Kazakhstan aims for revision of contracts with Western oil majors

Reuters

28-01-2025

ALMATY, Jan 28 (Reuters) - Kazakhstan, one of the world's 10 biggest oil producers, stepped up pressure on international firms working in the country on Tuesday with a call for "better terms" in their contracts.
The central Asian country has clashed for years with international oil companies over costs, bringing multi-billion-dollar claims against them in 2023.
The companies say the government is simply seeking to increase its shares in key oil and gas projects in what amounts to "resource nationalism".
Kazakhstan's authorities have rejected such criticism saying its aim was to rein in costs inflated by Western majors.
Kazakh President Kassym-Jomart Tokayev on Tuesday ordered the government to step up talks with international oil majors about an extension of existing production sharing agreements (PSA) on "better terms".
"Large investments require a long-term planning horizon. Therefore, the government will have to intensify negotiations regarding the extension of PSA contracts on the updated terms, favourable to the country," Tokayev said.
Speaking at a briefing, Energy Minister Almasadam Satkaliyev said the state may raise its share in oil projects developed by international energy firms, change operators or renegotiate contracts.
"One of the possible conditions for extending the PSA may be an improvement in the terms of the contract, a change in the share of the Republic of Kazakhstan, or a change in certain operators," he said.
"The final decision will be made on the basis of dialogue, open, competitive dialogue in accordance with international law with the participants of these consortia."
Kazakhstan derives most of its oil production from its Tengiz, Karachaganak and Kashagan oilfields, which were developed with the help of international oil majors.
In 2023 it launched claims against groups developing the Kashagan and Karachaganak oilfields worth more than $13 billion and $3.5 billion, respectively, over disputed costs.
The offshore Kashagan field, one of the world's biggest discoveries in recent decades, is being developed by Eni (ENI.MI), opens new tab, Shell (SHEL.L), opens new tab, TotalEnergies (TTEF.PA), opens new tab, ExxonMobil (XOM.N), opens new tab, KazMunayGaz (KMGZ.KZ), opens new tab, Inpex (1605.T), opens new tab and CNPC (CNPC.UL).
The consortium, called the North Caspian Operating Company (NCOC), has invested some $50 billion in the project.
Eni, Shell and KazMunayGaz are also partners in Karachaganak, alongside Chevron (CVX.N), opens new tab and Russia's Lukoil (LKOH.MM), opens new tab, with investments of more than $27 billion.
Tengizchevroil, Kazakhstan's largest oil producing enterprise, involves Chevron, ExxonMobil, Lukoil and KazMunayGaz.
Last Friday, Chevron started production at a $48 billion expansion of the giant Tengiz oilfield which will bring its output to around 1% of global crude supply.
Asked about Tuesday's statements by Kazakh officials, the company declined to comment directly and said it was focused on its work at Tengiz and Karachaganak.
The Tengiz field accounts for a large part of landlocked Kazakhstan's oil production and has been a major cash generator for Chevron for decades. But its exports depend almost entirely on a pipeline that runs through Russia to the Black Sea, a route therefore effectively under Moscow's control.
Exxon did not immediately respond to a Reuters request for comment.