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Karachaganak

Shell and Eni Face Up to $4 Billion Payout to Kazakhstan After Arbitration Ruling

Oil and gas majors Shell and Eni, key stakeholders in Kazakhstan’s Karachaganak field, have lost a key stage in an international arbitration case in London and may be required to pay the Kazakh government between $2 billion and $4 billion in compensation. The decision was first reported by Bloomberg. According to the ruling, the arbitration panel upheld Kazakhstan’s argument that the project operators had charged the state under a production sharing agreement (PSA) for unapproved cost overruns and other ineligible expenses. The tribunal found that a significant share of the disputed costs should not have been recovered from the state, siding with Kazakhstan on the central legal question. The arbitration proceedings were conducted behind closed doors, in line with standard practice for PSA disputes. The final compensation amount has yet to be determined, and the ruling remains subject to appeal. However, Bloomberg reported that the tribunal concluded the consortium must return a substantial portion of the contested funds, a decision that could require changes to the PSA’s oil and gas distribution formula. Karachaganak is one of Kazakhstan’s largest oil and gas projects and a cornerstone of the country’s energy sector. The field is operated by the Karachaganak Petroleum Operating consortium, which includes Shell, Eni, Chevron, Kazakhstan’s national oil and gas company KazMunayGas, and Russia’s Lukoil. The Kazakh government initially sought more than $6 billion in compensation, arguing that improper cost recovery had reduced state revenues over several years. The dispute was formally launched in 2023 and followed a broader effort by Kazakhstan to assert stricter oversight over major hydrocarbon projects governed by PSAs. In 2024, international partners reportedly proposed resolving the dispute by constructing a long-delayed gas processing plant at Karachaganak to supply the domestic market, an offer seen as an attempt to reach a negotiated settlement. The plant has long been a point of contention, with Kazakhstan pushing for increased gas processing capacity inside the country rather than exporting raw gas. Kazakhstan’s Ministry of Energy has declined to provide further details on the arbitration, citing confidentiality provisions. In response to an inquiry from BAQ.KZ, the ministry said: “All arbitration materials are subject to the confidentiality of the production sharing agreement and the arbitration agreement between the parties. Until the restrictions are lifted, it is not possible to provide any information.” The ruling marks one of the most significant recent legal setbacks for foreign oil companies operating in Kazakhstan in recent years and could have broader implications for how costs are approved and recovered under PSAs across the country’s energy sector.

Criminal Investigation

Olympic Boxing Champion Serik Sapiyev Assaulted by Deputy

A criminal case has been opened in Kazakhstan following the assault of Olympic boxing champion Serik Sapiyev by his deputy, Dauren Esimkhanov, in the Karaganda region’s Department of Physical Culture and Sports. The incident has triggered public outcry and intensified scrutiny of internal dynamics within the regional sports administration. Sapiyev, who currently heads the department, stated that the altercation was work-related. While the regional administration urged the public and media not to draw premature conclusions, it acknowledged that Esimkhanov had committed an offense and must be held accountable. A native of Karaganda, Sapiyev rose to prominence after winning gold in the 69 kg weight category at the 2012 London Olympics, where he was also awarded the Val Barker Trophy for most technical boxer. A two-time world amateur champion and two-time Asian champion, Sapiyev retired from professional boxing in 2012. He launched a political career the following year, becoming a UNESCO Goodwill Ambassador in 2013 and later serving as a deputy in the Mazhilis, Kazakhstan’s lower house of parliament, in 2017. In 2018, Sapiyev stepped down from parliament to lead the Committee on Sports and Physical Culture under the Ministry of Culture and Sports. He left the ministry in 2021 and, in late 2024, assumed his current position in Karaganda. The altercation reportedly took place on January 21 at a sports complex in Karaganda and was confirmed by local police. The Karaganda Region Police Department announced a criminal case based on a statement from the 42-year-old Sapiyev, citing grounds of assault. Esimkhanov, a sambo champion with accolades at both the Asian and world levels, has not denied involvement. Sapiyev addressed the incident on Instagram, asserting that the conflict stemmed from attempts to interfere with staffing decisions in the region's sports institutions without his knowledge. “I want to clarify: what happened was not a personal or domestic conflict, but rather resistance from certain individuals who have unofficial influence in the region,” Sapiyev wrote. “Without my knowledge, an attempt was made to illegally rotate the heads of sports organizations in the region. When I discovered this, I tried to stop it peacefully. I want to openly state that no provocations will shake my determination to implement systemic reforms in Kazakhstani sports, which the head of state has repeatedly spoken about.” In response, Esimkhanov claimed on social media that misinformation was being spread. “Currently, information that does not reflect the objective reality is being circulated. I ask you not to succumb to provocations and attempts to destabilize the situation by unscrupulous individuals,” he wrote. Ermaganbet Bulekpaev, the Akim of the Karaganda region, whose office oversees the department, called for caution and restraint while the investigation is underway. He confirmed that the Department for Civil Service Affairs will conduct a full inquiry, including a comprehensive audit of the department’s operations. “There has been a violation, and responsibility must be taken for it,” Bulekpaev stated during a staff meeting. “An investigation is underway, and each action will be given a legal assessment.” The scandal comes on...

