Kazakhstan is demanding compensation for lost profits from the operating consortium of the Kashagan oil field, North Caspian Operating Co (NCOC). Arbitration claims made by Kazakhstan have grown to $150 billion, Bloomberg reports, citing people familiar with the story.
An additional claim concerns $138 billion of lost profits stemming from volumes of oil promised to the Kazakh government but not provided by the developers of the field due to delays in Kashagan’s startup and production growth.
According to the Bloomberg’s source, Kazakhstan’s claims are also related to problems with the infrastructural arrangement at the Kashagan field, disruptions of production deadlines and cost overruns. “There is another compensation claim related to contracts for the development of Kashagan. They allegedly saw signs of corruption in [the contracts],” the source told Bloomberg.
The international scandal underscores the complexity of operating in Central Asia’s largest oil-producing country, according to Bloomberg. “Here, large international companies face difficult environmental and geological conditions, as well as a government that is committed to maximizing profits from signed production-sharing agreements,” reads the article.
Despite the published information, the Ministry of Energy of Kazakhstan isn’t disclosing the details of the conflict, calling it a purely commercial dispute. The parties in the consortium NCOC, which includes Eni, Total, ExxonMobil, Shell, China National Petroleum Corp. (CNPC), Japan’s Inpex and Kazakh state oil & gas producer, KazMunayGas, believe that they have acted in accordance with the contractual agreements.
Earlier, Kazakhstan filed a number of claims in international arbitration against the operators of the Kashagan and Karachaganak oil fields. The claims cover the period from 2010 to 2019.
