ExxonMobil Offers $80 Billion Kashagan Expansion if Disputes Are Settled

ExxonMobil is prepared to develop the western section of Kashagan with KazMunayGas and invest around $80 billion in the project. The proposal, however, is conditional on Kazakhstan settling its long-running disputes with the field’s foreign shareholders, Orda.kz reports, citing Bloomberg.

The plan calls for a joint venture owned equally by ExxonMobil and KazMunayGas. If implemented, the western section of Kashagan could produce an additional 600,000 barrels of oil per day. The field’s eastern section currently produces around 450,000 barrels per day.

According to Bloomberg’s sources, KazMunayGas has backed the proposal. The main obstacle is Kazakhstan’s unresolved claims against the foreign members of the North Caspian consortium.

Kazakhstan is seeking around $150 billion in compensation for revenue it says was lost because of years of delays in developing Kashagan. A separate dispute concerns an environmental fine of approximately $5 billion over sulfur storage.

Orda.kz previously explained how Kazakhstan seized NCOC property and vehicles during the sulfur dispute and warned the company’s managing director that he could face criminal liability.

ExxonMobil’s proposal would tie the settlement of these cases to the launch of the new project. Existing consortium members could be offered minority stakes in the joint venture.

Companies that join would be released from the environmental claims once the venture is established. The remaining claims would be dropped after a final investment decision is made.

Consortium members that decline to participate could also have the claims against them withdrawn if they agree not to challenge the new venture’s right to develop western Kashagan. However, once the current license expires in 2041, they would not be able to extend their participation in the eastern section of the field.

Original author: Alexander Zhdanov

Read also:

• Kazakhstan Says Arbitration Cannot Halt Enforcement of Kashagan Fine
• Arbitration Temporarily Blocks Kazakhstan From Collecting Kashagan Fine
• Kazakhstan And NCOC Still Arguing Over Kashagan Repair Schedule