Foreign oil companies operating in Kazakhstan are unlikely to exit the country as their investments continue to generate strong returns, Kazakh Energy Minister Yerlan Akkenzhenov said Friday.
“I don’t think so, because investments are being made every year and are paying off handsomely,” Akkenzhenov told journalists when asked about the possibility of Shell (SPB: RDS.A) or other firms leaving. “It’s too early to talk about all investments paying off,” Akkenzhenov said, adding that the NCOC project was “scheduled to operate until 2041 and will continue generating returns.”
His comments follow remarks by Shell Chief Executive Wael Sawan, who said during an investor conference call that the company was putting new investment in Kazakhstan on hold due to a lack of alignment between joint venture partners and the government on key issues.
“The Shell representative Suzanne Coogan came to me just last week and said that your colleagues in the media had misinterpreted the head of Shell’s words, and that in fact he wished to continue developing in Kazakhstan,” Akkenzhenov said. As an example, he pointed to a gas field Shell is currently evaluating for potential development. “They will invest in Kazakhstan,” the minister added.
The Energy Ministry has sent a formal request to the company and is awaiting an official response, Akkenzhenov said.
The discussion comes amid ongoing arbitration proceedings between the government and partners in the Karachaganak and Kashagan fields.
Media reported that a Stockholm arbitration court issued an interim ruling in Kazakhstan’s dispute with Karachaganak Petroleum Operating (KPO) partners, ordering the consortium to pay the state between $2 billion and $4 billion in compensation.
Asked about the arbitration, Akkenzhenov declined to confirm or deny the court’s decision.
“But based on the publications we have all seen and read, Kazakhstan has been awarded between $2 billion and $4 billion. I consider that very good news, and it is very encouraging,” the minister said. “Accordingly, based on these reports, we have very good chances.”
The International Arbitration Court began proceedings in summer 2024 on Kazakhstan’s claims against operators of the country’s two largest oil and gas fields, Karachaganak and Kashagan. Kazakh authorities have accused the operators of unauthorized expenditures. According to Bloomberg, the government contends that Karachaganak partners should not have deducted $3.5 billion in costs – a figure later increased to $6 billion.
Kazakh officials maintain that the disputes with Karachaganak and Kashagan shareholders are commercial in nature and “in no way affect the investment component.”
The Karachaganak field, one of the world’s largest, holds an estimated 1.2 billion tons of oil and 1.35 trillion cubic meters of gas. It is operated under a production-sharing agreement running until 2041 by the Karachaganak Petroleum Operating consortium. KPO’s shareholders include Shell (29.25% through an affiliated company), Eni (29.25%), Chevron (18%), Lukoil and KazMunayGas (10%).
