(Bloomberg) – Kazakhstan is considering the option of collecting a disputed $5 billion environmental fine by going directly after the oil majors behind the Kashagan venture, the Justice Ministry said.
The Kashagan field. Image: EIA
Enforcement proceedings, which were initiated by a bailiff’s order on Tuesday, can potentially include foreclosure on the property and funds of the international partners in Kashagan, the Astana-based ministry said by email. That option “is currently being considered,” the ministry said.
Kashagan’s operator, the North Caspian Operating Co., is a joint venture between Eni SpA, Shell Plc, TotalEnergies SE, ExxonMobil Holding Corp., Inpex Corp. and China National Petroleum Corp. Several of them are stakeholders in other major energy projects in the country, such as the Tengiz and Karachaganak fields.
The developers of Kashagan have long contested the fine of 2.356 trillion tenge, which was imposed on the project for storing too much sulfur at the field. After several years of legal wrangling, an Atyrau-based court upheld the penalty in a ruling on June 19. However, the field’s operator continues to dispute the fine in a pair of international arbitrations.
NCOCand the international companies “consider the sulphur fine to be without any basis and are contesting it by all available means,” the company said on July 23.
State bailiffs also have the right to initiate suspension of NCOC’s license and sent requests to get data from authorized bodies about the permits, the ministry said in the email.
State-run KazMunayGas, which is also a partner in NCOC, hasdecidedto pay its part of the fine, people familiar with the matter told Bloomberg this week.
The sulfur fine is connected to a wider$166 billioninternational arbitration centered around Kashagan. Most of that amount relates to claims for lost revenue by Kazakhstan, thesecond-largest supplierto Europe, but also includes environmental violations and contracts that the state alleges were tainted by corruption.
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