years as a result. Since his release, he’s under 24/7 police surveillance. „I can’t take any risk,” he says.

Max Bokay, an activist from Atyrau, was jailed for five years after organizing protests against the sale of land to foreign investors.

So what has come of prime minister Lubbers’ promise for Kazakhstan? The promise that the Netherlands would get a stable trading partner, and Kazakhstan a free, prosperous democracy?

Nothing has come of it. „You always read that market economy is going to bring democracy,” says Bokay, waving away the mosquitoes. „But that is not true for the oil industry in Kazakhstan. It has only strengthened the position of influential families.”

Oil doesn’t bring change. That’s partly because of the long duration of oil contracts, he says. „Suppose you’re the director of Shell and you sign an oil contract for thirty years. In those thirty years you want everything to stay the same, no change of power. These contracts have a tremendous conservative power.”

Lubbers’ second promise, that of Kazakhstan being a stable trading partner for the Netherlands, also didn’t come true. The delayed Kashagan project should have resulted in much more revenue for Kazakhstan. Environmental degradation and polluted air now suddenly prove to be a stick to beat with. Last March, the Kazakh state imposed billions in environmental fines on the NCOC consortium. A much higher claim of $160 billion for lost revenue followed a month later. Does Kazakhstan just want money, or is it turning the thumbscrews in order to grab Kashagan, just like the Russian state did with Sakhalin?

The war in Ukraine makes everything even more unstable. Since Russia’s full-scale invasion of Ukraine and since sanctions were declared against Russian oil, Kazakh oil has become more important to the West than ever. Russia is aware of that, too. Just after the invasion of Ukraine, when President Tokayev solemnly promised the West not to sabotage the sanctions against Russia, Russia closed the tap of the only major oil pipeline from Kazakhstan. Kazakhstan is stuck.

Bokay remains in the dark about the state’s plans for the oil fields. No one knows, not even the executives of Western companies. Everything is vague, foggy. Just like the poisonous clouds no one is sure where they come from, or the mysterious men filming people or showing up at the door at night. But speaking out and defending your rights remains risky. „You never know when you cross a line and it suddenly becomes dangerous.”

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