ExxonMobil Warns of 40% Tengiz Decline and Ties $80 Billion Kashagan Expansion to Legal Resolution
Exxon forecasts Tengiz output will fall to 500,000 bpd by 2035 and conditions a 600,000 bpd Kashagan joint venture on Kazakhstan settling a $150 billion dispute.
ExxonMobil has warned Kazakhstan that Tengiz, the country's largest oilfield, is near its production ceiling and output will slide to about 500,000 barrels a day by 2035, a decline of roughly 40 percent from its high, Bloomberg reported Sunday (2026-08-23), citing a company presentation made to authorities in Astana.3
The projection puts concrete numbers on a challenge that will shape Kazakhstan's upstream position over the next decade. Tengiz is the foundation of a national oil industry that produced 1.78 million barrels a day in 2025, according to OPEC data, having grown by 239,000 barrels per day over the prior year. A 40 percent slide at the country's biggest field would open a gap that no existing Kazakh producing asset is positioned to fill.3,1
Exxon has proposed one answer. The company is seeking to build an $80 billion equal joint venture with state-owned KazMunayGas National Co. to develop the undeveloped western portion of the Kashagan reservoir, Bloomberg reported. The project could produce as much as 600,000 barrels a day.3
The investment carries conditions. Exxon has told Kazakhstan the deal will not proceed until the government resolves a $150 billion dispute between Astana and the international oil companies operating at Kashagan, and settles a separate $5 billion environmental fine, Bloomberg reported. Both remain unresolved.3
The legal history behind those figures is extensive. Kazakhstan alleged in a confidential arbitration case that international firms at Kashagan awarded $10.7 billion worth of contracts with unjustified cost increases, Oilprice.com reported on August 14 (2026-08-14). The government holds multiple arbitration cases against the oil majors with total claims reaching as much as $166 billion, mostly tied to production delays and lost revenues at the field.2
That body of litigation forms the immediate obstacle. Exxon is asking Kazakhstan to resolve claims that far exceed the $80 billion investment in nominal terms, in exchange for a commitment to a project that would take years to reach production. Tengiz is set to plateau in 2027 before the decline runs to 2035, which means Kazakhstan's window to line up a replacement source of output is narrowing.3,2
Kazakhstan's production has already been trending lower. Energy Minister Yerlan Akkenzhenov said the country produced 19.7 million tons of oil and gas condensate in the first three months of 2026 (January through March 2026), equivalent to 80.2 percent of the same period a year earlier.1
ICE Brent crude front-month was last quoted at $93.60 a barrel as of Sunday (2026-08-23), with markets closed for the weekend. At that price, the 600,000 barrels a day projected for a western Kashagan expansion would carry substantial gross revenue value for Kazakhstan, but the gap between that projection and any investment decision is measured in legal settlements, not in months.3
Kashagan already has a history that illustrates the difficulty. Kazakhstan holds multiple arbitration cases against the international consortium running in parallel, and the $10.7 billion contracts dispute alleged in the confidential case sits alongside the broader $166 billion claims pool. Exxon has now drawn the sequencing explicitly: investment follows a legal settlement. The $5 billion environmental fine and the $150 billion dispute are the immediate gateposts. Neither has a public resolution date.3,2