Kazakhstan Threatens Tengiz; PSA Model in Jeopardy

by Inna Gaiduk, Caspian Investor


After shutting down operations at Kashagan, the largest offshore project, Kazakh officials have taken after the operator of the largest onshore development— TengizChevroil. However, the
authorities have decided not to limit their activities to Kashagan and Tengiz. Approval has taken place for a significant package of amendments to the law “About Subsoil and Subsoil Use.” Under these revisions, if the government regards an already concluded contract as potentially damaging to the “economic interests of the country,” it has the right to revise contract conditions and in some case to cancel it unilaterally. However, the changes may become more widespread. The Ministry of Economics and Budget Planning has recommended ending the use of production sharing agreements (PSAs) and utilizing contracts based on concessions.

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