In January 2025, Kazakhstan’s President Kassym-Jomart Tokayev instructed the government to seek revisions to the nation’s production-sharing agreements (PSAs). The first known result of that directive has now surfaced, with the International Consortium of Investigative Journalists (ICIJ) publishing a report regarding a confidential interim ruling in an arbitration case. According to this information, Kazakhstan is pursuing a $160 billion claim against the North Caspian Operating Company (NCOC), the consortium managing the Kashagan oil field. The ruling states that after royalty payments, NCOC receives 98% of remaining revenue from Kashagan’s output.

The document concerns a narrower environmental dispute, but the 98% figure alters the landscape. The contract in question dates to the 1990s, when Kazakhstan — newly independent, fiscally constrained, and eager for technical expertise — entered into deals that prioritized attracting investment over securing long-term national benefit. The government now argues that those historical constraints no longer apply, while the revenue-sharing terms remain effectively frozen in place. Rather than seek unilateral redress or executive override, Tokayev’s administration has turned to arbitration. The venue, the Permanent Court of Arbitration in The Hague, and the legal framing mark a continuation of Kazakhstan’s methodical approach to reasserting national interests in its domestic political economy.

This latest move cannot be understood as an isolated decision. It reflects a trajectory of state behavior extending back three decades. In the early 1990s, when Chevron’s bid for Tengiz was effectively imposed as a condition for U.S. bilateral assistance, Kazakhstan lacked both the leverage and the institutional competence to resist — a dynamic I analyzed in detail at the time. Chevron’s refusal to direct more than a token amount of investment to social infrastructure nearly sank the agreement. A similar dynamic surrounded the financing and structuring of the Caspian Pipeline Consortium (CPC). Kazakhstan’s attempts to assert greater influence were often thwarted, not least by the asymmetry of legal expertise and negotiating experience.

That imbalance began to shift by the early 2000s. The creation of KazMunaiGas (KMG) in 2002 consolidated the state’s participation in the energy sector and enabled its strategic action to become more coordinated. By 2003, Kazakhstan was insisting on conformity with international accounting standards at Tengiz, not only to ensure transparency but also to block attempts by foreign operators to defer investment obligations. Environmental enforcement became more assertive as well, with fines imposed on Tengizchevroil for massive open-air sulfur storage, a practice that had long provoked public concern.

The Kashagan field, discovered in the late 1990s and described as the largest oil find since Alaska’s Prudhoe Bay in 1968, became the focal point of these tensions. From the outset, Kazakhstan’s participation in the consortium was marginal. A restructuring of the consortium in the early 2000s brought KMG back in, but cost overruns and delays continued. By 2007, the government had suspended work at Kashagan, citing both ecological violations and spiraling expenditures, in a sequence of events I traced contemporaneously during the legislative and consortium restructuring that followed. Amendments to the Law on the Subsurface followed, granting the state powers to amend or annul contracts deemed contrary to national interest. While controversial, the law reflected a calculated decision to build formal mechanisms for contract rebalancing into the legal order itself.

Tokayev’s current move falls into that tradition. His January statement calling for “better terms” carried forward the logic of legal assertiveness, now deployed through international mechanisms. The arbitration claim, while formally limited to a specific set of grievances, points to a broader contention: the revenue model governing one of the country’s most significant strategic assets no longer corresponds to the political economy of the present. Analysis by the local energy consultancy EXia suggests, according to the ICIJ report, that between 2016 and 2023, Kazakhstan received $5.4 billion in revenue from Kashagan, while the consortium sold an estimated $55 billion in oil. The development cost, while high, does not fully explain the persistence of such a skewed distribution into the present day.

Astana has moved deliberately but not provocatively. There have been no statements denouncing foreign companies, and no sudden regulatory seizures. The claim has been brought under standard rules of arbitration and is being conducted behind closed doors. Even when TotalEnergies and Eni dismissed the case as lacking merit, and NCOC called the associated environmental fines a “cash grab,” the official response remained restrained. Tokayev’s team appears to be betting on procedural legitimacy to rebalance the terms without destabilizing the investment climate.

Domestically, the 98% figure has resonance. For years, Kazakhstan’s public has questioned the lack of transparency around major resource contracts. The Kashagan, Tengiz, and Karachaganak agreements remain unpublished, contributing to an atmosphere of suspicion. The new information makes visible what many long suspected: that the state’s share in key resource flows is far smaller than what many citizens regard as fair. Tokayev’s arbitration initiative meets this discontent with an institutional response. It signals that sovereign national interests can be pursued through legal reform rather than rhetorical confrontation.

Such a posture has precedent. In a case around the Karachaganak gas field in northwest Kazakhstan, the government used a combination of environmental fines, tax assessments, and procedural leverage to secure a 10% equity stake for KMG in 2012. This followed delays in development with rising costs and regulatory disputes that created pressure points. To that situation, the government of the day responded with structured, often multi-phase negotiations. Adjustments to equity shares or managerial structures then followed. The current arbitration, while involving a different mechanism, follows a similar arc.

The companies and other critics have suggested that Kazakhstan’s evolving stance reflects a drift toward resource nationalism. This is an oversimplification that overlooks the layered administrative learning process that I described in a 2012 study of Kazakhstan’s legal and institutional strategy. Critics have suggested that Kazakhstan’s evolving stance reflects a drift toward resource nationalism.  The 2012 legal reforms, including the Law on Production Sharing Agreements and the revised subsoil legislation, were not tools of expropriation. They were responses to a legal and administrative environment increasingly capable of enforcing domestic standards. The model contracts, tax code reforms, and clearer arbitration frameworks that emerged in the 2000s aimed to give the state — not just the companies — a basis to defend its interests.

Tokayev’s administration inherited that framework. Its use of arbitration reflects not weakness but confidence. It demonstrates a belief that Kazakhstan’s legal footing is strong enough to bear international scrutiny. Moreover, in contrast to earlier decades, the government is now able to marshal detailed evidence, financial data, and expert analysis to support its case. That capacity alone is a marker of institutional change in domestic governance.

Whether the claim succeeds is less important than what it represents. It is an implementation of Tokayev’s declared policy to “strengthen the economy and society”, distributing benefits of extraction among the country’s citizens, in consonance with the demands of domestic legitimacy, rather than guarding them in the hands of a few hundred oligarchs as the old regime did. The new strategy avoids the drama of contract annulment while still asserting the right to redress. It is the expression of a continuing concern under changed conditions.