Cyber Security

Kazakhstan Considers Criminal Liability for Mass Leaks of Personal Data

Kazakhstan is considering tightening legal responsibility for violations related to personal data protection. The Ministry of Artificial Intelligence and Digital Development has proposed introducing criminal liability for mass leaks of citizens' personal data, along with a significant increase in administrative fines for failing to comply with information security requirements. The proposal was announced by Rostislav Konyashkin, First Deputy Minister of Artificial Intelligence and Digital Development, during a government meeting. According to Konyashkin, Kazakhstan is adopting a “zero tolerance” policy regarding the mishandling of personal digital data. “In implementing the constitutional rights of citizens to privacy and the protection of personal information, we are moving to a zero-tolerance policy in this area. Digital transformation should not undermine the security of citizens, and any irresponsible handling of personal data should be punished in accordance with the law,” he said. In addition to criminal penalties for mass data breaches, the ministry is proposing to significantly increase administrative liability for officials violating information security standards. The current maximum fine is approximately $17,000. The proposed new ceiling would be about $42,500. The initiative would apply to government agencies, the quasi-public sector, financial institutions, and private companies that handle large volumes of personal data. The day prior to the government meeting, President Kassym-Jomart Tokayev addressed the issue of digital security at the National Kurultai (Assembly). He emphasized that the right to personal data protection should be enshrined in the country's. “Our Constitution must keep pace with the times. In the 21st century, digitalization is developing at a rapid pace and has a direct impact on human rights and freedoms. Therefore, the Basic Law must clearly stipulate that the personal digital data of citizens is protected by law,” Tokayev said. The push for stricter regulation follows a series of large-scale data breaches. In spring 2024, the State Technical Service of the National Security Committee identified a leak affecting over 2 million clients of the microfinance organization zaimer.kz. In summer 2025, the government confirmed the largest data breach in Kazakhstan’s history, compromising the personal information of over 16 million people, more than three-quarters of the country’s population of just over 20 million. Experts say the proposed legal reforms mark Kazakhstan’s shift toward a stricter regulatory framework, aligning with standards seen in the European Union and some Asian jurisdictions, where personal data breaches carry both administrative and criminal consequences.

Fraud

Kazakhstan Blocked Nearly 85 Million Fraudulent Phone Calls in 2025

Kazakhstan’s law enforcement agencies blocked approximately 85 million fraudulent phone calls in 2025, according to Interior Minister Yerzhan Sadenov. The announcement was made during a meeting of the Ministry of Internal Affairs. “Systematic work continues to combat cybercrime and internet fraud,” Sadenov stated. “A total of 84.5 million fraudulent calls were blocked, helping to prevent significant financial losses and reduce citizen exposure to fraudulent schemes. Thirteen call centers were shut down, including some located abroad. Fifty-six criminal cases have been launched against individuals involved in so-called ‘dropperism,’ aiding internet fraudsters.” Sadenov also highlighted Kazakhstan’s signing of the United Nations Convention on Combating Cybercrime, which he said will strengthen international cooperation in addressing cross-border digital crimes. As part of its broader digital transformation, Kazakhstan introduced the Law and Order service last autumn, a new tool enabling citizens to interact with law enforcement agencies. Integrated into eGov Mobile, the government’s digital services platform, as well as the Kaspi.kz and Halyk Bank mobile apps, the service is accessible nationwide. In addition to reporting offenses, users can submit complaints against police officers and send text, voice, photo, and video messages. Every report submitted through the service is automatically registered in the Ministry’s information system, with users receiving real-time updates on the status of their submissions. To support these initiatives, the Ministry of Internal Affairs has established a Department of Digitalization and Artificial Intelligence. The department is tasked with integrating smart technologies into law enforcement. One of its flagship projects is the National Video Monitoring System, which uses video analytics to enhance street and public safety, including the ongoing development of the Safe City initiative. As previously reported by The Times of Central Asia, engineers in Karaganda unveiled three prototype unmanned aerial vehicles last year aimed at improving public safety across Kazakhstan.

