Kazakhstan‘s Legal Battle with Oil Majors Escalates
Kazakhstan’s legal battle against international oil majors involved in the Kashagan field has escalated, with the Central Asian nation demanding over $160 billion in compensation. The massive offshore field in the Caspian Sea has been plagued by delays and cost overruns since its inception more than two decades ago.
Major oil players, including Eni SpA, Shell Plc, ExxonMobil Corp., and TotalEnergies SE, are caught in the crossfire as Kazakhstan seeks compensation for lost revenue and broken promises. The arbitration tribunal recently consolidated the claims into one case, putting additional pressure on the companies involved.
Challenges and Setbacks
The Kashagan field, discovered in the late 1990s, has faced numerous challenges since its inception. Technical issues, including harsh environmental conditions and high concentrations of hydrogen sulfide, have plagued the project. The concentration of hydrogen sulfide directly from the well is estimated at 17%, posing a lethal risk to workers.
The project’s initial budget of $10 billion quickly ballooned to $55 billion, and production did not commence until 2013, eight years behind schedule. Even after production started, setbacks occurred, including a pipeline leak and operational issues that halved production in 2022.
Conclusion
The Kashagan project has been a complex and troubled endeavor, but it is crucial for all parties involved to find an agreement that allows for the exploitation of these enormous resources.