Exxon ties new $80 billion oil project to settlement of dispute with Kazakhstan

ExxonMobil Holdings Corp. told Kazakhstan that potential joint investments of $80 billion to expand the Kashagan oil field depend on resolving a long-running dispute between international companies and the government.

At issue are claims totaling about $150 billion, largely for lost profits related to delays in project implementation, which are subject to international arbitration, as well as a $5 billion fine for violations of environmental laws. The proposed investment, through an equal joint venture with state company KazMunayGas, would enable development of the Kashagan oil field’s reserves, with potential output of up to 600,000 barrels a day, according to informed sources. Although KazMunayGas agreed to Exxon’s proposal, the plan still needs political approval, which is not guaranteed, the sources added.