Caspian Pipeline Consortium

Kazakhstan Opens Criminal Probe Over Calls to Attack CPC Oil Pipeline

Kazakhstan has opened a criminal investigation into public statements that authorities say encouraged attacks on the Caspian Pipeline Consortium (CPC), the main export route for the country’s crude oil, after months of disruption at the system’s Black Sea terminal turned a foreign security risk into a domestic legal and political issue. Prosecutor General Berik Asylov confirmed the case in a written reply to a parliamentary inquiry on January 6. "On December 17, 2025, the Astana City Police Department launched a pre-trial investigation under Part 1 of Article 174 of the Criminal Code of the Republic of Kazakhstan (incitement of social, national, tribal, racial, class, or religious discord) into negative public comments regarding damage to the Caspian Pipeline Consortium," the Prosecutor General stated. The authorities have yet to name suspects, publish the posts under review, or announce any arrests. The file remains at the evidence-gathering stage, and prosecutors have left open whether any charges will ultimately be filed under Article 174, or reclassified under other provisions once investigators assess the intent and impact. The probe follows a request by Mazhilis deputy, Aidos Sarym, who said that some social media commentary crossed from opinion into encouragement of harm to strategic infrastructure, endorsed attacks on the CPC, and urged further strikes on critical sites. The political sensitivity is rooted in the 1,500-kilometer pipeline’s central role in Kazakhstan’s economy. CPC carries crude from western Kazakhstan to a marine terminal near Russia’s Black Sea port of Novorossiysk, where the oil is loaded onto tankers for delivery to global markets. The pipeline is owned by a consortium that includes Kazakhstan, Russia, and several international energy companies. The system dominates Kazakhstan’s oil export economy. More than 80% of the country’s crude oil exports move through the CPC route, which also carries more than 1% of global oil supplies, making it a pressure point for both markets and state revenue when operations are disrupted. The investigation follows a period of repeated disruption at the Novorossiysk terminal in late 2025, after a naval drone strike damaged one of the offshore loading points used to transfer oil from the pipeline to tankers. The damage forced operators to suspend loadings and move vessels away while inspections and repairs were carried out, sharply reducing export capacity. The CPC relies on single-point moorings positioned at sea to load crude onto tankers, a critical constraint on the entire system; when one goes offline, capacity drops quickly. The pipeline cannot store large volumes, forcing upstream producers to cut or slow output. By late December, the impact was visible in Kazakhstan’s production figures. Oil output fell by about 6% during the month after the late November strike constrained exports. Production at the Tengiz oilfield, the country’s largest, dropped by roughly 10%. Exports of CPC Blend crude fell to about 1.08 million barrels per day in December, the lowest level in more than a year, as the terminal operated with only one functioning mooring while others remained offline due to damage and maintenance. Operational pressures continued as...

Digital Fraud Prevention

Kazakhstan Introduces Mandatory Biometric ID for Mobile Phone Subscribers

Kazakhstan is implementing mandatory biometric identification for all new mobile phone subscribers as part of broader efforts to combat telephone and internet fraud, the Ministry of Artificial Intelligence and Digital Development has announced. The ministry noted that the country already enforces several measures to address SIM card misuse, including efforts to prevent fraud, illegal SIM registration, and the use of devices for mass calls and bulk messaging. From the start of 2026, these safeguards will be tightened further. Under the new regulations, SIM cards will only be issued after biometric identification is completed. Communication services will not be activated until the subscriber's identity is verified through facial scanning. The policy applies to both individuals and legal entities. “For businesses and organizations, this requirement also applies to employees issued SIM cards for work-related purposes. Biometric identification eliminates anonymous number usage and increases accountability,” the ministry stated. Authorities expect the measure to curb illegal SIM sales via dealers and intermediaries. Regardless of where a number is purchased, service activation will only occur once the end user’s identity is confirmed. Additionally, a cap has been introduced on the number of SIM cards that can be registered to a single individual: up to ten for personal and family use. Exceeding this limit requires documented justification and identification of the devices in which the extra SIMs will be used. “This approach reduces the risk of mass SIM registration, a hallmark of fraudulent operations,” the ministry added. A key component of the new anti-fraud framework is the expansion of collaboration between mobile operators and the Anti-Fraud Center of the National Bank of Kazakhstan. This cooperation is intended to ensure the swift identification and deactivation of numbers linked to criminal activity. “In the case of suspicious calls or SMS messages, including those made using SIM boxes, telecom operators will relay subscriber information to the National Bank's Anti-Fraud Center and launch an investigation. If fraud is confirmed, the number will be blocked immediately and telecom services suspended,” the ministry explained. As previously reported by The Times of Central Asia, Kazakhstan also intends to introduce joint liability for banks and mobile operators in cases of internet fraud perpetrated through their infrastructure.