A court of arbitration in Kazakhstan has ruled in favour of major oil companies in a multibillion-dollar dispute with the government over environmental fines and tax claims at the Kashagan oilfield.
The ruling marks a significant development in the ongoing legal battle between Kazakhstan and the oil consortium operating one of the world’s largest oil fields.
The arbitration panel granted a request by oil majors, including Eni, Shell, Exxon Mobil, and TotalEnergies, to prevent Kazakhstan from collecting a US$5 billion (KZT2.46 trillion) fine related to sulphur storage at the field until the matter is fully considered.
This decision, while not resolving the ongoing arbitration process, strengthens the companies’ position in their disputes with the Kazakh government.
In a separate ruling, the Kashagan partners secured a decision preventing Kazakhstan’s tax authorities from auditing the country’s oil-profit share.
The companies argued that only the Energy Ministry’s representation office, as the contractual counterparty, has the authority to conduct such audits.
The Kashagan oil and gas field, located in the Caspian Sea near Atyrau, Kazakhstan, has been a source of contention between the government and the oil consortium.
The US$55 billion project has faced delays and cost overruns since its inception.
Kazakhstan’s total claims, including lost revenue and cost deductions at the field, have reportedly surged past US$160 billion.
The Kashagan partners have also appealed to Kazakhstan’s Supreme Court to overturn an earlier appellate court decision supporting the government’s claim of excessive sulfur storage and other alleged environmental violations.
The Energy Ministry of Kazakhstan has not commented on the rulings.
NCOC, which operates the field, and the involved oil majors, including Shell, Eni, and TotalEnergies, have declined to comment.
Exxon, Inpex, and China National Petroleum, also stakeholders in Kashagan, have not responded to requests for comment.
These arbitration rulings come as Kazakhstan seeks higher oil revenues and has sued the joint venture over claims of lost revenue, environmental violations, and corruption.
The ongoing legal dispute highlights the complex relationship between resource-rich countries and international oil companies, as both parties seek to maximise their interests in lucrative energy projects.
As the arbitration process continues, the outcome of this high-stakes dispute could have significant implications for foreign investment in Kazakhstan’s oil sector and the future development of the Kashagan field.
