Shell pauses further Kazakhstan investments over legal disputes, CEO says

Chevron Corporation -1.13% Post
Exxon Mobil Corporation -0.15% Post
Shell Plc Sponsored ADR -1.66% Post

Chevron Corporation

CVX

184.91

184.80

-1.13%

-0.06% Post

Exxon Mobil Corporation

XOM

149.01

148.85

-0.15%

-0.11% Post

Shell Plc Sponsored ADR

SHEL

89.84

89.70

-1.66%

-0.16% Post

- Shell SHEL.L will pause new investments in Kazakhstan due to a series of legal proceedings launched by the government against the oil major and other international companies over cost disputes, CEO Wael Sawan said.

Kazakhstan has, for years, clashed with international oil companies and launched arbitration cases against the developers of its Kashagan and Karachaganak oilfields, alleging $13 billion and $3.5 billion, respectively, in disputed costs.

One claim involves the field operated by the Karachaganak Petroleum Operating consortium, in which Shell holds a 29.25% stake alongside Eni ENI.MI, Chevron CVX.N, Lukoil LKOH.MM and KazMunayGaz KMGZ.KZ.

"It does impact our appetite to invest further in Kazakhstan," Sawan said on a call with analysts Thursday. "We think that there's still a lot of potential investment opportunities in Kazakhstan, but we will hold until we have better line of sight to where things end up."

Bloomberg News, citing unnamed sources, reported last week that the Karachaganak consortium lost the arbitration case, leaving them liable to pay as much as $4 billion in compensation. Reuters could not confirm the report.

International oil companies have settled previous disputes with Kazakhstan by allowing the state to take a larger ownership stake in projects.

Kazakhstan's energy minister has previously said the government was gathering documents for another, larger lawsuit against the Kashagan consortium, the value of which has not been disclosed.

Shell holds a 16.81% stake in the North Caspian Operating Company, which operates Kashagan and also includes Eni, TotalEnergies TTEF.PA, ExxonMobil XOM.N, KazMunayGaz, Inpex 1605.T and China National Petroleum Corp.

Kazakhstan's energy ministry did not immediately reply to a request for comment.