Karachaganak Shareholders Preparing Proposal to Government of Kazakhstan

Within nine months the shareholders of Karachaganak Petroleum Operating (KPO) will have to come up with a proposal to the Government of Kazakhstan on the dispute about the unfair distribution of income from the sale of oil at the Karachaganak field, Energy Minister Kanat Bozumbayev said, according to www.abctv.kz.

In parallel, the republic in the face of the Ministry of Energy will continue to pursue its interests through arbitration.

“We have signed a memorandum with them at the end of December that will continue our negotiations next nine months in 2017. They will formulate concrete proposals to us,” the head of the Ministry of Energy said.

In March last year, it became known that Kazakhstan needs the KPO consortium to pay about $ 1.6 billion because of the unjust interpretation of the production sharing agreement (PSA), with the result that Kazakhstan does not receive part of the profits from the sale of oil from the field Karachaganak. The sum of the claims was listed in the financial report of the Russian company Lukoil, which is one of the PSA participants.

In June 2016 the Financial Times, citing a source reported that KPO offered to pay about $ 300 million to settle the dispute. Kazakhstan rejected the proposal.

* Participants of KPO are: Shell (29.25%), ENI (29.25%), Chevron (18%), Lukoil (13.5%), and KazMunayGaz (10%).