Kazakhstan, a key player among the world's top ten oil producers, has escalated its demands for better terms from international companies operating within its borders, Reuters reported.
On January 28, the country called for improved contract conditions as part of its broader efforts to ensure more favorable agreements in the oil sector. This move adds to a series of disputes, claims, and settlements over the past decade, which have seen international oil companies either relinquish control of key oilfields to the Kazakh government or agree to substantial cash settlements.
Kazakhstan’s oil reserves are among the largest in the world, and its key fields are vital not only for the country but also for global energy markets.
Discovered in 2000, Kashagan is one of the most significant and expensive oil finds in recent decades, located in the North Caspian Sea. Although oil production began in 2013, it remains below its projected output capacity. In 2024, Kashagan produced around 378,500 barrels per day (bpd), a figure slightly lower than the anticipated 400,000 bpd.
Development plans aim to boost production to 450,000 bpd. The North Caspian Operating Company (NCOC), which manages the field, is a consortium including Eni, Shell, TotalEnergies, ExxonMobil, KazMunayGaz, Inpex, and China National Petroleum Corp.
Located in northwestern Kazakhstan, the Karachaganak gas-condensate field was discovered in 1979 and has been producing since 1984. In 2024, it yielded around 263,000 bpd. The Karachaganak Petroleum Operating (KPO) consortium, which manages the field, includes Eni, Shell, Chevron, Lukoil, and KazMunayGaz.
Kazakhstan's largest and one of the world’s deepest oilfields, Tengiz, was discovered in 1979. The field is managed by Tengizchevroil (TCO), a consortium led by Chevron, with significant stakes held by KazMunayGaz, ExxonMobil, and Lukoil. In 2024, production from Tengiz reached approximately 606,000 bpd.
A key component of Kazakhstan's oil export network, the 935-mile Caspian pipeline connects oilfields like Tengiz and Karachaganak to the Russian port of Yuzhnaya Ozereyevka. The pipeline carries over 80% of Kazakhstan’s crude exports, which make up about 1.2% of global oil supply. Shareholders in the CPC include Russian pipeline operator Transneft, KazMunayGaz, and Chevron.
Kazakhstan has been involved in several high-profile disputes with international oil companies over the years, particularly regarding the allocation of revenues and development costs.
In 2023, Kazakhstan filed claims for $13bn and $3.5bn against the companies managing Kashagan and Karachaganak, respectively, citing contested costs. This is not the first time the Kazakh government has pursued legal action against its oil partners.
In 2020, a long-standing dispute over profit-sharing at the Karachaganak field was settled with a $1.9bn agreement. This settlement ended a drawn-out conflict that began shortly after the field's development.
The Kashagan field also saw disputes settled in 2012 when the consortium agreed to cover $1bn of additional costs incurred by Kazakhstan's state-owned KazMunayGaz. A year earlier, the consortium agreed to give Kazakhstan a 10% stake in Karachaganak, valued at $1bn, as part of a settlement.
In 2008, following delays in the Kashagan project’s development, Kazakhstan increased its stake in the field to 16.8%, solidifying its position as a major player in the field’s operation.
These ongoing disputes reflect Kazakhstan's growing assertiveness in ensuring that the country benefits from its vast natural resources. The legal wranglings and settlements have reshaped the landscape of oil exploration and production in Kazakhstan, with the government securing more favorable terms and increasing its control over valuable assets.
Follow Daryo's official Instagram and Twitter pages to keep current on world news.
Comments (0)