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

Shell, TotalEnergies, Eni and other shareholders of Kazakhstan's Kashagan Oilfield filed an arbitration case against a fine for environmental violations in 2023. The consortium announced this on Tuesday. This is the latest in the growing number of legal disputes in Kazakhstan's hydrocarbon industry. The Kazakh government fined NCOC, a consortium of oil and gas companies in Kazakhstan, 2.3 trillion tenge (then worth $5.4 billion) for environmental violations. This was a result of an inspection of Kashagan’s gas processing plants the previous year.

NCOC includes KazMunayGas as well as Japan's Inpex, and China's CNPC. Kazakhstan has been 'fighting' with international oil companies for years over cost, and bringing claims of multi-billion dollar amounts against them. Shell CEO Wael Sawan announced this month that the group will halt further investments in the country because of the legal disputes.

NCOC stated in an email that "we consider the Republic's behavior in relation to a alleged permit violation for the storage of sulphur does not meet the Republic's international investment treaties obligations, including its obligation?to afford fair and equitable treatment to investors."

"NCOC handled sulphur in accordance with Kazakhstani laws, and NCOC held the necessary permits... The international shareholders concluded that they "have no other choice than to request arbitration." Shell's spokesperson confirmed that the company was moving towards arbitration. Eni declined comment. The other NCOC shareholders didn't immediately respond to our request for comments.

(source: Reuters)