7 Jun 2023 16:21

Kashagan operator appeals $5 bln fine from Kazakhstan Ecology Ministry

ASTANA. June 7 (Interfax) - The North Caspian Operating Company (NCOC) consortium, operator of the Kashagan field development project, is attempting to appeal the results of an environmental audit, which sees the company facing a fine of 2.3 trillion tenge, or $5.1 billion at the current exchange rate, Kazakh Ecology and Natural Resources Minister Zulfiya Suleimenova told Interfax.

"We have issued a fine [to the operator of Kashagan] following the results of last year's inspection. They filed a lawsuit, as they do not agree with it. In the first instance regarding the marine complex, the claim by the Kashagan operator was dismissed. The court upheld the Ministry's decision. The second part of the hearing will be this week," she said on the sidelines of parliament on Wednesday.

The minister clarified that the ministry did not independently come up with the fine amount. "They committed a violation for which the amount of the indicative fine is calculated according to existing methodology."

"The estimated amount is 2.3 trillion tenge, but the fine itself will be set by the court," Suleimenova explained.

In March, the Ecology Department in the Atyrau Region reported violations by the Kashagan operator caused by an excessive amount of sulfur placed in Bolashak Plant storage facilities in the amount of more than 1 million tonnes. According to environmentalists, the NCOC is not fully implementing the environmental protection plan: wastewater is discharged into the evaporation pond without proper treatment, and raw gas is flared without an environmental permit.

Meanwhile, the managing director of the consortium, Olivier Lazare, told the media that NCOC "adhere to the most stringent environmental approaches in our work."

The Kashagan field is one of the largest oil fields in the world to be discovered in recent decades. Its recoverable reserves range from 9 billion to 13 billion barrels of oil. Commercial production at Kashagan began in autumn 2016.

The shareholders of the NCOC consortium are KMG Kashagan B.V. (16.877%), Shell (SPB: RDS.A) Kazakhstan Development B.V. (16.807%), Total EP Kazakhstan (16.807%), AgipCaspian Sea B.V. (16.807%), ExxonMobil Kazakhstan Inc. (16.807%), CNPC Kazakhstan B.V. (8.333%) and Inpex NorthCaspian Sea Ltd. (7.563%).

The official exchange rate as of June 7 is 447.71 tenge/$1.