An international arbitration court has invalidated approximately $12 billion of Kazakhstan’s claims against oil majors for disputed costs at the Kashagan field, according to sources familiar with the matter. Kazakhstan was seeking to recoup about $20 billion in disputed costs related to the country’s second-largest oil field, which faced significant delays and budget overruns. The court ruled that the government filed its case too late for costs incurred between 2011 and 2015, though about $8 billion of other claims remain valid.
The arbitration process continues, with the government pursuing total compensation exceeding $150 billion, largely tied to lost revenue, environmental violations, and alleged corruption. Major partners in the North Caspian Operating Company (NCOC) include Exxon Mobil, Eni, Shell, TotalEnergies, KazMunayGas, CNPC, and Inpex. The field, one of the largest oil discoveries in decades, faced technical challenges including freezing seas and toxic gas reservoirs.
Companies invested $55 billion to develop the offshore site, which produced an average of 400,000 barrels per day last year. Production began in September 2013—eight years late and $45 billion over budget—only to halt a month later due to pipeline leaks. Operations resumed in 2016.
Exxon Mobil has stated that a proposed $80 billion joint investment to expand the field is contingent on resolving the arbitration dispute.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing