ASTANA — An international consortium developing Kazakhstan’s Karachaganak oil and gas field may be required to pay up to $4 billion after losing an arbitration case brought by the Kazakh government, Bloomberg reported on Jan. 26, citing sources familiar with the matter. Kazakhstan’s Energy Ministry has not yet confirmed the information.
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The project is operated by a consortium led by Eni and Shell, each of which holds a 29.25% stake. Other partners include Chevron (18%), Lukoil (13.5%), and Kazakhstan’s state-owned KazMunayGas (10%).
According to Bloomberg, the arbitration tribunal has not yet determined the final compensation amount, and the Karachaganak partners retain the right to appeal the ruling. External legal advice obtained by Kazakhstan suggests the consortium could be required to return between $2 billion and $4 billion.
Bloomberg added that the repayment mechanism may involve adjustments to the oil distribution formula under the field’s production-sharing agreement. Kazakhstan’s Ministry of Energy has declined to comment on the substance of the case, citing confidentiality obligations.
“All materials related to this arbitration, including details of the case, the final production-sharing agreements, as well as the arbitration agreement between the parties, are confidential, and compliance with the confidentiality regime is mandatory for all participants in the process. Accordingly, the Ministry of Energy does not have the right to disclose information on the case under consideration, provide explanations, express opinions, or discuss it until the relevant restrictions are lifted. Until the confidentiality regime changes, the provision of additional information is not possible,” the ministry said in an official response cited by Bloomberg.
