Shell stops further Kazakhstan investment due to legal disputes, CEO states

Shell has halted new investments due to legal actions launched by the government against it and other international companies for cost disputes. CEO Wael Sawan said that Shell would halt its new investments because of the legal proceedings.

Kazakhstan has been in conflict with international oil companies for many years. It launched arbitration proceedings against the developers who developed its Kashagan oilfield and Karachaganak, claiming $13 billion of disputed costs and $3.5 billion.

Shell, Eni, Chevron and KazMunayGaz all hold a 29.25% stake in the Karachaganak Petroleum Operating Consortium, which operates the field.

Sawan told analysts on Thursday that the decision to invest in Kazakhstan was impacted by this. "We believe that there are still a lot of investment opportunities in Kazakhstan. But we will wait until 'we have a better view of where things end up.

Bloomberg News reported, last week, that unnamed sources had said the Karachaganak Consortium lost the arbitration case and was liable for up to $4 billion in damages. Could not confirm the report.

The international oil companies settled past disputes with Kazakhstan, allowing the government to take a greater ownership stake in project.

Kazakhstan's Energy Minister has said previously that the government is gathering documents to file a larger lawsuit against Kashagan, whose value has not yet been revealed.

Shell owns a 16.81% stake of the North Caspian Operating Company (NCOC), which operates Kashagan. The NCOC also includes?Eni TotalEnergies ExxonMobil KazMunayGaz Inpex, and China National Petroleum Corp.

The Kazakhstani energy ministry didn't immediately respond to a comment request. (Reporting and editing by Joe Bavier; Additional reporting in Almaty by Mariya Goreyeva; Reporting by Stephanie Kelly, Vladimir Soldatkin)

(source: Reuters)