Exclusive-Kazakhstan sees progress in multi-billion claims against oil firms by December

ALMATY :Kazakhstan expects preliminary results of multi-billion arbitration proceedings against international oil companies developing its giant oilfields by December, the country’s energy minister told Reuters on Wednesday.
The central Asian country last year launched claims against groups developing its Kashagan and Karachaganak oilfields over $13 billion and $3.5 billion, respectively, over disputed costs.
Kazakhstan has a history of large claims against foreign companies, which say the government uses to increase its shares in key oil and gas projects in what amounts to “resource nationalism”.
Kazakhstan’s authorities have rejected such criticism saying its aim was to rein in costs inflated by Western majors.
The offshore Kashagan field, one of the world’s biggest discoveries in recent decades, is being developed by Eni, Shell, TotalEnergies, ExxonMobil, KazMunayGaz, Inpex and CNPC.
Their consortium, called the North Caspian Operating Company (NCOC), has invested some $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.
NCOC, Eni, Shell and TotalEnergies did not respond to requests for comment.
“Everything, which relates to the subject of the claim, is confidential information. We are talking about the execution of the terms of the production-sharing agreement on Kashagan and Karachaganak,” Energy Minister Almasadam Satkaliyev said.
Bloomberg News reported in April that Kazakhstan raised arbitration claims against the Kashagan consortium to more than $150 billion, Neither the government nor the companies have disclosed the details of the claims.
In 2020, Kazakhstan reached a $1.9 billion settlement with the Karachaganak partners that brought to an end a years-long dispute over sharing of profits from the giant field.
In 2011, partners in the Kashagan consortium agreed to cover $1 billion in Kazakh state energy company KazMunayGaz’s extra costs to settle a dispute over the project.
A year earlier, the Karachaganak consortium agreed to hand the government a 10 per cent stake in the field, valued at $1 billion, as part of a dispute resolution.
The landlocked Kazakhstan, Central Asia’s largest economy, has pinned its hope on Kashagan for future prosperity and has for years expressed its concerns over cost overruns and delays in its development.
The oilfield’s crude contains high concentrations of poisonous hydrogen sulphide, which complicates the extraction process. Its production reached around 380,000 barrels per day last year.
OIL EXPORTS
Satkaliyev also said that Kazakhstan’s oil exports to Germany via the Soviet-built Druzhba pipeline were seen at 1.2 million metric tons (24,000 barrels per day) this year, while Germany sought to double its imports to 2.5 million tons per year.
Kazakhstan’s role as an oil exporter has increased following Western sanctions against Russian oil over the war in Ukraine.
While it remains Moscow’s ally it has not taken sides in the conflict or supported Moscow’s claims to some Ukrainian territories.
Germany has said it was interested in expanding trade with Kazakhstan while ensuring it does not serve to circumvent Europe’s sanctions on Russia.