A new investigation led by the International Consortium of Investigative Journalists (ICIJ) and 26 media partners, including RFE/RL, dug into financial dealings surrounding a key pipeline in Kazakhstan and the oil fields that feed it.
The project, Caspian Cabals, and the two-year investigation are based on tens of thousands of pages of confidential e-mails, company presentations, and other oil-industry records, audits, court documents, and regulatory filings, as well as frontline reporting and hundreds of interviews, including with former oil company employees and insiders at Shell, Chevron, and Exxon.
At the center is a crucial 1,511-kilometer Caspian pipeline that transports Kazakh oil through Russia to European markets. The investigation documents instances of inflated budgets, rigged bidding for contracts, and payments to subcontractors for work that never happened linked to the pipeline's construction over the years.
In Russia, the investigation reported on how Transneft, a state-owned company that is the Russian partner in the Caspian Pipeline Consortium (CPC) that operates the pipeline, sought to wrest greater control and sideline other Western corporations such as Chevron, Exxon, and Eni that are also part of the consortium.
ICIJ also looked at how oil companies signed off on lucrative contracts to two firms linked to Timur Kulibaev, the billionaire son-in-law of Kazakhstan's former president, Nursultan Nazarbaev.
The investigation also focused on villages near the Kazakh oil fields where people are battling chronic illnesses and grappling with mounting environmental and health problems that local residents and activists say is tied to the sprawling energy projects nearby.
Key Findings: Kazakhstan and Kulibaev
In Kazakhstan, the investigation centers on the well-connected Kulibaev, who is sometimes called the Oil Prince for his top role in the industry and how he leveraged his influence with international companies and the Kazakh government to turn the country into one of the world's top producers.
Kulibaev is one of Central Asia's wealthiest people, with Forbes estimating his fortune at more than $5 billion in 2024, including extravagant properties around the world.
- In 2011, a $276.5 million contract for two oil pumping stations was awarded to KazStroyService, a company tied to Kulibaev. Over the course of the six-year project, public records show Kulibaev's Singapore-based private equity firm, Steppe Capital, listed KazStroyService among its holdings.
- The cost of the project awarded to KazStroyService ballooned to $486 million, with little explanation offered for the increase -- and the company completed the work four years behind schedule.
- Tenizservice, a company partially owned by Kulibaev until 2010, was given a contract to build the offloading facility linked to the pipeline with a price tag of $1.06 billion. Despite enormous regulatory hurdles, the project moved quickly with preliminary work starting within a month.
- Chevron, Exxon, and two other partners approved a deal that would ultimately pay TenizService $1.5 billion beyond the original cost of the no-bid contract, for a total of $2.5 billion.
- Kulibaev declined ICIJ's requests for an interview.
- Kulibaev's U.K. law and communications firm, Schillings, said he is an independently wealthy businessman and investor, with his own business interests and a proven commercial track record.
- In a 39-page letter to ICIJ's lawyers, Schillings acknowledged Kulibaev had an indirect, minority stake in TenizService until 2010, but had no financial interest in the company when the giant infrastructure contract was awarded two years later.
- KazStroyService did not respond to repeated requests for comment, nor did the Caspian Pipeline Consortium or Exxon. Chevron did not respond to questions about the KazStroyService contract.
- Kulibaev's lawyers said he acquired a 50 percent stake in KazStroyService in June 2007 but was not involved in the company's management or contract discussions. They said Kulibaev "was never involved in the management of CPC," adding that neither he nor Steppe Capital played a role in the pumping stations project or CPC's awarding of the pipeline contract to KazStroyService.
- According to filings seen by ICIJ, the government of Kazakhstan has retained a U.S. lobbying firm since Russia's full-scale invasion of Ukraine for a contract that is now worth nearly $4 million to help keep the pipeline sanction-free.
Key Findings: Russia And Transneft
Russia's Transneft owns a 31 percent stake in CPC and one of the central takeaways of the Caspian Cabals investigation is how the state-owned company has expanded its control over the pipeline.
- In one instance documented by ICIJ in March 2020, Transneft sought to wrest greater control of CPC's board from Western companies. According to internal CPC documents reviewed by ICIJ, Transneft sought to grant expanded powers to Nikolai Gorban, a Transneft veteran who had worked at several of the company's subsidiaries and was CPC's general director. This move required Western shareholders working at CPC to report to Gorban as part of a new board for the consortium.
- In May of that year, shortly after the new board's election, more than a dozen Western oil company employees working with CPC were accused by Russia's Interior Ministry of being illegally employed in Russia. Concerned over the possible legal consequences, the Western workers fled the country and were then shut out of CPC's computer system.
- The move effectively sidelined Western influence over the pipeline's operations. Prior to the 2020 push by Transneft, sources told ICIJ's Dutch partner NRC that shareholders argued over a proposal to award Transneft Service, a subsidiary for the state-owned firm, a lucrative marine service contract. Six weeks after the Western employees left Russia, CPC signed a 10-year contract with Transneft Service for marine services at Novorossiysk, the processing terminal for the pipeline on Russia's Black Sea coast.
- A politically influential Russian company, Velesstroy, became one of the pipeline's key suppliers under Transneft management. Velesstroy is co-owned by two Croatian businessmen, both under sanctions by the United Kingdom for their ties to the Russian energy sector.
- One of them is Kresimir Filipovic, who is known in Russian and other media as "Putin's wallet" in the Balkans. Bank documents, inspection reports, and court filings show how the company avoided taxes and piled up safety violations. At least 18 Velesstroy workers have died on the job since 2015, including one at a pipeline site. Yet the consortium's partners continued to sign off on contracts with the company amid allegations that the deals were vastly overpriced.
- After it started paying dividends, CPC made at least $1.4 billion in such payments to the Russian state through CPC shareholders Transneft and Rosneft, Russia's biggest oil company. According to ICIJ, at least $816 million has been paid to those companies since Russia's full-scale invasion of Ukraine in February 2022.
- ICIJ found that since the start of the war, there have been at least 20 pipeline disruptions or suspensions of oil shipments.
- CPC paid roughly $321 million in taxes to Russian authorities in 2022 -- including $96 million to the Russian federal government -- an amount equivalent to the value of about 70 new Russian tanks, according to ICIJ calculations.
- ICIJ also found that CPC downplayed the severity of the 2021 oil spill in Russia and significantly underreported the amount of oil lost. The consortium later lost a Russian court case on this issue and paid a $98.7 million fine for environmental damage.
- In 10 cases identified by ICIJ, Russian construction firms signed contracts for the CPC expansion and accepted advance payments or loans, but they allegedly failed to carry out substantial work or delivered work late.
- In a statement to ICIJ, Chevron said the company is "committed to ethical business practices, operating responsibly, conducting its business with integrity and in accordance with the laws and regulations of each of the jurisdictions in which it operates."
- Transneft did not respond to ICIJ's request for comment.
- Exxon also did not respond to requests for comment on this issue.
- A Shell spokesman said the company does not tolerate bribery in any form.
- An Eni spokesperson said, "We are committed to upholding the highest standards of transparency, ethical conduct, and environmental responsibility." The company referred questions about the pipeline to its owner, the CPC, which did not respond to multiple requests for comment.
