Update on Kazakhstan withholding tax disputes
Nostrum Oil & Gas PLC has provided an update on withholding tax disputes involving its subsidiary Zhaikmunai LLP, which faces claims from Kazakhstan tax authorities totaling approximately USD 71 million for the years 2018, 2019, and 2020. Zhaikmunai LLP disputes these claims, believing they contradict applicable laws and treaties, and has paid over USD 1.24 billion in taxes to Kazakhstan since 1997. A hearing is scheduled for February 5, 2026, to consider Zhaikmunai's appeals, with the company expecting relevant laws and treaties, including a double tax treaty with the Netherlands, to be considered. The outcome remains uncertain, and the company is continuing to defend its interests.
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Nostrum Oil & Gas PLC (LSE: NOG) (the "Company" and together with its subsidiaries, the "Group"), an independent oil and gas company engaging in the production, development and exploration of oil and gas in the pre-Caspian Basin of Western Kazakhstan, provides an update on withholding tax disputes involving its principal operating subsidiary, Zhaikmunai LLP ("ZKM"), as referred to in Note 24 to its interim condensed consolidated financial statements for the nine months ending 30 September 2025.
ZKM is currently engaged in disputes with the Republic of Kazakhstan ("RoK") tax authorities challenging the results of such authorities' tax audits of ZKM for 2018, 2019, and 2020. The tax authorities have asserted withholding tax claims for such three year period totalling approximately USD 71 million (comprising USD 52 million relating to the 2018/2019 audits and USD 19 million in potential claims for 2020), which the Company believes contradict applicable laws and treaties and arbitral, administrative and judicial practice. Since commencement of operations in Kazakhstan in 1997, ZKM has paid in aggregate more than USD 1.24 billion in taxes, royalties and other payments to the RoK.
On 28 January 2026, ZKM was informed that the RoK Ministry of Finance Appeal Board has scheduled a hearing on 5 February 2026 to consider ZKM's appeals of the tax audits for 2018 and 2019, following the resumption of proceedings after a prior period of suspension. The Company expects that the Appeal Board will consider all relevant facts together with national and international laws, and take into account all relevant treaties, including the relevant double tax treaty between the Kingdom of the Netherlands and RoK, pursuant to which the Dutch tax authorities have initiated a mutual agreement procedure ("MAP") in respect of the pertinent claims. The outcome of the hearing remains uncertain and may result in further procedural steps in accordance with applicable laws rather than a final determination.
The scheduling of the hearing represents a further step in the progression of the dispute. The Company continues to monitor developments closely and to take appropriate steps to protect its interests.
The Company is incorporated under the laws of England and Wales and listed on the London Stock Exchange. Its investor base is international, with investors predominantly based in the United States. In addition, the Company's wholly owned subsidiary Nostrum Oil & Gas Finance BV, incorporated in the Netherlands, is the issuer of the Group's senior secured notes and senior unsecured notes.
The Company will continue to defend its interests and to assess all available legal remedies.
Further updates will be issued as appropriate.
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