Auditors doubted the ability of the joint company of KMG and Lukoil to continue operations

The company is owned equally by KazMunayGas and Lukoil, and after US sanctions its accounts in Kazakh banks were closed. Lukoil has already begun selling its stake.

The essence in brief

• In the 2025 reporting, auditors stated doubts about the going concern of Kalamkas-Khazar Operating; they did not dispute the reliability of the reporting.
• Money in the accounts fell from 6.3 billion tenge to 14.38 million tenge.
• The project remains at the study stage and is awaiting a final investment decision.
• KazMunayGas intends to continue work on the project for 12 months with minimal activity.

What the auditors said

As Forbes Kazakhstan reports, KPMG auditors in the 2025 reporting pointed to substantial uncertainty regarding the company's ability to continue operating. They did not change their opinion on the reliability of the reporting itself. Kalamkas-Khazar Operating was founded in 2023 to develop the Kalamkas-more, Khazar, and Auezov blocks; at the end of 2025, KazMunayGas and Lukoil each owned 50%.

Why the problem arose

On October 22, 2025, the US Treasury's Office of Foreign Assets Control added Lukoil to the sanctions list, and the restrictions affected the company. Kazakh banks and other financial organizations stopped servicing its accounts and payments; all bank accounts were closed back in 2025. Full financing is possible only after the sanctions are lifted or the sanctioned participant exits the project. Lukoil has begun the process of selling its stake.

What about the money

The company has no revenue yet, since the project has not reached production. The net loss for 2025 amounted to 7.3 billion tenge versus 9.18 billion a year earlier. Long-term financial liabilities grew from 26.07 billion to 41 billion tenge. The lenders were KazMunayGas, Lukoil, and Lukoil Kazakhstan Upstream; the loans are in dollars at 2.8% plus the SOFR rate, with maturity in 2033. The nominal value of these loans at the end of the year was 65.75 billion tenge.

What's next

KazMunayGas stated that it intends to continue work on the project for 12 months from the date of approval of the report, maintaining minimal activity. In parallel, the Ministry of Defense plans a diving survey and demining in the Kazakh sector of the Caspian Sea to prepare pipeline routes. The equipment for this work is to be purchased by the company and transferred to the ministry; details about the mines are a state secret.

Other KMG projects

KazMunayGas also has projects where work is proceeding without such complications. The company is forming a consortium with Shell, Chevron, Sinopec, and CNOOC for seismic exploration and drilling in the Caspian region. And the dispute over the production sharing contract at the Dunga field in Mangistau was closed without a trial, but the Ministry of Energy did not disclose the compensation amount.

Author's conclusion

The auditors' warning does not mean the project is closed, but it shows that without resolving the sanctions issue and Lukoil's exit, its financing remains in question. The timeline for the investment decision has not yet been announced.