Why Kazakhstan fights against Eni and the other Big Oils
Kazakhstan has opened arbitration proceedings against foreign companies active in two oil fields: there is also Eni. All the details
Kazakhstan today announced that it has opened international arbitration proceedings against foreign oil companies operating in the fields of Kashagan and Karachaganak: they have been accused of having deducted part of the costs from the revenues, before dividing the latter with the government on the basis of the profit sharing arrangement.
WHAT KAZAKHSTAN DID
The announcement of the arbitration proceedings was made today by Energy Minister Almasadam Satkaliev, who spoke of 16.5 billion dollars in costs deducted from the revenues of the two sites: more specifically, 3.5 billion for Karachaganak and 13 billion for Kashagan.
If the Kazakh government wins the arbitration, it could receive a larger share of revenue from the two fields, Bloomberg wrote last week, anticipating the official announcement.
The procedure covers a period from 2010 to 2018 for Kashagan, and from 2010 to 2019 for Karachaganak. Kazakhstan claims the oil companies violated tendering procedures on both projects; in the case of Kashagan, the contractors have also been accused of not delivering the finished works.
THE FOREIGN COMPANIES PRESENT IN THE FIELDS (THERE IS ALSO ENI)
Kashagan is one of the largest offshore oil fields in the world: it is located in the northern portion of the Caspian Sea and contains reserves estimated at 13 billion barrels. It was discovered in 2000, but its development was hampered by a number of technical problems.
The operator of the field is the North Caspian Operating Company, composed of the Kazakh state oil company KazMunayGas and a number of foreign companies: Eni (Italian), ExxonMobil (US), Shell (UK), TotalEnergies (French), CNPC (Chinese) and Inpex (Japanese).
Eni, Shell and KazMunayGaz – together with Chevron (US) and Lukoil (Russian) – also manage the Karachaganak field in western Kazakhstan.
– Read also: Not only Eni. All the activities of Italian companies in Kazakhstan
INVESTMENTS
The oil companies active in Kashagan have invested more than 50 billion dollars in the development of the field; while those in Karachaganak – Eni is present in both fields – at least 27 billion.
Kashagan operators have been accused of violating environmental rules on the storage of sulphide: they risk a fine of 5.1 billion.
THE GOAL OF KAZAKHSTAN
After the strong protests of early 2022 , which erupted following the increase in fuel prices, Kazakh President Qasym-Jomart Toqaev is looking for ways to stimulate economic growth and redistribute national wealth more fairly.
Through arbitration, the Astana government aims not only to obtain higher oil revenues but to modify the entire mechanism of tenders for the oil & gas sector, so as to make it more effective and increase the profitability of this industry for the country.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/kazakistan-arbitrato-entrate-petrolio/ on Tue, 11 Apr 2023 14:13:39 +0000.