Kazakhstan Revokes Shell and Eni’s Role, Will Finish Key Karachaganak Gas Plant Itself

State agency says soaring costs and stalled decisions forced move; government frames takeover as protecting domestic energy supply

Mar. 24, 2026 — Kazakhstan’s state-authorized project office announced on March 21 that it had terminated an agreement with Royal Dutch Shell and Eni to develop a gas treatment plant at the giant Karachaganak field, and that the government will assume responsibility for completing the work. The agency cited large cost increases, an unattractive financial case and repeated attempts by the oil companies to link construction to other outstanding disputes as reasons for pulling the firms off the job. It added that continuing with the consortium was no longer viable on technical, commercial or legal grounds.

The plant is designed to process gas from Karachaganak, one of the world’s biggest gas-condensate accumulations, and when finished is expected to handle roughly four billion cubic meters a year. Kazakh officials had aimed to bring the facility online by last spring but delays persist. For now, gas from the field continues to be routed to a processing site in Russia’s Orenburg region, a dependence that became starkly visible after that facility was struck by a Ukrainian drone last October and Kazakhstan had to curb output.

The move follows a bitter legal battle between the Kazakh state and the consortium led by Shell and Eni. In January an arbitration panel sided with Kazakhstan in disputes over cost recovery and revenue sharing; the companies have appealed, and if the decision holds the group could face claims of up to about $4 billion. Shell announced a pause to new investment in Kazakhstan in February as the court process proceeds, though it later opened talks with Astana in early March on exploration in a separate license area known as the Zhanaturmys block.

For ordinary consumers and local industry, officials say the takeover is meant to reduce reliance on foreign processing capacity and shore up national supply. But analysts warn the state faces a tough technical and financial task. “Completing a complex gas plant without partners who committed upfront funding and technology will test the budget and project management,” said an independent energy analyst in Almaty. He added that the government’s move could deter some investors even as it projects decisive action.

Construction, connection to pipelines and export arrangements will be closely watched in the coming months. With the arbitration appeal still pending and a new state-led schedule yet to be released, the timeline and final bill for finishing the Karachaganak processing facility remain uncertain — and so does the broader message it sends to foreign oil and gas companies operating in Kazakhstan.