Shell, TotalEnergies, Eni, Exxon and other shareholders in Kazakhstan’s Kashagan oilfield have started arbitration proceedings against a 2023 environmental fine worth around $4.6 billion, a Shell spokesperson said, the latest in a growing web of complex legal disputes in the country’s hydrocarbon industry.
In early 2023, Kazakhstan’s government fined the consortium known as NCOC 2.3 trillion tenge – then worth $5.4 billion – for ecological violations related to an inspection the year before of Kashagan’s gas processing facilities when the authorities said they discovered excessive volumes of poisonous sulphur at the site. Kazakhstan has clashed for years with international oil companies over costs, bringing multi-billion-dollar claims against them. Shell CEO Wael Sawan said this month the group would pause further investment in the country due to the legal disputes.
“Despite disputing the allegations, and attempting to resolve these issues through dialogue, these efforts have not resulted in a solution,” a Shell spokesperson said. “Therefore, the international shareholders have concluded that they have no choice but to initiate a request for arbitration under international treaties.”
A Shell spokesperson declined to give further detail. NCOC, which operates Kashagan on behalf of the shareholders that also include KazMunayGas, Japan’s Inpex and China’s CNPC, has said its shareholders strongly disagree with any such fine.
NCOC and most of the other shareholders did not immediately respond to a request for comment. Eni declined to comment.
(Reporting by Shadia Nasralla; Additional reporting by Stephanie Kelly, America Hernandez, Francesca Landini, Felix Light; Editing by Kate Mayberry)