Kazakhstan Names QazaqGaz Lead For New Karachaganak Gas-Processing Project

Kazakhstan has selected state-owned QazaqGaz to lead the construction of a new gas-processing facility at the Karachaganak field that is meant to feed the domestic market. Beijing-based CITIC Construction has signed a framework pact and said it is prepared to take part. The move follows the government’s decision in March to drop an earlier arrangement with Shell and Eni after disagreements over costs and delivery terms, and signals a push to move processing from Russia back onto Kazakh soil.

Officials say the first phase of the plant was originally slated to begin operations in 2028 with capacity set at roughly four billion cubic meters of gas per year; planners are now discussing the option of expanding to about five billion cubic meters annually. Energy Minister Yerlan Akkenzhenov told reporters the choice of QazaqGaz reflects the need to accelerate work and to rely on a company familiar with the country’s gas network. He added that economic studies support the scheme and that the government expects concrete progress, not open-ended delays.

Key technical and commercial questions remain on the table as talks continue with foreign shareholders in the Karachaganak consortium. Negotiators are hashing out guaranteed raw-gas deliveries, a pricing formula that keeps local supply affordable, how to connect the new facility to existing field works, and the structure of fees tied to moving processed gas out of the area. The state says those matters must be settled before full construction contracts are signed.

At present raw gas from Karachaganak is sent to the Orenburg processing complex in Russia. Moving processing into Kazakhstan is being framed as a national security measure aimed at cutting reliance on outside infrastructure, especially after intermittent disruptions blamed on attacks in the region. The earlier plan with international oil companies unraveled amid cost overruns, prompting the government to change course and take a more hands-on role.

Legal disputes add another layer of complexity. International arbitration in London has left open the possibility that Shell and Eni could face damages in the range of two billion to four billion dollars, according to published reports. Separately, disagreements over the Kashagan field are being considered at the International Centre for Settlement of Investment Disputes in Washington, underscoring the broader tensions between the Kazakh state and foreign partners.

Independent energy analysts say the project could improve supply reliability for households and industry if it stays on schedule, but warned of execution risks. "Shifting processing here will bolster supply control, yet negotiating with existing shareholders and closing finance and engineering contracts will take time," said one analyst. For now, QazaqGaz has a central role to play, and the government has ordered a rapid move from planning to implementation under President Kassym-Jomart Tokayev’s development roadmap through 2029.