Kazakhstan continues to fine Kashagan consortium $4.4 billion

A source and an official document indicate that Kazakhstan's regional environmental department has imposed a fine of $4.4 billion on an international consortium working to develop the giant Kashagan oilfield. This is despite a long-running legal battle.

The NCOC consortium which includes Eni Shell TotalEnergies ExxonMobil said that its shareholders strongly disagreed with any fine and would continue to pursue every avenue of recourse available against the decision.

Kazakhstan's Government originally fined NCOC $5.4 billion in 2023 - 2.3 trillion Tenge - for environmental violations related to an investigation of Kashagan’s gas processing facility in 2022 when authorities claimed they found excessive amounts of poisonous sulfur at the site.

The operator of consortium denied the allegations and filed an appeal.

Early in August, the Astana court suspended the dispute between oil companies developing the Kashagan Field and the Department of Ecology of Atyrau Region. According to the source, and to an official document, however, the department intends to continue its claim.

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.

Companies claim that the government simply wants to increase its share in major oil and gas projects, which amounts to "resource nationalism".

Kazakhstan's authorities rejected this criticism and said that their goal was to reduce costs, which were inflated by Western companies.

Tengiz oilfields and Karachaganak oilfields were developed by international oil companies with the assistance of the country.

In 2023, it will also launch claims for more than $13 billion against the groups that are developing the Kashagan oilfield and Karachaganak, and $3.5 billion against those who developed them, in dispute over costs.

(source: Reuters)