Kazakhstan on Thursday said it may enforce a KZT2.3 trillion ($4.88 billion) environmental fine against the operator of the Kashagan oilfield after July 20, even as the operator said the move was prohibited under ongoing arbitration proceedings.
In a statement, Kazakhstan's Justice Ministry said that a June ruling by a Kazakh court that upheld a 2023 fine concerning a breach of sulphur storage limits is subject to voluntary compliance until July 20.
Thereafter, it said, "enforcement measures may be taken against the North Caspian Operating Company and its contractors, including the levy of an additional enforcement penalty amounting to 10 per cent of the recovered sum".
Earlier on Thursday, Kashagan operator NCOC — a joint venture of Shell, TotalEnergies, ExxonMobil and China's CNPC, among others — said an international arbitration tribunal has issued a restraining order prohibiting Kazakhstan from enforcing the fine.
It said the order prohibits Kazakhstan, "from taking any measures to enforce the fine while the arbitration is pending".
"NCOC and the contracting companies reject the fine and the allegations underlying the fine, and are contesting them by all available means," it added.
In its statement, the Kazakh energy ministry said that the arbitration proceedings do not prevent the fine from being enforced.
Kashagan, an offshore field in the Caspian Sea discovered in 2000, is one of the world's largest oil discoveries in recent decades, with an estimated 13 billion barrels of recoverable reserves.
Kazakhstan accounts for around two per cent of daily world oil supply and is engaged in arbitration with international oil majors working on several of its oilfields, which it accuses of various environmental violations and corrupt practices.
In January, Kazakhstan won an arbitration concerning the Karachaganak field, in which it was seeking to recover around $4 billion.
Kazakh officials have argued that some production-sharing agreements signed with foreign oil companies in the 1990s, when the newly independent country was seeking investment and expertise, no longer provide the state with a fair share of revenues.
Some foreign oil companies and analysts have described Kazakhstan's lawsuits around major oil projects as a form of resource nationalism, an accusation Astana rejects.
(Reporting by Mariya Gordeyeva; Writing by Vladimir Soldatkin and Felix Light; Editing by Tomasz Janowski and Jan Harvey)