Kazakhstan had reason to cheer after receiving a commitment from the International Finance Corporation to help develop infrastructure projects worth $3 billion. But that happy foreign investment news was offset by an international arbitration court’s decision to throw out $12 billion in Kazakh claims against Western oil giants in a dispute over the development of the Kashagan oil field.
The IFC, the World Bank’s private-sector wing, will get involved in projects covering the 2026-31 period, focusing on fostering public-private partnerships (PPPs), the Kazakh State Agency for Strategic Planning and Reform announced October 21. The IFC will provide advisory services via Kazakhstan’s Joint Economic Research Program. Projects will aim to expand transport infrastructure and achieve efficiencies in the management of water resources.
The involvement of PPPs “not only facilitates private investment but also enhances the quality of infrastructure design, construction, and operation throughout the entire lifecycle of the assets,” according to an agency statement.
The same day Astana announced the IFC investment, Kazakh officials received the unwelcome news that the Permanent Court of Arbitration in the Hague had excluded $12 billion in Kashagan-related claims, Bloomberg reported. The court asserted that the Kazakhstan’s claims covering the $12 billion, costs allegedly incurred between 2011-15, were filed after the statute of limitations had run out. The court let stand another $8 billion in claims, however.
Kazakhstan is seeking compensation from a consortium of oil companies dominated by Western oil majors, including ExxonMobil, Shell and TotalEnergies, for what Astana claims were delays and cost overruns in the development of the Kashagan field, which sits just offshore in the Caspian Sea, near the Kazakh city of Atyrau. The field’s development posed an engineering challenge given the sea’s shallow depth and variable weather conditions, ranging from high heat in summer to frigid winter temperatures.
Kashagan is estimated to hold upwards of 13 billion barrels of recoverable reserves, according to the US Energy Information Agency (USEIA).
Citing Kashagan’s “adverse operating environment and complexity,” USEIA in a background report noted that Kashagan began pumping oil in 2016 after years of delays and “significant cost overruns.”
“[Kashagan’s] reservoir contains high levels of hydrogen sulfide, which is both highly toxic and highly corrosive and has been blamed for pipeline leaks,” the USEIA report stated. “In addition, conventional drilling and production technologies such as fixed or floating platforms cannot be used because of the shallow water and cold climate. Instead, offshore facilities are installed on artificial islands (drilling and hub islands) that house drilling and processing equipment.”
In addition to seeking compensation for Kashagan delays and overruns, Kazakh officials are pursuing separate claims of over $130 billion in lost revenue relating to production delays. ExxonMobil maintains that further development of Kashagan cannot proceed until the arbitration cases are settled.
Kazakhstan’s oil production for the first eight months of 2026 stood at 61.7 million tons, representing an 8.4 percent decline compared to the same period in 2025. Kazakh officials in August downwardly revised estimates for annual production in 2026 to 96 million tons: the country pumped just under 100 million tons last year. Russia-Ukraine war-related disruption to Kazakhstan’s main oil export route, the Caspian Pipeline Consortium, is a major factor in hampering the country’s oil production.