Exxon tells Kazakhstan an $80B Kashagan expansion depends on settling a $150B dispute. Eni also eyes western development. Final decision due by 2030.
Alpha Score of 65 reflects moderate overall profile with strong momentum, moderate value, moderate quality. Based on 3 of 4 signals — score is capped at 90 until remaining data ingests.
(Bloomberg) -- ExxonMobil has told Kazakhstan that a potential $80 billion joint investment to expand the Kashagan oil field depends on resolving a long-running $150 billion dispute between the government and international oil companies, people familiar with the matter said.
The proposed venture, an equal partnership with state-owned KazMunayGas, would tap the undeveloped western portion of the giant Kashagan reservoir. It could add as much as 600,000 barrels a day of output, the people said, asking not to be named because the talks are private.
In discussions with Kazakh officials, Exxon tied the investment to settling the state's claims for roughly $150 billion in lost revenue during development delays – a matter now in international arbitration – and a separate $5 billion environmental fine, the people said.
KazMunayGas has agreed with Exxon's proposal. Political approval remains uncertain, they added. Exxon and KazMunayGas declined to comment. Kazakhstan's Energy Ministry did not respond to a request. KazMunayGas Chairman Askhat Khassenov told reporters Friday that the Bloomberg report was inaccurate, according to Kursiv media.
Discovered in 2000, Kashagan was the largest oil find in decades. Operator Eni SpA initially expected output of 1.5 million barrels a day. Cost overruns and delays plagued development. Production from the eastern portion now runs about 450,000 barrels a day. The operating consortium, North Caspian Operating Co., expects to reach 500,000 barrels a day this year and as much as 710,000 by 2031.
About 1 billion barrels of the estimated 16 billion barrels of recoverable reserves have been produced in the first decade, the government said. Exxon wants to unlock roughly 10 billion of those barrels through western Kashagan, according to people familiar with the matter. Bloomberg first reported the company's initial proposal last year.
Under Exxon's plan, other Kashagan partners – Eni, Shell Plc, TotalEnergies SE, KazMunayGas, China National Petroleum Corp. and Inpex Corp. – would be offered minority stakes in the new venture, the people said. Firms that join would be released from the sulfur fine claims when the venture is formed, and from remaining claims at final investment decision. Those that decline would be released from the claims provided they do not challenge the new venture's right to develop western Kashagan. They would not be able to extend their existing license for eastern Kashagan after it expires in 2041, the people said.
Eni has separately approached Kazakhstan signaling it and some unnamed partners also want to develop western Kashagan, the people said.
Shell, TotalEnergies, Inpex and NCOC declined to comment. CNPC did not respond. Eni did not immediately respond.
The development concept for an Exxon-led project may cost $250 million, the people said. Front-end engineering and design would require roughly $2 billion from 2028, with final investment decision expected in 2030, they added.
Eni carries an Alpha Score of 65 out of 100, a Moderate rating in the Energy sector.
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