Kazakhstan Targets Arbitration Over Kashagan and Karachaganak Spending
The Kazakh authorities plan to present their claims to arbitration courts in Geneva and Stockholm. The republican government accuses the leadership of foreign oil companies, including ExxonMobil and Shell, of unapproved expenditures that total 16.5 billion dollars in the development of the Kashagan and Karachaganak oil and gas fields, according to a Bloomberg report cited by the source.
The issue centers on uncoordinated outlays by the companies during 2010 to 2018 for Kashagan and 2010 to 2019 for Karachaganak. The government is pursuing the suit to boost national oil revenues and to secure a larger share of field revenues in line with the terms of the production sharing agreements.
The government argues that partners should not have deducted 13 billion dollars from Kashagan and 3.5 billion dollars from Karachaganak without authorization. The dispute has prompted legal action as part of a broader effort to recalibrate fiscal terms and revenue allocations tied to these two major projects.
Last month, arbitrators were appointed to oversee the Kashagan and Karachaganak cases in Geneva and Stockholm, respectively. Reports indicate that the oil companies facing these charges have yet to appoint their own arbitrators.
Investors associated with Kashagan have placed more than 50 billion dollars into its development. Major players include Shell, ExxonMobil, the state-owned KazMunayGas, Eni, and TotalEnergies. For Karachaganak, the consortium led by Shell and Eni has invested at least 27 billion dollars toward development.
The April 2 release from the Ministry of Energy stated Kazakhstan’s intention to reduce oil production by 78,000 barrels per day from May through the end of 2023. Earlier, producers in Russia and Saudi Arabia announced production-cut plans, aiming to reduce total daily output by about 500,000 barrels per country by year end. These moves reflect ongoing efforts to manage supply and stabilize market conditions across the region.
Industry observers note that arbitration in Geneva and Stockholm emphasizes the shifting balance of power in Central Asia’s energy sector. The case highlights tensions between national governments and international oil companies over project governance, cost controls, and revenue sharing. As the proceedings unfold, stakeholders will look to the outcomes for guidance on how similar production sharing agreements may be interpreted and enforced in the future.
Analysts cited by Bloomberg point to a broader trend where governments seek greater clarity and protection of sovereign revenues in long-running mega-projects. The two Kazakh fields have long been among the region’s most significant sources of crude and gas, underpinning national energy strategy and export plans. The forthcoming rulings could set important precedents for monetary recoveries and contractual interpretations in similar deals worldwide.