FSUOGM: Kazakh businessmen acquire mothballed gas processing plant

Kazakhstani businessmen Kens Rakishev and Baikadam Ablasanov have acquired a mothballed gas processing plant previously owned by Moldovan businessman Anatol Stati, who was embroiled in a lengthy legal battle with the Kazakh government.

Rakishev and Ablasanov, partners in Kazakh oil producer KumkolTransService, bought the Borankol plant in Kazakhstan’s western Mangystau region at auction for $130mn and plan to bring it into full operation next year, Rakishev said on a local podcast on November 29.

Construction of the Borankol plant began in 2005, with the project’s cost estimated at $176.5mn, but was suspended in 2010 after developer Triston Oil, owned by Stati, had its contracts for the Tolkyn and Borankol oil deposits terminated. Triston claimed its investments in Kazakhstan were expropriated by the government, initiating a legal dispute that did not reach a tentative settlement until earlier this year.

Borankol is currently only partially operational, but at full capacity could handle up to 3bn cubic metres of natural gas per year. It will get increased gas supply from the Zapadnaya Prorva field in the future, Rakishev said.

Kazakhstan’s government and National Bank signed a framework agreement with Anatolie and his son Gabriel to resolve their dispute in July. The specific terms and conditions of the agreement remain confidential, although Kazakhstan’s justice ministry said it would bring an end to all legal proceedings and the suspension of all ongoing claims across all jurisdictions.

The Statis initially claimed $4bn in damages from Kazakhstan in a case lodged at Sweden’s arbitration court in 2010. But they were awarded only $500mn, of which $199mn related to the alleged cost of building the Borankol plant. In June 2018, however, the English High Court concluded that there were sufficient grounds that the award was obtained by fraud.

The Statis then tried to enforce the ruling in seven countries, resulting in more than $22bn of assets owned by Kazakhstan’s National Bank and National Fund being frozen. In May 2019, a court of first instances in Belgium ordered freezes on $21.5bn of assets lifted, stating that the attachment of the other $530mn should be sought in English courts. 

In August 2019, the English Court of Appeal delivered its judgment in the Statis' case against Kazakhstan, effectively bringing the enforcement proceedings to a definitive close. In November 2021, the Brussels Court of Appeal determined that the Statis had engaged in fraudulent conduct both before and during the arbitration, as well as afterward. The court specifically found that the Statis' investment in Kazakhstan was made in bad faith and concluded that the arbitration award associated with this investment was procured through fraud.

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