Eni, Shell, Chevron, and Lukoil Retain Role in Karachaganak Project — UpStream

Four foreign companies — Eni, Shell, Chevron, and Lukoil — will continue construction of the Karachaganak gas processing plant. Kazakh authorities had previously considered transferring the project to KazMunayGas, Orda.kz reports.

According to Upstream Online, which cites a government source, an agreement has been reached on a new project format. Kazakhstan will not require KPO shareholders to withdraw from the gas plant deal, despite earlier demands this summer that Eni and Shell halt work.

Authorities in Kazakhstan have invited the four foreign shareholders at operator Karachaganak Petroleum Operating (KPO) — Eni, Shell, Chevron and Lukoil — to form a new consortium with state run oil and gas holding KazMunayGaz to build and operate the processing plant, Upstream writes.

The new consortium will operate separately from the existing production-sharing agreement at Karachaganak.

In June, Kazakh authorities sent letters to KPO shareholders ordering them to stop construction due to disputes over cost and deadlines. Officials have long criticized foreign investors for missed timelines and attempts to shift expenses to the state.

The companies, however, argued that the project would only be profitable with more funding or a smaller production capacity.

By July, the Ministry of Energy had announced plans to stop working with Western investors and considered transferring the project entirely to KMG. The final decision was delayed until the fall, but the dispute now appears to be resolved.

Original Author: Nikita Drobny