Ministry of Energy reports court victory over KPO
The specialized interdistrict economic court of the West Kazakhstan region has ruled that Karachaganak Petroleum Operating (KPO) must pay $1.1 million to Kapitalneftegaz, a state-owned company under the Ministry of Energy, along with $33,125 in state duty. This ruling follows a legal dispute in which Kapitalneftegaz claimed damages of $3.1 million against KPO.
Documents revealed during the hearings indicate that in June 2005, Kapitalneftegaz transferred some of its property to KPO as collateral for liabilities under the final product sharing agreement for the Karachaganak field, signed on Nov. 18, 1997. Under this arrangement, all property at the Karachaganak field was transferred to KPO for long-term use while Kapitalneftegaz retained ownership. Additionally, in July 2015, Kapitalneftegaz transferred further assets to KPO.
In October and November 2023, authorities conducted an inventory count of all state-owned property recorded under Kapitalneftegaz and transferred to KPO. The commission, which included representatives from Kapitalneftegaz and the Ministry of Energy, reported the shortage of 44 assets valued at $3.1 million. Kapitalneftegaz is now demanding reimbursement for the missing items. KPO, however, has argued in court that it should not be held responsible for these assets.
The operator further contends that damages should be based on the residual value of the assets at the time of the inventory count. Initially, the inventory reported the absence of 74 assets worth $3.7 million, but further investigations allowed KPO to account for some of the allegedly missing assets, reducing the claim to 44 items.
The court rejected KPO’s argument of non-liability, stating that the company, having received state-owned property through a handover certificate, was obligated to secure the assets. It also dismissed KPO’s claim that the dispute falls under the purview of the product-sharing agreement, asserting instead that the issue involves asset shortages recorded in the complainant’s accounts. In response, KPO has filed a petition of appeal.
Meanwhile, Kazakhstan plans to increase oil exports from 68.6 million tons in 2024 to 70.5 million tons in 2025, as announced by Energy Minister Almassadam Satkaliyev in February. The Future Growth Project (FGP) at the Tengiz oil field and oil production at the Karachaganak field are expected to drive this growth. Overall oil production is projected to rise from 87.7 million tons in 2024 to 96.2 million tons in 2025.
Oil production in Kazakhstan is primarily growing due to the FGP at Tengiz, which is scheduled to begin operations in the first half of the year. In 2025, Tengiz is expected to produce 34.8 million tons, compared to 27.8 million in 2024. Kashagan is forecast to produce 17.9 million tons (up from 17.4 million in 2024), while Karachaganak is expected to produce 12.4 million tons (up from 12.2 million tons last year).
