Kazakhstan’s Compensation Claim Against Big Oil Climbs to $150 Billion

Kazakhstan is seeking more than $150 billion in compensation from the oil majors developing its huge Kashagan oilfield, after adding a $138 billion claim for lost revenue to a previous claim of $15 billion over costs, anonymous sources with knowledge of the matter told Bloomberg on Wednesday.

Kazakhstan already claims that it is owed as much as $16.5 billion by international oil majors for project costs in two of the biggest oilfield developments in the country in the past decade, the Kashagan and Karachaganak oilfields.

Kazakhstan, part of the OPEC+ group of oil producers, has had several litigations over project costs and delays with major international oil firms.

According to the latest claim, Kazakhstan is now seeking to recoup $138 billion in lost revenue from Kashagan, based on estimates of revenue lost because the majors developing the field haven’t delivered fully on production volumes they had promised the government. 

In April 2023, Kazakhstan said it was taking to court the oil majors developing the Kashagan and Karachaganak oilfields. The country began arbitration proceedings to claim $13 billion in costs deducted as part of profit-sharing agreements for the Kashagan oilfield and another $3.5 billion for the Karachaganak field development.

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Under the profit-sharing agreements for the Kashagan and Karachaganak oilfields, the companies can deduct some costs from the income before sharing it with the government of Kazakhstan.

Kazakhstan’s massive oilfield Kashagan, which pumps around 400,000 barrels per day (bpd), is operated by a consortium of firms, North Caspian Operating Company (NCOC), which includes Kazakhstan’s state firm KazMunayGas, as well as Eni, ExxonMobil, Shell, TotalEnergies, China National Petroleum Corporation (CNPC), and Inpex.

So far, the consortium has invested around $55 billion in the project.

NCOC is currently involved in several disputes regarding the application of certain provisions of the Kashagan production-sharing agreement that are subject to arbitration, the consortium told Bloomberg in a statement, declining to comment further.

By Tsvetana Paraskova for Oilprice.com

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