© Reuters. FILE PHOTO: Infrastructure on D Island, the main processing hub, is pictured at the Kashagan offshore oil field in the Caspian sea in western Kazakhstan August 21, 2013. REUTERS/Stringer
ASTANA (Reuters) -Kazakhstan has started arbitration proceedings against companies developing its Kashagan and Karachaganak oilfields over $13 billion and $3.5 billion respectively in costs deducted as part of profit-sharing deals, its energy minister said on Tuesday.
“I can only say these lawsuits have been filed in the interest of the people of Kazakhstan,” Energy Minister Almasadam Satkaliyev told reporters, declining to provide any further details about the claims.
Eni, Shell and KazMunayGaz are also partners in Karachaganak, alongside Chevron (NYSE:CVX) and LUKOIL.
The two consortia’s offices in Kazakhstan did not reply to requests for comment.
Both projects are covered by production-sharing agreements stipulating that companies can deduct certain costs from income before splitting it with the government. The size of the deductions determine how much income there is to be split.
Kashagan and Karachaganak, both of which pump around 400,000 barrels of oil per day, are the second and third biggest producers of oil respectively in the Central Asian nation whose economy relies heavily on energy exports.
The Astana government has already had a series of disputes with its partners about the terms of oil deals, which typically ended with settlements.
According to a Bloomberg report published this month, the claims cover the period from 2010 to 2018 for Kashagan and from 2010 to 2019 for Karachaganak.
Kazakhstan and the Karachaganak consortium settled their most recent dispute in 2018 after three years of negotiations, with the group paying Astana $1.1 billion and giving it a greater portion of future profits.