Kazakhstan alleges Big Oil corruption tainted $10.7 billion in contracts, delayed key oil project
The Kazakh government is claiming in a confidential arbitration that international oil giants awarded $10.7 billion in contracts at the Kashagan oil field which had been compromised by self-dealing or unjustified cost increases, or were won through bribery, multiple sources have told ICIJ.
At the heart of the claim are around a dozen contracts that the Kashagan consortium of oil companies had issued to a handful of international engineering and construction firms that built key parts of the Kazakh mega field during the 2000s.
The claim amounts to the most serious accusation yet to surface from the Kazakh government in the closely watched international arbitration dispute between Central Asia’s biggest oil producing state and the North Caspian Operating Consortium (NCOC) that operates Kashagan. The consortium is made up of Shell, ExxonMobil, Eni, TotalEnergies, China National Petroleum Company and Japan’s Inpex.
The claim is part of a $160 billion international arbitration action over the Kashagan project that also includes allegations of lost profits and environmental damage.
The arbitration tribunal, registered at the Permanent Court of Arbitration in The Hague, is yet to make any decision on the corruption claims, people familiar with the situation said.
The NCOC told ICIJ via email that the consortium members “consider that they have acted in accordance with the relevant contracts, [Kazakh] laws and applicable standards and best practices.”
“Due to the confidential nature of the proceedings, we are unable to provide further comments,” the consortium added.
n only in 2016, a delay, the Kazakh government claims, that has cost it billions of dollars in lost earnings.
Kazakhstan is contending that crucial delays at Kashagan, hailed as the world’s biggest oil find after Alaska’s Prudhoe Bay, were in part caused by alleged corruption over contract awards to international companies and the mismanagement that ensued during the 2000s, sources told ICIJ.
These alleged corruption-related setbacks, Kazakhstan claims, postponed the start of full production at Kashagan and therefore the start of the profit-sharing phase — the most lucrative for the Kazakh state — even as the oil companies have continued to recover their claimed development costs. Available estimates for the latter hover around the $60 billion mark, though that is believed to be a conservative figure.
https://www.icij.org/investigations/caspian-cabals/timur-kulibayev-nazarbayev-kazakhstan-oil-riches/
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