Exclusive-Kazakhstan expects progress in arbitration against oil firms in coming months

ALMATY : Kazakhstan expects preliminary results of multi-billion arbitration proceedings against international oil majors by December, the country’s Energy Minister Almasadam Satkaliyev told Reuters on Wednesday.
Kazakhstan last year started arbitration proceedings against companies developing its giant Kashagan and Karachaganak oilfields over $13 billion and $3.5 billion, respectively, over disputed costs.
The offshore Kashagan field, one of the world’s biggest discoveries in recent decades, is being developed by Eni, Shell, TotalEnergies, ExxonMobil, KazMunayGaz, Inpex and CNPC.
Their consortium, called the North Caspian Operating Company (NCOC), has invested some $50 billion in the project.
Eni, Shell and KazMunayGaz are also partners in Karachaganak, alongside Chevron, and LUKOIL with investments at more than $27 billion.
Bloomberg News reported in April that Kazakhstan raised arbitration claims against the Kashagan consortium to more than $150 billion, Neither the government nor the companies have disclosed the details of the claims.
“Everything, which relates to the subject of the claim, is confidential information. We are talking about the execution of the terms of the production-sharing agreement on Kashagan and Karachaganak,” Satkaliyev told Reuters.
Kazakhstan has a history of multi-billion claims against international companies, which say the government uses to increase its shares in key oil and gas projects in what amounts to “resource nationalism”.
Kazakhstan’s authorities have rejected such criticism saying its aim was to rein in costs inflated by Western majors.
The landlocked Kazakhstan, Central Asia’s largest economy, has pinned its hope on Kashagan for future prosperity and has for years expressed its concerns over cost overruns and delays in its development.
The oilfield’s crude contains high concentrations of poisonous hydrogen sulphide, which complicates the extraction process. Its production reached around 380,000 barrels per day last year.
Satkaliyev also said that Kazakhstan’s oil exports to Germany via the Soviet-built Druzhba pipeline were seen at 1.2 million metric tons (24,000 barrels per day) this year, while Germany sought to double its imports to 2.5 million tons per year.
Kazakhstan’s role as an oil exporter has increased following Western sanctions against Russian oil over the war in Ukraine.
While it remains Moscow’s ally it has not taken sides in the conflict or supported Moscow’s claims to some Ukrainian territories.
Germany has said it was interested in expanding trade with Kazakhstan while ensuring it does not serve to circumvent Europe’s sanctions on Russia.