International oil companies are looking for a solution to multibillion dollar disputes with the Government of Kazakhstan over operations at two major oil fields, reported Bloomberg, citing sources.
Italy’s Eni is playing a leading role in the search for a resolution, the sources said.
Eni controls a majority stake in both the Kashagan and Karachaganak oil and gas projects, which are at the centre of the issue.
The development of a gas processing plant to supply Kazakhstan’s local market is one potential solution that is being discussed, the sources said.
According to two sources, Eni has sought assistance from the Italian Government to address the conflicts.
The sources stated that Italian Prime Minister Giorgia Meloni is planning to visit the central Asian country and hold discussions with local officials during her return from the G7 summit in Japan.
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However, it is uncertain whether oil and gas matters will be part of her trip’s agenda, the sources added.
“Eni does not comment on rumours related to projects,” a company spokesperson was quoted as saying.
“Eni strongly denies having involved the Italian government to solve any dispute in the country.”
The Energy Ministry of Kazakhstan, the North Caspian Operating Company (which is responsible for Kashagan), Karachaganak Petroleum Operating and a spokesperson for Meloni did not respond to requests for comment.
Last month, Kazakhstan initiated arbitration proceedings against the international partners involved in the Kashagan and Karachaganak oil projects.
The Kazakh Government believes that operators of the projects should not deduct expenses amounting to $13bn (KZT5.77trn) for Kashagan and $3.5bn for Karachaganak as part of profit-sharing deals.
If the government is successful, it could receive a higher share of the revenue from these fields.
Additionally, the Kashagan partners are facing a $5.1bn penalty for alleged violations of environmental laws.
While the international oil companies involved have denied any wrongdoing, they are seeking a resolution with the Kazakh Government, the sources said, adding that one potential solution being explored is financing the construction of gas processing facilities.
Led by Shell and Eni, the Karachaganak field partners have invested at least $27bn in the development of the field.