News 2021December 2020
The government of Kazakhstan and the shareholders of the Karachaganak project have finally settled the dispute over the field. According to the Ministry, the Kazakh ministries of energy, Finance, PSA, Eni, Shell, Chevron and Lukoil signed an agreement on completing the settlement of the dispute.
Under the agreement, the consortium paid $1.3 billion to Kazakhstan. The parties also agreed on the final method of production sharing, as a result of which Kazakhstan will receive an additional $600 million by 2037 at an oil price of $40-50 per barrel. The launch of the Karachaganak-1 (A) expansion investment project was also approved in order to further maintain production levels at the field.
"The project for the future expansion of Karachaganak PRK (1A) provides for the construction of a gas re-injection compressor and associated installations with an investment of about $1 billion. This will allow us to maintain production at the level of 10-11 million tons of liquid hydrocarbons per year. The implementation of PRK (1A) involves ensuring a minimum share of Kazakhstan content in the amount of 45% in the purchase of goods, works and services and 75% in the hiring of personnel," the Ministry of energy explained.
The Ministry added that the parties also provided for the possibility of implementing the next stage of PRK 1 (B), taking into account the technical and economic parameters of the project.
The Ministry recalled that the differences were in the division of products and, accordingly, the distribution of monetary income between the parties.
In 2018, Kazakhstan and the Karachaganak consortium reached an agreement after a long-term dispute. According to them, the Karachaganak consortium has pledged to pay Kazakhstan monetary compensation in the amount of $1.1 billion. There were also changes to the production sharing mechanism of the PSA, which gives the country additional revenues from the project in the amount of about $415 million until 2037 at a price of $80 per barrel. Later it became known that the settlement of the dispute continues.