Kashagan oil field dispute: Kazakhstan raises claims to $160 billion
The arbitration disputes between Kazakhstan and international oil giants, which are engaged in the development of the massive Kashagan oil field, continue to escalate. The compensation claims have increased to an astonishing $160 billion, as reported by Kazinform agency, citing Bloomberg. This is $10 billion more than had been previously disclosed.
The Kazakh side has made allegations that certain transactions that were executed within the project's framework were corrupt, which has resulted in an increase in claims. According to informed sources, who requested anonymity, the authorities of the country are advocating for additional compensation, which may be additionally increased in the future.
The project's implementation has been substantially inflated by cost overruns, which have resulted in delays and technical issues that have persisted since its inception.
"The giant field has been beset by delays, technical difficulties and cost overruns since development began more than 20 years ago. The government raised its claims to about $150 billion in April, seeking as much as $138 billion in lost revenue from production that was promised to the government but not delivered," the article states.
According to sources, the arbitrators declined the oil companies' request to divide the case into distinct components, and all claims will be evaluated in a single trial. The subsequent development of the case may be significantly affected by this decision.
Since its inception, the Kashagan project, which incurred an estimated $55 billion in expenses, has encountered numerous challenges.
"Companies invested about $55 billion to develop Kashagan, which produced an average of about 400,000 barrels a day last year. (...) Kashagan pumped its first oil in September 2013 — eight years later than targeted and $45 billion over the initial budget — only to shut down a month later after leaks were detected in a pipeline. Production resumed in 2016, and the field gradually reached output of as much as 270,000 barrels a day the next year," Bloomberg writes.
Despite the fact that the field is regarded, as one of the most significant discoveries of the past few decades, it was accompanied by sea that freezes for half a year and high concentrations of toxic vapors in the reservoir.
The Kashagan development project was previously reported to be at risk of suspension or delay because of the construction of new gas processing facilities. This is specified in Kazakhstan's National Development Plan until 2029.
