Kazakhstan's dispute with oil majors
Two sources told AFP that Kazakhstan had warned the head an oil consortium, which includes Exxon and Shell, about possible criminal charges if they did not pay a $5 billion fine for environmental damage.
This is just the latest in a series of disputes that have seen international firms cede control?of giant oilfields in the country to the government?or pay cash settlements.
International Oil Majors in Kazakhstan:
TENGIZ FIELD
Tengizchevroil operates the Tengiz Oilfield, which produces approximately 960,000 barrels per day. Chevron owns 50% of TCO while KazMunayGaz, the Kazakh energy company, holds 20%. Exxon Mobil has 25%, and Lukoil, 5%.
KASHAGAN FIELD
The Kashagan oilfield is operated by North Caspian Operating Company, which includes Eni (16.81%) Shell (16.81%) TotalEnergies (also 16.81%) ExxonMobil (also 16.81%) KazMunayGaz (also 16.88%) Inpex (7.56%) and China National Petroleum Corp (8.33%).
KARACHAGANAK FIELD
The Karachaganak Gas-Condensate Field, which produces 260,000 bpd, is operated by a consortium consisting of Eni (29.25%) Shell (29.25%) Chevron (18%) Lukoil (13.5%) and KazMunayGaz (10):
After U.S. sanctions, the future of Russia's Lukoil in Kazakhstan remains uncertain.
CASPIAN PIPELINE CONSORTIUM
Over 80% of Kazakhstani crude oil is exported via the 1,500-km (935-mile) Caspian Pipeline linking TCO and Karachaganak fields to the Russian Port of Yuzhnaya Ozereyevka. KazMunayGaz, Transneft, KazMunayGaz, and Chevron Caspian Pipeline Consortium are the main shareholders of the Caspian Pipeline Consortium.
DISPUTES:
In 2008, Kazakhstan increased its stake in Kashagan from around 7% to 17% in a settlement reached with international oil companies over the delays in developing the field.
As part of a settlement, the Karachaganak consortium led by Eni gave the Kazakh Government a 10% stake as part a dispute resolution in 2011. The value of other concessions made in Kazakhstan's legal disputes is difficult to assess, including the addition of long-term payments or obligations to sell gas a certain state entity, as well as non-reimbursement for some historical costs.
- In 2012 the Kashagan partners agreed to pay $1 billion in KazMunayGaz extra costs as a settlement of a dispute.
Kazakhstan has reached a $1.9billion settlement with Karachaganak Partners in 2020. This brought an end to a long-running dispute over the profit-sharing from the giant oil field.
In 2023, Kazakhstan sued companies developing the Kashagan oilfield and Karachaganak for $3.5 billion and $13 billion respectively over costs disputed. Arbitrators in 2026 decided that Kazakhstan was entitled to a partial award in the Karachaganak dispute. The final award has not yet been calculated, but it is expected to range between $2 billion and $4 billion. Kazakhstan has increased its claim for $150 billion in the Kashagan arbitration, according to government sources.
In a separate, but technically related case, Kazakhstan fined oil companies $4.9 billion by 2023 for not properly storing sulphur at the Kashagan Project, which is a by-product of oil production. The fine was approved by local court and brought to arbitration for collection.
The deadline for paying the fine was set at July 20. The consortium said the fine could not be enforced as long as arbitration was ongoing. Reporting by Mariya Goreyeva, America Hernandez and Felix Light, compiling by Shadia Nasralla, editing by Susan Fenton
(source: Reuters)
