Kazakhstan insists that the international oil majors pay a hefty $4.4 billion fine for sulfur pollution despite a court win for Big Oil earlier this month.
At the beginning of August, a Kazakh appellate court sided with the international oil majors operating the huge Kashagan oilfield, overturning the massive environmental fine over sulfur storage practices.
The North Caspian Operating Company (NCOC)—a consortium that includes Eni, Shell, ExxonMobil, and TotalEnergies—hailed the decision as confirmation that their sulfur handling meets both Kazakh legal requirements and global industry standards.
The North Caspian Project is the first major offshore oil and gas development in Kazakhstan, covering three fields: Kashagan, Kairan, and Aktoty. The giant Kashagan field ranks as one of the largest oil discoveries of the past decades, with about 9-13 billion barrels of recoverable oil.
However, Kazakhstan has been in a dispute with the international project partners. Kazakhstan claims that NCOC had improperly stored sulfur byproducts at the $55 billion Kashagan project, one of the most technically challenging and delay-ridden oil developments in the world. Authorities have sought 2.3 trillion Kazakh tenge (about $4.4 billion at the current exchange rate) in penalties, citing environmental violations.
Kazakhstan has also taken the consortium to international arbitration over a jaw-dropping $160 billion in alleged damages—mostly tied to what it claims are lost revenues, but also including accusations of environmental harm and questionable contract dealings.
Despite the early August appellate court decision in favor of the international majors, Kazakhstan’s environmental protection ministry has told the companies that the fine stands and they have 40 days to pay the $4.4 billion fine. The foreign firms also have 10 days to appeal the fine, sources familiar with the development have told Bloomberg.
Earlier this month, a regional division at the Kazakh ministry said the department was addressing “procedural” deficiencies identified previously by the court.
By Charles Kennedy for Oilprice.com
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