Kazakhstan has raised its arbitration claims against international oil companies developing the Kashagan field to $150 billion. According to Bloomberg, a year ago, Kazakhstan filed a $13 billion lawsuit against Kashagan operator North Caspian Operating Company N.V. (NCOC). The claim was later increased to $15 billion, and today the figure has grown tenfold.
The reason for the lawsuit is the belief that international oil companies violated tender procedures and did not fully carry out the contracted work, explains economic analyst Tulegen Askarov. Another claim relates to missed profits amounting to $138 billion, reflecting the calculation of promised oil production not delivered by the field developers.
Kashagan is a supergiant offshore oil and gas field in Kazakhstan, located 80 km from the city of Atyrau in the northern part of the Caspian Sea. Discovered on June 30, 2000, it is one of the largest fields in the world.
The first oil at Kashagan was extracted in the fall of 2013, eight years behind schedule and $45 billion over the initial budget. Leaks were discovered in the pipeline a month later, halting production until 2016.
Askarov believes that the lawsuit is justified, attributing the disagreements to events two decades ago when confidence in Kashagan was lower compared to Tengiz due to its complex location and unpredictable climate. Despite challenges, Kazakhstan assured unprecedented oil production levels at the field.
Investors are hesitant to increase oil production due to logistical constraints. The existing pipelines are at full capacity, and expanding them is impractical. Investors are cautious as any excess oil may remain unsold in Kazakhstan.
While Eni confirmed Kazakhstan's arbitration proceedings against the consortium partners, the specifics remain confidential. Eni's representative expressed reservations about the requested compensation amounts.
In 2008, Kashagan partners agreed to pay Kazakhstan $5 billion and sell a larger stake to KazMunayGas to settle disputes over delays and cost overruns.
