Kazakhstan has initiated legal proceedings in Switzerland, aiming to strengthen its position in international arbitration against oil companies operating in the Kashagan and Karachaganak fields, reports Orda.kz.
According to information from Bloomberg, Kazakhstan has accused contractors of the oil and gas company Eni of corruption, which led to significantly inflated contracts. As a result, the country is seeking $15 million in damages, including interest.
The lawsuit is based on materials from criminal cases in Italy and related court proceedings in Houston.
“The key issue is a contract, the cost of which, according to the allegations, was increased from $88 million to over $490 million. Kazakhstan claims that the contract was rewritten 11 times. In 2017, several contractors working with Eni were convicted of corruption in Italy, but no Eni employees were prosecuted,”
clarifies Bloomberg.
To use the materials from the criminal case in Swiss court, Kazakhstan requested to interrogate Makhsat Idenov, a former top manager of KazMunayGas and Eni. The court in Houston allowed the interrogation but stipulated that the testimony could only be used in the Swiss proceedings, not in international arbitration.
A representative of Idenov confirmed that the interrogation has already taken place. At the same time, Eni US rejected Kazakhstan's requests for additional documents, stating that such materials do not exist.
The company PSA LLC, representing the interests of the Ministry of Energy of Kazakhstan, filed three requests for information disclosure in Houston, but the court only partially satisfied them.
In response to Kazakhstan's accusations, Eni representatives stated that these issues had already been addressed in Italy, and the company was fully acquitted.
“We are confident that there are no grounds for accusations against Eni,” the company stated.
North Caspian Operating Company (NCOC), which manages the Kashagan field, confirmed that it strictly adheres to the terms of the production sharing agreement. The Ministry of Energy of Kazakhstan declined to comment on the situation.
It was previously reported that Kazakhstan lost a lawsuit amounting to four billion dollars to Kashagan investors. The case concerned environmental violations — the authorities insisted on a fine for exceeding sulfur storage norms, but arbitration supported the NCOC consortium, which includes Eni, Shell, ExxonMobil, and TotalEnergies.
The total cost of the Kashagan project is $55 billion; however, it faces delays, deadline extensions, and pricing disputes. Kazakh authorities believe they are losing revenue and are engaged in legal disputes with the NCOC operator. The amount of the claim exceeds $160 billion and includes lost profits from oil production, which Kazakhstan believes the consortium failed to deliver due to delays, technical issues, and constant changes in the contract. Arbitration proceedings have been ongoing for several years without tangible results.
In October 2024, it became known that NCOC proposed to resolve another dispute regarding environmental claims. In exchange for withdrawing fines and abandoning arbitration, investors agreed to invest $110 million in social projects and create a development fund. Additionally, they agreed to reduce sulfur volumes at production sites and supply gas to Kazakhstan at reduced prices. However, one of the conditions of the agreement was a requirement to amend Kazakhstan's environmental legislation, which proved challenging for the authorities.
