Why was PetroKazakhstan (NYSE:PKN), the Calgary-based company with the majority of its exploration, production, and refining facilities in the former Soviet republic, the number one percentage loser on the New York Stock Exchange yesterday?

At 12:20 p.m., a Dow Jones newswire report said that the Kazakhstan Agency for the Regulation of Natural Monopolies would confiscate monopoly profits from PetroKazakhstan and its small local oil distributor and transfer them to the state budget. The Agency claimed that the PetroKazakhstan overstated prices without Agency permission. From a Tuesday close of $20.90, the stock plummeted to $15.51 when the exchange suspended trading.

PetroKazakhstan offered its response through the wires at 2:13 p.m., saying it had not received any notification of the action, knew of no facts that would support the allegation, and "based on previous experience where similar allegations were made and eventually overturned by the Kazakh Courts, the Company has no reason to believe that this alleged statement is of a material nature to the Company or its operations."

According to the company, then, this was a spat between a Kazakh government executive and PetroKazakhstan, previously refereed by the judiciary in the company's favor. Calmed for the moment that this wasn't the End of PetroKazakhstan as They Knew It, the exchange resumed trading in the stock at 3:00 p.m. Shares immediately shot over $19.00, later closing at $18.36 and off 12% for the day. Quite a chart. This morning the company stated this was much ado about, well, something, but not much. Management believes the company's exposure was less than $400,000.

With the likes of Warren Buffett investing in developing world oil and gas assets such as PetroChina (NYSE:PTR), investors have focused on this Kazakhstan operation that obtained ownership shares of certain Kazakh reserves in exchange for developing them. Company shares have more than doubled since April lows.

But if you're going to own a business whose profits come from six years operating in a former Soviet republic with nascent political and judicial structures, expect at least growing pains. Just as the state may tolerate or support a monopoly, it may take away -- or at least raise a ruckus to increase its take. When this happens there is absolutely no recourse for international common stockholders. If that scares you, do not play in this particular sandbox.

That's why no matter how secure you are that future world energy appetites guarantee increasing asset value, investing in developing country energy assets is a speculation. For the sleep-at-night portion of your portfolio, you may prefer large energy concerns like ExxonMobil (NYSE:XOM), ChevronTexaco (NYSE:CVX), Royal Dutch Petroleum (NYSE:RD), or BP (NYSE:BP).

While these giants may not offer as much upside as PetroKazakhstan, they do come with a greater margin of safety. They too sport assets in the Wild West (and East), and each has endured even nationalization of their properties, but their diversified worldwide interests blunt the effects of this or that nation's governmental machinations.

For investors interested in traditional energy investments, our community offers a terrific Oil & Gas discussion board! No brag, just fact.