Kazakhstan to Press Ahead with $16.5B Claim Against Oil Majors

Mariya Gordeyeva and Olzhas Auyezov
Tuesday, June 6, 2023

Kazakhstan is pressing ahead with $16.5 billion in claims against international oil majors over disputed project costs and has no plans for a possible out-of-court settlement, Energy Minister Almasadam Satkaliyev said on Tuesday.

The legal wrangling underscores the risks for foreign companies operating in the former Soviet Union state and is one of many court battles between the international majors and the government.

In April Kazakhstan started arbitration proceedings against companies developing its Kashagan and Karachaganak oilfields over $13 billion and $3.5 billion respectively in costs deducted as part of profit-sharing deals.

"There are working procedures. Arbitrators are being appointed, consultations are underway," Satkaliyev said.

He also replied negatively to a question about a possible out-of-court agreement.

The offshore Kashagan field, one of the biggest discoveries in recent decades, is being developed by Eni, Shell, TotalEnergies, ExxonMobil, KazMunayGas, Inpex, and CNPC. The consortium has invested $50 billion in the project.

Eni, Shell, and KazMunayGaz are also partners in Karachaganak, alongside Chevron and LUKOIL, with investments at more than $27 billion.

The Kazakhstan offices of the two consortiums did not reply immediately to requests for comment. 

A Chevron spokesperson said it would not comment "on matters related to ongoing disputes".

The Astana government has already had a series of disputes with its partners over the terms of oil deals, which typically ended with settlements.

The current claims cover the period from 2010 to 2018 for Kashagan and from 2010 to 2019 for Karachaganak. 

PREVIOUS LEGAL BATTLES

In its most recent high-profile arbitration case, Kazakhstan reached a $1.9 billion settlement with the Karachaganak partners in 2020. 

In 2012 the Kashagan partners agreed to cover $1 billion in Kazakh state energy company KazMunayGaz's extra costs to settle a dispute over the project. 

It is harder to put a value on other concessions won in Kazakhstan's legal wranglings, such as the addition of some long-term payments, obligations to sell gas to a state entity or non-reimbursement of some historic costs.

Kazakhstan doubled its stake in Kashagan to 16.8% as part of a 2008 settlement with oil majors over delays in development of the field. It also received a 10% stake in Karachaganak from that project's consortium in a 2012 settlement.

(Reuters - Reporting by Mariya Gordeyeva and Olzhas AuyezovAdditional reporting by Ron BoussoWriting by Vladimir SoldatkinEditing by David Evans, Mark Potter and David Goodman)

Categories: Engineering Industry News Activity Production Regulations Caspian Sea

Related Stories

Seatrium Engages Axess Group to Clear FPSOs for Brazil Deployment

BP, ONGC, Reliance Industries Ink Deal for Offshore Exploration in India

Yinson, PTSC Get $600M Contract for Vietnam-Bound FSO

Seatrium Makes First Turnkey FPSO Delivery to Petrobras

CNOOC Signs Hydrocarbons Exploration and Production Deal with Kazakhstan

CNOOC Starts Production at Offshore Field in South China Sea

BP Expands Oil and Gas Scope in Azerbaijan with New Projects and Exploration Rights

Indonesia's Medco Starts Production at Natuna Sea Fields

CNOOC Puts Into Production New Oil Field in South China Sea

Pakistan’s OGDC to Start Production at ADNOC’s Offshore Block by 2027

Current News

SPE Offshore Europe 2025 set to drive transformational change for the energy sector

Shipbuilder Delivers Fast Crew Boat Pair to Aesen

Norwegian Oil Investment Will Peak in '25

Saipem Marks First Steel Cut for Tangguh UCC Project at Karimun Yard

Saipem Wins FEED Contract For Abadi LNG Project FPSO Module In Indonesia

Cheniere, JERA Ink Long-Term LNG Sale and Purchase Agreement

Shelf Drilling Lands New Jack-Up Contract in Vietnam, Extends Egypt Deal

Seatrium Engages Axess Group to Clear FPSOs for Brazil Deployment

Inpex Picks FEED Contractors for Abadi LNG Onshore Plant

Inpex Kicks Off FEED Work for Abadi LNG Scheme Offshore Indonesia

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com