Kazakh Kashagan oil field operators file arbitration for $4.6 billion fine

Shell, TotalEnergies, Eni and other shareholders in Kazakhstan's Kashagan oilfield, have begun arbitration proceedings to challenge a $4.6 billion environmental fine for 2023, according to a Shell spokesperson. This is the latest in an ever-growing web of legal disputes involving the hydrocarbon industry in Kazakhstan.

Kazakhstan's government fined NCOC, a consortium of gas processing companies in Kashagan, 2.3 trillion Tenge ($5.4 billion) for environmental violations. This was a result of an inspection conducted the previous year. The authorities had claimed to have found excessive amounts of poisonous sulphur. Kazakhstan has been in a dispute with international oil companies for many years over cost, and they have brought multi-billion dollar claims against them. Shell CEO Wael Sawan announced this month that the group will halt further investments in Kazakhstan due to legal disputes.

Shell's spokesperson stated that despite disputing the accusations and trying to resolve these issues via dialogue, this effort?has not resulted into a solution." "The international shareholders concluded that they have no choice but to request arbitration under international treaties.

Shell's spokesperson refused to provide any further details. NCOC, the company that operates Kashagan for a group of?shareholders including KazMunayGas and Japan's Inpex, as well as China's CNPC has stated its shareholders are strongly opposed to any fine.

NCOC, and the majority of other'shareholders' did not immediately respond if asked for comment. Eni refused to comment.

(source: Reuters)