The International Court of Arbitration in London upheld the Kazakh government's position in its dispute with the operators of the Karachaganak field, ruling that the reimbursement of a number of unapproved costs was illegal. According to Bloomberg, the consortium led by Eni SpA and Shell Plc could now face compensation of between $2 billion and $4 billion, Kazpravda.kz reports.
The essence of the claims was that the project participants reimbursed expenses and cost overruns from the "state share" that were not subject to compensation under the production sharing agreement (PSA). The republic's initial demands amounted to over $6 billion, but the final payment amount has not yet been determined and may be adjusted during further proceedings.
The consortium also includes Chevron, Lukoil, and KazMunayGas. The dispute resolution mechanism may involve changing the oil distribution formula in favor of the state. Notably, the arbitration court rejected the companies' attempt to dismiss the case due to the expiration of the statute of limitations.
This litigation is part of Kazakhstan's larger campaign to reassess its relations with international oil giants. Similar multi-billion dollar claims and environmental fines were previously brought against the operators of the Kashagan project. Sources note that Karachaganak management retains the right to appeal the current court decision.
CentralasianLIGHT.org
January 27, 2026