Oil Giants Win $4.2 Billion Environmental Case in Kazakhstan Court

Partners in Kazakhstan's second-largest oil field won a local court case regarding an environmental fine that could have surpassed $4 billion, according to the venture

Kazakhstan previously sought to fine the Kashagan oil field venture partners for about 2.3 trillion tenge, or $5.1 billion at the time but $4.2 billion at current exchange rates, The Caspian Post reports citing foreign media.

“We welcome the Appellate Court’s decision which confirms the correctness of NCOC’s sulphur management operations, which are carried out responsibly and in compliance with the laws of the Republic of Kazakhstan, and in line with applicable standards, and best practices,” operator NCOC and partners in the venture said in a statement.

The $55 billion Kashagan development in the Caspian Sea has been dogged by delays and cost overruns. Kazakh authorities have being pushing for higher revenue from the nation’s fields and sued the joint venture partners in international arbitration for more than $160 billion in damages. Most of that amount reflects lost revenue, but it also includes damages related to alleged environmental violations, and deals that Kazakhstan argued were tainted by corruption.

Last year, venture partners including Eni SpA, Shell Plc, Exxon Mobil Corp. and TotalEnergies SE proposed settling the sulfur case by making an additional investment in social projects of $110 million over the next two years, an expense that would be recoverable from Kashagan’s revenue under the production sharing contract.

The venture also proposed making additional payments related to the supply of liquefied petroleum gas to the government and to found a multimillion dollar social development fund, the people said.

The Kazakh energy ministry and the country’s environment-protection ministry didn’t immediately respond to requests for comment.