Kazakhstan Looks to Improve Oil Production Agreements Terms

Tuesday, January 28, 2025

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".

The central Asian country is one of the world's top 10 oil producers and has had a chequered history in dealing with international oil companies, bringing multi-billion-dollar claims against them.

Foreign 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.

"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.

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, Shell, TotalEnergies, ExxonMobil, KazMunayGaz, Inpex and CNPC.

The consortium, called the North Caspian Operating Company (NCOC), has invested some $50 billion in th project.

Eni, Shell and KazMunayGaz are also partners in Karachaganak, alongside Chevron CVX.N and Russia's Lukoil, with investments of more than $27 billion.

Tengizchevroil, Kazakhstan's largest oil producing enterprise, involves Chevron, ExxonMobil, Lukoil and KazMunayGaz.


(Reuters - Reporting by Mariya Gordeyeva; writing by Vladimir Soldatkin; editing by Kirsten Donovan and Jason Neely)

Categories: Industry News Activity Production Asia Caspian Sea Oil and Gas

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