News 2023
06.04.2023Kashagan/Karachaganak
The Kazakh government has initiated arbitration proceedings in respect of two of the country's three major oil and gas projects, Kashagan and Karachaganak, citing sources of Bloomberg.
In particular, according to the interlocutors of the agency, it follows from the lawsuits that project partners should not deduct expenses in the amount of $13 billion for Kashagan and $3.5 billion for Karachaganak. If the authorities of the republic succeed in this matter, they will be able to receive a large share of the income from the fields in accordance with the terms of production sharing agreements (PSAs).
The relevant trials on Kashagan and Karachaganak will be held in Geneva and Stockholm, respectively. At the same time, foreign companies have not yet appointed arbitrators, unlike the government of Kazakhstan.
According to sources, the claims cover the periods from 2010 to 2018 for Kashagan and from 2010 to 2019 for Karachaganak. They include, among other things, that the companies violated the tender procedures for both projects and did not complete the work of contractors at Kashagan in full.
Earlier, President of Kazakhstan Kassym-Jomart Tokayev instructed to increase taxes on highly profitable large enterprises and companies exporting raw materials. In particular, we are talking about corporate income tax (CIT) and value added tax (VAT).
In addition to generating large revenues from oil companies, the government of Kazakhstan intends to change the system of tenders used by extractive enterprises, which will lead to an increase in the income of local companies, according to the agency's sources.
The members of the consortium to develop the Kashagan project have invested more than $50 billion in it, the main partners in the project are Shell Plc, Exxon Mobil Corp., as well as KazMunayGas, Eni SpA and TotalEnergies SE. The Karachaganak partners, led by Shell and Eni, have invested at least $27 billion in the development. It was previously reported that the Kashagan partners also face a $5.1 billion fine for alleged environmental violations. A version was expressed that this could lead to an increase in Kazakhstan's share in the Kashagan project.