By Mariya Gordeyeva
ALMATY, July 21 (Reuters) – Kazakhstan has warned the head of the international consortium developing one of its largest oilfields, Kashagan, of possible criminal prosecution over the non-payment of a near $5 billion environmental fine, two sources told Reuters on Tuesday.
The warning is a major escalation in a long-running legal stand-off between Kazakhstan and the international oil giants operating several of its fields, which the authorities have variously accused of environmental regulation violations and corruption.
The North Caspian Operating Company, which is developing the offshore Kashagan field, has not paid an environmental fine of 2.3 trillion tenge ($4.92 billion) awarded against it in 2023 over a breach of sulphur storage limits, the sources said.
According to a document reviewed by Reuters, Kazakhstan’s justice ministry warned NCOC’s managing director Giancarlo Ruiu of “administrative and criminal liability for non-compliance.”
Kazakhstan’s Ministry of Justice, NCOC, and Ruiu did not immediately respond to requests for comment from Reuters.
NCOC REJECTS ALLEGATIONS BEHIND FINE
NCOC and its contractors reject the fine and the allegations behind it, and the case is currently being heard in international arbitration.
The consortium, which includes Shell, Eni, TotalEnergies, and Exxon Mobil, has said that the fine cannot be enforced whilst arbitration is ongoing.
Sulphur is a byproduct of crude oil production and processing, and it should be separated from the crude to improve oil quality.
Last week, the Ministry of Justice said that NCOC may voluntarily pay the fine by Monday, after which it said enforcement measures could be taken against NCOC and its contractors, including an additional enforcement fee of 10% of the recovered sum.
It is not clear how a move against NCOC could affect output at Kashagan, which produces around 430,000-450,000 barrels daily and is Kazakhstan’s second-largest oil field.
Critics and some international oil majors have accused Kazakhstan of seeking to increase its control over its oil industry via “resource nationalism”, an accusation Astana rejects.
($1 = 468.3100 tenge)
(Reporting by Mariya Gordeyeva; Additional reporting and writing by Felix Light; Editing by Stephanie Kelly and Jan Harvey)
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