The North Caspian Operating Company (NCOC), operator of the Kashagan oil field, has lost its appeal of a 2.3 trillion tenge environmental fine in Kazakhstan’s Supreme Court.
Oil and gas industry expert Nurlan Zhumagulov said on his Energy Monitor channel that the company is delaying payment pending a decision by an international arbitration tribunal.
Collection efforts may face delays
Kazakhstan’s Ministry of Ecology can now move to enforce the fine and begin collection. However, NCOC may still challenge the fine itself, as earlier proceedings focused only on the procedures used to verify the violations.
Experts say the consortium is seeking to delay payment until an arbitration ruling is issued in Washington.
If payment is not made, authorities could attempt to collect the fine by freezing accounts, restricting executives’ travel abroad and taking other enforcement measures. Zhumagulov said both the Kazakh government and NCOC appear to be moving slowly.
Challenges in enforcing the fine
According to Zhumagulov, collecting the fine could prove difficult because NCOC operates as a consortium representing its shareholders and does not retain profits from Kashagan oil sales in its own accounts.
The Ministry of Ecology has been pursuing the fine since 2022, following four inspections of NCOC’s operations that identified 10 violations, including excessive sulfur storage.
Legal back-and-forth over violations
Court rulings on the case have shifted multiple times. In 2023, some violations were deemed invalid, but a subsequent appeal reinstated them. In June 2025, the Supreme Court overturned that ruling and sent the case back for retrial.
On Aug. 1, 2025, an appeals panel canceled the administrative decision on procedural grounds without assessing the underlying violations. The court said the environmental agency may reissue the fine if it corrects procedural flaws in its original action. The fine was reimposed later that month.
International arbitration underway
In February, companies involved in the Kashagan project filed an international arbitration claim against the Kazakh government, arguing that NCOC complied with all laws and permits related to sulfur handling.
In late March 2026, Kazakhstan’s vice minister of justice said a lower court had ruled in favor of the government, and the companies had appealed.
At the same time, contractors initiated arbitration proceedings under bilateral investment agreements between Kazakhstan and France and the Netherlands. The case will be heard in Washington, where the arbitration tribunal is now being formed.
Consortium partners
NCOC’s partners include Shell, ExxonMobil, Eni, TotalEnergies, China National Petroleum Corp., Japan’s Inpex, and Kazakhstan’s state oil company, KazMunayGas.
