Kazakhstani court orders KPO to pay hefty penalty / Photo: KazMunayGas
The economic court of Uralsk, the administrative center of the West Kazakhstan region, has partially upheld a lawsuit filed by the country’s Ministry of Energy against the Karachaganak Petroleum Operating B.V. consortium (KPO), ordering the company to pay 543.19 million tenge (approximately $960,000) in damages, according to the Bes.media news portal.
The lawsuit was brought by Kapitalneftegaz, a company controlled by the Ministry of Energy, after an inventory check revealed the loss of 44 state-owned assets that had been provided to KPO for free use. The damage assessment was based on the residual value of the missing property. In addition to the principal amount, KPO must also pay approximately $30,000 in state duty.
The property at the Karachaganak oil field was originally transferred to KPO in 2005 under a production sharing agreement (PSA). Since 2015, the consortium has continued using it free of charge. However, a 2023 audit uncovered missing assets valued at over $3 million. The court ruled that KPO, having accepted state-owned property, was responsible for its safekeeping but failed to meet this obligation. The ruling is not final and may be appealed.
Karachaganak is one of Kazakhstan’s largest oil and gas fields. As of Jan. 1, 2024, the Ministry of Energy estimated its recoverable reserves at 253.2 million tons of oil and condensate and 791.7 billion cubic meters of natural gas. Expansion projects are planned to sustain annual production at 11 million tons through 2028.
In 2023, KPO, the field’s operator, produced 143 million barrels of oil equivalent, an increase of 10.9% year-on-year. Total investments in the field’s development have surpassed $31.3 billion. Under the PSA concluded in 1997, ownership of KPO is divided among Shell (29.25%), Eni (29.25%), Chevron (18%), Lukoil (13.5%) and KazMunayGas (10%). The PSA remains in effect for 40 years, until 2038.
