Oil and gas giant Shell will suspend investments in Kazakhstan during ongoing legal proceedings with the government, according to CEO Wael Sawan. He said multiple lawsuits filed by the republic, totaling billions of dollars, are reducing the company’s willingness to continue investing in the country.
Kazakhstan is currently involved in several major legal disputes with Western oil companies in both domestic courts and international arbitration. Two key projects are at the center of the conflict.
Karachaganak
In January, Shell and its partners — Eni, Chevron and Lukoil — lost a dispute over cost deductions. Compensation to Kazakhstan could reach as much as $4 billion, though the consortium retains the right to appeal. Investors had previously proposed settling the dispute by building a gas processing plant to meet the country’s domestic needs.
Kashagan
Authorities are investigating alleged environmental violations related to sulfur stockpiles as well as the justification of project costs. Kazakhstan’s claims tied to the project are estimated at $13.5 billion.
Potential partnership with QazaqGaz
Sawan’s announcement of a «pause» comes amid recent reports about a possible joint venture between Shell and the national company QazaqGaz.
