projected 2p reserves valued below $1 a barrel, page-7

LoTM,

Why do you say: ‘So the risk with Jupiter is not actually about finding oil, it’s the political risk associated with its only asset’s being in Kazakhstan. The longer this remains the case, the more that risk increases with time.’ Surely, it’s extremely unlikely that JPR will have assets *outside* Kaz in the foreseeable future, so you seem to be implying a background of increasing risk over time, which for any medium- or long-term investor suggests that they should perhaps sell-up and look elsewhere (or do so as soon as the sp ticks up a bit).

However, this isn’t really an accurate assessment is it? Sure, there’s some social tension in certain mono-employer regions (of which Zhanaozen was the worst case in late 2011), and there’s uncertainty surrounding what happens when Nazarbayev quits or dies. However, Nazarbayev seems generally popular and the country has been on an international investment love-in for at least the last couple of years. Senior Kaz figures have visited the Far East and Middle East repeatedly, Europe, Russia, USA, and as recently as this month the UK had the Trade Minister and a delegation over in Kaz. From memory, Kaz has something like $100bn in state contracts to award in the next decade and they’ve attracted some $150bn of FDI into the country in the last 20 years. I also understand that after an 18 year process, Kaz is set to join the WTO perhaps later this year. They also recently launched the so-called ‘People’s IPO’ and are developing the ‘New Silk Road’ project to act as an overland trade bridge between the Far East and the outer fringes of Europe. All-in-all, the investment climate there seems to be better than it’s ever been, with a concomitant reduction in political risk. Of course, according to measures by such as Transparency International, the country is still highly corrupt, but I reckon the worst days of expropriation of assets in highly visible ways such as at Kashagan, Karachaganak etc, are likely over (by which I mean they’ll do it less visibly and less egregiously now).

By the way, just a suggestion, but why didn’t you split up your post into a series on particular aspects which we could then consider individually?