Kazakhstan sues foreign oil majors over struggling Kashagan field

Kazakhstan's government is suing foreign oil companies developing its huge Kashagan oilfield in the Caspian Sea, a tactic used earlier in securing the government large stakes in two of the three multinational energy projects on its territory.

The development consortium, led by Exxon (XOM), Shell (RDS.A, RDS.B), Total (TOT) and Eni (E) as well as Kazakh state oil firm KazMunaiGas, may face Kazakhstan seizing a bigger stake in Kashagan or refusing to reimburse part of the $50B spent on bringing it onstream.

Repeated delays at Kashagan have infuriated the government; production finally began in September after 13 years but was stopped a few weeks later after gas was found to be leaking from its pipelines.

The government says its checks show the volume of gas burned off after the discovery of the leak totaled 2.8M cubic meters, and thus is claiming $737M against the consortium.

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Comments (6)
  • Veritas1010
    , contributor
    Comments (3346) | Send Message
    You cannot sleep with tyrants and not expect the stench and filth to not be telling.
    7 Mar 2014, 08:59 AM Reply Like
  • john001
    , contributor
    Comments (1217) | Send Message
    7 Mar 2014, 09:19 AM Reply Like
  • User 353732
    , contributor
    Comments (5166) | Send Message
    This is the Russian model of creeping expropriation. It is spreading ...Nigeria has adopted it. Kazakhstan is but a follower. Oil and Gas Putinism is increasingly popular with corrupt and venal politicians. In the Gulf of Mexico the US Regime has pursued the degradation of property rights for via regulatory, licensing and tax policies .
    7 Mar 2014, 12:51 PM Reply Like
  • Lo45
    , contributor
    Comment (1) | Send Message
    I lived in Astana Kazakhstan for a year. The country has been taken advantage by Russia. In that area the Kazaks produce oil from there wells then the Russian control the pipeline so profits for Kazakhstan 40 percent Russia 60 percent. This new pipeline will put money in Kazak hands unfortunately the President puts his friends first over his people and they will receive much more than the average Kazak. He's a smart man but his interests come first not the people.
    7 Mar 2014, 12:59 PM Reply Like
  • Bob Carl
    , contributor
    Comments (341) | Send Message
    Actions like this hurt IOCs operating in such a kleptocracy. However, they also tend to ultimately reduce international oil supplies and, accordingly, drive oil prices upwards. That benefits the IOCs. It's an interesting dichotomy.
    7 Mar 2014, 03:54 PM Reply Like
  • smurf
    , contributor
    Comments (6369) | Send Message
    Of course they sued. Majors should all pull out and tell them to pound sand and go back to their mud huts and goats. Think the Russians had any influence on this decision?... Rhetorical question, folks.
    7 Mar 2014, 04:06 PM Reply Like
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