Kazakhstan’s authorities may seek settlement with NCOC and KPO

The Ministry of Energy of Kazakhstan has never ruled out that it may seek amicable dispute resolution with North Caspian Operating Company (NCOC) and Karachaganak Petroleum Operating (KPO), operators of the Kashagan and Karachaganak oil fields, according to Almasadam Satkaliyev, the country’s energy minister.

«I think it’s possible if all sides of the argument are ready to reach a settlement,» the minister said. He also noted that currently all sides are negotiating with their consultants and choosing arbitrators.

In April 2023, PSA, a company that represents the interests of the government of Kazakhstan, filed international arbitrage with a $16.5 billion lawsuit against KPO and NCOC. According to Bloomberg, the country’s government believes that over the period from 2010 to 2019, the two companies broke the product-sharing agreement and shouldn’t have deducted $13 billion from their taxes at Kashagan and $3.5 billion at Karachaganak.

Kashagan is one of the biggest oil fields in the world discovered over the past few decades. It has been in operation since 2016. The project struggled with many obstacles and some foreign investors even nicknamed Kashagan Cash-All-Gone. The second oil field, Karachaganak, has been exploited since the middle of the 1980s and is ranked among the one hundred biggest oil deposits in the world.

Among shareholders of NCOC are KMG Kashagan B.V. (16.9%), CNPC Kazakhstan B.V. (8.3%), Inpex NorthCaspian Sea (7.6%), Shell Kazakhstan Development B.V. (16.8% ), Total EP Kazakhstan (16.8%) and ExxonMobil Kazakhstan (16.8% ). Concerning KPO, there are five major stakeholders of the company: KMG (10%), Shell (29.25%), Eni (29.25%), Chevron (18%) and Lukoil (13.5%).