11 Apr 2023 10:46

Kazakh govt sues Kashagan, Karachaganak operators for $16.5 bln - Energy Ministry

ASTANA. April 11 (Interfax) - The government of Kazakhstan has filed lawsuits with claims of $16.5 billion against the operators of the country's largest oil fields, Kashagan and Karachaganak, on behalf of the public, Energy Minister Almasadam Satkaliyev said.

"The authorized government body in the person of the PSA companies have filed lawsuits in international arbitration against the Karachaganak and Kashagan companies," Satkaliyev said, responding to questions from reporters on Tuesday.

These lawsuits have been filed "in the interests of the people of Kazakhstan," he said, adding that the claims amount to $3.5 billion and $13 billion.

Bloomberg, citing sources, reported earlier that the operators of Kazakhstan's two largest oil fields, Kashagan and Karachaganak, had been served with lawsuits from the government in arbitration court in connection with accusations of unauthorized spending.

The sources said the government believes that the partners in the projects should not deduct expenses totaling $13 billion for Kashagan and $3.5 billion for Karachaganak. The government has appointed arbiters to consider the Kashagan and Karachaganak cases in Geneva and Stockholm, respectively, the sources said.

Kashagan is considered one of the largest oil fields discovered in the world in recent decades, with recoverable reserves of 9 billion to 13 barrels of crude. Commercial production at the field began in the fall of 2016.

NCOC, the operator of the Kashagan project, is owned by KMG Kashagan B.V. with 16.877%; Shell Kazakhstan Development B.V., Total EP Kazakhstan, Agip Caspian Sea B.V., and ExxonMobil Kazakhstan Inc. with 16.807% each; CNPC Kazakhstan B.V. with 8.333% and Inpex North Caspian Sea Ltd. with 7.563%.

The Karachaganak oil and gas condensate field is one of the largest in the world. Its reserves are estimated at 1.2 billion tonnes of oil and 1.35 trillion cubic meters of gas. It is operated by Karachaganak Petroleum Operating B.V. (KPO) under a 40-year production sharing agreement signed in 1997. This international consortium is comprised of Shell with a 29.25% stake through its 100% affiliate company BG Karachaganak Ltd, Eni with 29.25%, Chevron with 18%, Lukoil with 13.5% and KazMunayGas with 10%.