Britain’s Victoria Oil & Gas Files Multimillion-Dollar Lawsuit Against Kazakhstan

British company Victoria Oil & Gas has filed a multimillion-dollar lawsuit against the government of Kazakhstan under the Energy Charter Treaty. The development was reported by Energy Monitor, a Telegram channel focused on Kazakhstan’s energy sector. Dispute Centers on Kemerkol Oil Field The legal proceedings are registered with the International Centre for Settlement of Investment Disputes (ICSID), a World Bank-affiliated body. The case stems from a longstanding dispute over the Kemerkol oil field in Kazakhstan's Atyrau region. In 2005, Victoria Oil & Gas acquired a 100% stake in the field from Saga Creek Gold Ltd for $8.5 million. After drilling several wells, the company estimated the field’s geological reserves at approximately 15 million tons of oil. Unexplained Contract Termination In 2008, Kazakhstan’s authorities terminated the subsoil use contract without providing an official explanation. That same year, Kazakh company Bakyt Tau purchased the rights to the field from Saga Creek Gold Ltd for 360 million tenge (approximately $3 million at the 2008 exchange rate). In 2016, Bakyt Tau transferred the development license to Up-Nafta Operating for 1.36 billion tenge (nearly $4 million at the 2016 rate). The company continued exploration and drilling operations. By 2022, the State Reserves Commission reported the following: C1 category geological reserves: 2.35 million tons; recoverable: 588,000 tons C2 category reserves: 652,000 tons; recoverable: 29,000 tons As of 2023, actual oil production totaled just 14,700 tons, with 12 active wells and an average water cut of 79%. Legal Strategy or Political Statement? Given the field’s modest reserves and limited output, some experts suggest the lawsuit may be more political than economic. Energy Monitor noted: “The field is clearly not worth hundreds of millions of dollars, unlike the Stati case involving the Borankol and Tolkyn fields. Most likely, the lawsuit has a political context rather than an economic one.” Victoria Oil & Gas first raised the prospect of arbitration in April 2021. The case has now been officially registered under ICSID case number ARB/25/13, signaling the start of formal legal proceedings. Implications for Kazakhstan While the precise amount of the claim has not been disclosed, Victoria Oil & Gas is expected to seek compensation for lost investments and projected profits. However, given the field’s limited commercial viability, many industry observers question the likelihood of a favorable ruling. The case adds to Kazakhstan’s growing docket of international arbitrations, including the high-profile Stati brothers’ case. Analysts warn the dispute could affect the country’s investment climate and its bargaining position in future energy negotiations.