It seemed so appealing at first. PetroKazakhstan (NYSE:PKZ) was this little Canadian-based oil company with some interesting assets in Kazakhstan and a low valuation to boot. Then came the oil boom, and relations soured between the company and one of its partners -- and the Kazakh government. Its revenue source may reside underground, but PetroKazakhstan's future is currently up in the air.

Only a few days ago, PetroKazakhstan's stock rose nicely on the company's announcement that it had received multiple expressions of interest in a possible buyout. We've since learned that one of the bidders was India's state-run Oil and Natural Gas Corp., and while no other suitors have identified themselves, many of the usual suspects (i.e., Chinese and European companies) have been named.

This makes a certain amount of sense, right? For all of this company's positives (including very low production costs), the market's worries about various legal disputes had pushed the stock down.

Not only is PetroKazakhstan engaged in a legal dispute with putative Russian partner Lukoil, but it is also squabbling with the government over production limits. The Kazakh government has ordered PetroKazakhstan to cut back production to a level that eliminates gas flaring -- the burning of gas released when crude oil is brought to the surface. (While the company alleges that the government has been discriminatory in its application of this law, the Kazakhs have fired back by accusing the company of continuing to flout the law.)

PetroKazakhstan's management now appears to be at least considering getting out of the game, but that may not be so simple after all. The Kazakh government has apparently stepped in by reminding everyone that they have the right of first refusal on any PetroKazakhstan asset sales. What's more, the government has the right to buy the assets in question at "market price."

Now, I'm neither an expert in Kazakh natural resources law nor a conspiracy buff, but I think it's fair to wonder what exactly this right of first refusal might mean with regard to PetroKazakhstan's attempts to strike a buyout deal. Could the government perhaps refuse any and all offers, instead strong-arming the company to sell to the government for a song?

I'm inclined to doubt it, but you never know. Kazakhstan doesn't exactly have a long and rich tradition of democracy, much less respect for Western-style contract law. While I fully respect Kazakhstan's rights and interests in protecting its own natural resources, it may not be equally interested in protecting the rights of foreign investors.

At this point, we seem to have a sea of unknowns. Will the flaring dispute get resolved? Who are the buyers? How much will they pay? Will the Kazakh government even let a deal happen?

With those questions in mind, I'm not sure the price on these shares is attractive enough just yet. For me, investing is about balancing risks and rewards. To me, all these unknowns only ramp up the risk side of the equation.

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Fool contributor Stephen Simpson held no financial position in any companies mentioned in this article at the time of publication.