Photo courtesy of enka.com
An international arbitration tribunal has partially dismissed Kazakhstan’s claims against the North Caspian Operating Company (NCOC) seeking to recoup disputed costs incurred during the development of the Kashagan oil field. The ruling invalidates roughly $12 billion of the $20 billion sought by the Central Asian government, Bloomberg reported, citing sources familiar with the matter.
Kazakhstan argued that delays in commissioning production facilities at Kashagan—the country’s second-largest oil field—drove actual expenditures far above the original budget. Astana subsequently sought reimbursement for disputed expenditures totaling nearly $20 billion.
However, the tribunal determined that Kazakhstan filed its claims regarding expenses incurred between 2011 and 2015 too late, tossing out the $12 billion portion of the dispute. Arbitration over the remaining $8 billion in claims continues, though the specific matters still before the panel have not been disclosed.
Kazakhstan has been locked in legal battles with NCOC—whose partners include Shell, ExxonMobil, Eni, TotalEnergies, China National Petroleum Corporation, and Japan’s Inpex—over lost revenue, environmental infractions, and alleged corruption.
The corruption allegations are part of a broader $160 billion arbitration claim brought by Kazakhstan against the Kashagan consortium. The litigation stems from the 1997 North Caspian Production Sharing Agreement and its 2008 amendments. Analysts estimate that between 2016 and 2023, Kazakhstan received $5.4 billion in taxes and royalties under the pact, while total oil sales generated roughly $55 billion.
Citing contract breaches, corruption, and environmental damage during project execution, authorities in Astana are pressing to renegotiate the terms of the agreement. NCOC denies Kazakhstan’s allegations.
Earlier this month, Astana resumed efforts to collect a 2.3-trillion-tenge (roughly $5 billion) environmental fine from the consortium.
