Kazakhstan has been talking tough over its oil reserves

Mamadou Barry said recent moves by ministers to penalise foreign firms for alleged environmental lapses and production delays sent a "bad signal".

His remarks came after Chevron was hit with a $609m (�299m) fine for breaching regulations at an oilfield it operates.

Foreign firms have flocked to the country due to its huge oil reserves.

Oil wealth

The Kashagan oilfield, whose operation is at the centre of concerns about the stability of foreign investment, contains 13 billion barrels of crude oil alone.

It gives the impression of increased risks for investment Mamadou Barry, World Bank

The Kazakh government has demanded billions of dollars of compensation from the foreign consortium which operates Kashagan, led by Italian energy firm ENI, for alleged production delays and budget over-runs.

Reuters reported on Friday that US power firm AES, the largest electricity supplier in the country, was facing a $200m fine for competition abuses.

It quoted a senior government official as saying that AES had "ignored anti-monopoly legislation" by selling electricity through other companies with which it has close links.

There is growing unease that the Kazakh government is hardening its stance on foreign investment for political and economic reasons to the detriment of businesses there.

'Not positive'

Legislation allowing the government to renegotiate existing energy deals if it believes the country's vital interests are threatened was recently agreed by its Parliament.

"The impact is not at all positive," said Mr Barry of the Multilateral Investment Guarantee Agency, the World Bank's foreign investment arm.

While some of the government's criticisms of how foreign firms were acting were valid, Mr Barry added, its approach to dealing with them risked scaring off potential investors.

"It gives the impression of increased risks for investment," he added.

But with oil prices near a record high of more than $80 a barrel, many experts believe growing uncertainty about the political climate will not deter foreign firms.

"Investors will still be coming, except if, like in Venezuela there is outright nationalisation," said Joel Benjamin, from lawyers Denton Wilde Sapte.