Kazakhstan to be paid compensation for Karachaganak - report

The oil majors that operate the Karachaganak field in Kazakhstan lost an international arbitration case, leaving them liable to pay as much as $4 billion in compensation to the country’s government, Bloomberg reported.

"The court has yet to determine the specific amount the field’s partners, led by Eni SpA and Shell Plc, will have to pay," the repot reads.

The ruling is a partial victory for Kazakhstan, which was claiming more than $6 billion from the operators of Karachaganak. The tribunal upheld the government’s position that the companies recovered money from the state, through the field’s production sharing agreement, for cost overruns that were unapproved and other expenses that should not have been recoverable.

External legal advice received by Kazakhstan suggests the arbitration ruling means the Karachaganak partners, which include Chevron Corp., Lukoil PJSC and KazMunayGas National Co. JSC, will have to pay back an estimated $2 billion to $4 billion.

Kazakhstan’s Energy Ministry declined to comment on the confidential arbitration process.