FSUOGM: Kazakh court reinstates $5bn fine against Kashagan developers

The consortium developing Kazakhstan’s largest offshore oilfield, Kashagan, has had a $5bn environmental fine reinstated by an appeals court in Astana, marking another turn in a high-stakes legal dispute between the group and authorities in the Central Asian country.

The North Caspian Operating Co. (NCOC), comprising Italy’s Eni, Shell, ExxonMobil, France’s TotalEnergies, Japan’s Inpex, China National Petroleum Corp. (CNPC) and Kazakhstan’s state-owned KazMunayGas (KMG), defeated the fine in court last year after authorities accused the consortium of environmental violations. But that ruling was overturned last week by a special appeals court. The consortium is accused of storing too much sulphur at the project.

It remains to be seen what bearing the appeals court decision will have on reported settlement talks between the consortium and the government. In January, Bloomberg reported that NCOC was preparing a draft settlement that would stop the government from pursuing the environmental fine, in exchange for a commitment from the consortium to invest more in social projects. That extra spending was to amount to only $110mn over the next two years, the news agency said, a mere fraction of the size of the fine. Under the proposed settlement, NCOC would also reduce sulphur storage at the field.

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