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

Shell has halted new investments in Kazakhstan due to legal actions taken by the government against the oil giant and other international companies over cost disputes. CEO Wael sawan confirmed this.

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

One claim?involves a field operated by the Karachaganak Petroleum Operating Consortium, in which Shell holds a 29,25% stake along with Eni, Chevron and KazMunayGaz.

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 idea of where things are going to end up."

Bloomberg News reported, last week, that unnamed sources had confirmed the Karachaganak Consortium's loss in the arbitration case. Sources said the Stockholm tribunal ruled in Kazakhstan’s favor on a number of disputed costs. The award is expected to be between $2 billion and $400 million.

International oil companies settled previous disputes with Kazakhstan by allowing Kazakhstan to own a greater share of the?projects.

Kazakhstan's Energy Minister has said previously that the government is gathering documents for a larger lawsuit against the "Kashagan Consortium", whose value has not been disclosed.

Shell owns 16.81% of the North Caspian Operating Company (which operates Kashagan) along with 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)