Kazakhstan’s Vice Minister of Justice, Daniel Vaisov, announced that the country’s claims over the removal of sulfur storage limits at the Kashagan field, operated by North Caspian Operating Company N.V. (NCOC), will be heard under the International Centre for Settlement of Investment Disputes framework, which is headquartered in Washington.
NCOC includes Shell, TotalEnergies, Eni, ExxonMobil, CNPC, Inpex, and KazMunayGas.
In March 2023, an inspection of the Kashagan consortium by Kazakhstan’s environmental authorities identified violations of environmental legislation, including the excessive storage of sulfur volumes exceeding permitted limits. The resulting claim was valued at around $5 billion, according to the authorities. A court of first instance in Kazakhstan ruled in favor of the environmental authorities, according to Vaisov.
Six of the seven NCOC participants, excluding KazMunayGas, challenged the ruling in a Kazakh court in March this year. At the same time, the foreign investors initiated international arbitration proceedings.
“This claim was filed under bilateral international agreements: the agreement between the Republic of Kazakhstan and the Republic of France, and the agreement between the Republic of Kazakhstan and the Kingdom of the Netherlands,” Vaisov said during a briefing.
The Ministry of Justice, Ministry of Ecology, and Ministry of Energy are jointly handling the case.
Kazakhstan has been steadily tightening its position in major energy projects, seeking a larger share of revenues from fields developed under production-sharing agreements signed in the 1990s. Disputes over Kashagan and Karachaganak reflect broader efforts to rebalance terms with foreign investors as production stabilizes and fiscal pressures grow. The outcome of these cases could reshape how Central Asia’s largest economy manages foreign participation in its energy sector.
A separate dispute concerning project costs, reportedly exceeding $100 billion, is being handled under the framework of the Production Sharing Agreement (PSA), in line with government policy, Vaisov said.
Kazakhstan maintains that under the current terms, participating oil companies receive up to 98% of revenue from oil production at Kashagan, leaving the state with comparatively limited income in the form of royalties. Astana’s claim related to this issue has been reported at approximately $160 billion.
“As far as I know, an interim decision has been made regarding Karachaganak. Further work is currently underway,” Vaisov said.
In January 2026, an international arbitration tribunal ruled in favor of Kazakhstan in its dispute with shareholders in the Karachaganak Oil and Gas Projects, Eni, Shell, Chevron, and Lukoil. Compensation for the shareholders’ unjustified reimbursement of expenses has yet to be determined, but experts estimate it at between $2 billion and $4 billion.
Vaisov also noted that Kazakhstan has been reducing the cost of arbitration proceedings involving foreign investors.
“The Ministry of Justice has managed to reduce spending on these matters each year. Since 2021, costs have been reduced by nearly threefold. At the same time, the Republic of Kazakhstan engages leading law firms for these proceedings, as contracting companies do the same,” he said.
