Kazakhstan slaps $119mn in environmental fines on major oil producers

Kazakhstan has imposed more than KZT61.1bn ($119mn) in environmental fines on four major oil producers between 2022 and 2024, Prime Minister Olzhas Bektenov said on April 30.

The move comes as the government declares its intention to tighten ecological oversight over the oil and gas sector, although some industry sources tell Newsbase that Astana is also motivated by a desire to extract more revenues from major oil and gas projects to shore up its revenues.

The penalties were levied on Tengizchevroil (TCO), North Caspian Operating Company (NCOC), Caspi Neft and Mangistaumunaigas, according to figures presented by Bektenov. TCO, which operates the giant Tengiz oilfield, was fined over KZT2.8bn for environmental infringements, while NCOC, operator of the offshore Kashagan field, was penalised approximately KZT12.4bn.

In 2024 alone, Caspi Neft and Mangistaumunaigas were found to have breached environmental legislation and were fined KZT13.7bn and KZT32.2bn, respectively. Mangistaumunaigas is a joint venture between China’s CNPC and Kazakhstan’s state-owned KazMunayGaz. Caspi Neft is reported to be ultimately controlled by Timur Kulibayev, a prominent businessman and son-in-law of former President Nursultan Nazarbayev.

Kazakhstan is undertaking a broader overhaul of its environmental policy framework. The government has announced new measures under the environmental code to modernise industrial processes, implement automated monitoring systems and mandate the use of best available technologies across high-impact enterprises, classified as first-category facilities.

Firms failing to comply with environmental standards face increased fines and emission charges, with multipliers of up to eight times for repeat or severe violations. The code also strengthens accountability for companies that exceed emissions limits.

Bektenov underscored that these requirements are binding for all resource developers on the Caspian shelf, including those operating under long-standing production-sharing agreements. He noted that PSAs signed for the North Caspian project in 1997 and the Tengiz development in 1993 do not offer exemptions from national environmental regulations.

The prime minister added that Kazakhstan's environmental watchdogs are conducting regular inspections and monitoring of industrial operations to enforce compliance. The government is also focusing on enhancing transparency in procurement processes and increasing the economic return from PSAs, particularly from operators such as NCOC.

President Kassym-Jomart Tokayev signalled in March 2023 that further fiscal tightening could be ahead for resource exporters. Speaking at the opening session of the new parliament, Tokayev said high-earning companies should contribute more to the state budget, suggesting that increased taxation would support more equitable wealth distribution and economic diversification.

Tokayev’s administration has also pursued several high-profile legal cases against major international oil companies over alleged contract violations – a move some experts have said amounts to a renewed resource nationalisation in the Central Asian country.