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Kazakhstan cancels plans for Karachaganak Gas Processing Plant with Foreign Shareholders

The Kazakhstani energy ministry announced on Wednesday that it had canceled plans to build a processing plant for gas at the Karachaganak Field with the project's major foreign investors.

It stated, without going into detail, that they were looking to work with domestic companies.

Central Asia has been in a dispute with oil companies for many years over cost. In 2023, the country will bring multi-billion dollar claims against these companies.

Companies claim that the government simply wants to increase its share in major oil and gas projects, which amounts to "resource nationalism".

Kazakhstan's authorities rejected this criticism and said that their goal was to reduce costs, which were inflated by Western companies.

The Karachaganak Petroleum Operating consortium (KPO), which includes Eni (29.5%), Shell (29.5%), Chevron (18%) Lukoil (13.5%) and KazMunayGaz (10) operates the field.

Last year, the shareholders and local government agreed to build a processing plant for gas with a capacity of up 4 billion cubic meters per annum and start operating in 2028.

At present, the raw gas from Karachaganak crosses the border and is processed at Orenburg in Russia.

The ministry has not stated the reason why the Karachaganak project was halted.

Sources in the industry have linked the problem to legal disputes that exist between the government, and foreign companies.

In an email response to questions, the energy ministry said that the arbitration case between Karachaganak shareholders and the Energy Ministry was "confidential". (Reporting and writing by Tamara Vaal, Writing by Vladimir Soldatkin, Editing by Emelia S. Sithole-Matarise & Mark Potter).

(source: Reuters)