Victoria Oil & Gas Files Arbitration Claim Against Kazakhstan

British oil and gas company Victoria Oil & Gas has filed an international arbitration claim against Kazakhstan over the termination of its contract to develop the Kemerkol field in the Atyrau region, Orda.kz reports.

The claim was officially registered on March 21. While the compensation amount has not been specified, Victoria Oil & Gas previously estimated its losses at around $500 million in 2020.

Kazakhstan’s Ministry of Justice will represent the state in the proceedings.

The little-known London-registered company received its development license for Kemerkol in 2006 and drilled several wells. However, in 2008, the Atyrau Regional Economic Court revoked the license and transferred the field to another operator, Bakyt Tau LLP.

Victoria Oil & Gas vowed to defend its interests, later winning related cases in courts in the UK and Canada.

Despite this, the dispute has remained unresolved. In 2021, the company reiterated its intention to sue Kazakhstan, again citing damages in the hundreds of millions of dollars.

The Kemerkol field itself is not considered economically significant. Initially discovered in 1991, it was thought to hold 15 million tons of oil. Later assessments downgraded that figure to just 4 million tons, only 1 million of which is considered recoverable due to the field’s heavy oil and bitumen content.

The field clearly doesn’t justify claims in the hundreds of millions, unlike the Stati case involving the Borankol and Tolkyn fields. This lawsuit is likely more political than economic,  said oil and gas analyst Nurlan Zhumagulov.

The dispute with Victoria Oil & Gas is just one case involving Kazakhstan. 

The most prominent — the Stati case — concluded last year. More recently, it was reported that foreign investors in the Kashagan project won an arbitration ruling against the Kazakh government.

Original Author: Nikita Drobny