NCOC partially wins the case against authorities in Kazakhstan

The Specialized Interdistrict Administrative Court of the city of Astana has partially sustained a suit by the North Caspian Operating Company (NCOC), which runs the Kashagan oil field, against the Department of Ecology in the Atyrau region.

According to an official statement about the case, the court sustained three claims out of ten by NCOC. The company wanted the court to rule illegal Order No. 122 issued by the ecology department on November 8, 2022, which allowed officials to conduct preventive monitoring and oversight inspections of NCOC facilities. The company also insisted that the instruction to rectify violations No. 072-12 signed on December 12, 2022, was unlawful. It also deemed actions by the department’s representatives and the preventive oversight with physical inspections on the site as unjustified.

With the help of such preventive control inspections, officials identified excessive stockpiles of sulfur at Kashagan which has led to significant penalties. During the process, NCOC asked the court to invite Rasul Turdybakiyev, an experienced specialist in the field of environmental legislation who took part in the development of normative standards for big oil and gas companies in Kazakhstan. In particular, he was supposed to clarify how much sulfur the company can add to the future limits for sulfur and whether it is possible to add a stockpile of sulfur accumulated in the past to new limits for sulfur storage.

As a result, the court decided to partially sustain the administrative suit filed by NCOC against the ecology department of the Atyrau region and ruled unlawful paragraphs No. 3, 6 and 9 of Order No. 072-17 signed on December 3, 2022.

On the other hand, the court refused to support claims by NCOC No. 1, 2, 4, 5, 7, 8 and 10. The company hasn’t provided any comments at the time of this article’s publication.

The Ministry of Ecology and Natural Resources claimed that NCOC stored about 1.7 million tons of sulfur at the Bolashak plant, although it was officially allowed to store just 700,000 ton of sulfur. In addition to the excessive disposal of sulfur, an audit by the ecology department revealed that the company operated a temporary storage site for sulfuric acid without permission, flared untreated raw gas, discharged wastewater into an evaporation pond without necessary treatment and didn’t fully comply with the environmental protection plan. An administrative law case has been opened against the company, which accused it of violating of the country’s legislation.

The Ministry of Ecology wanted NCOC to pay $5.1 billion in fines for violating environmental requirements, but the company disagreed with those claims. Now it is trying to defend itself in court.

The Kashagan oil field is considered one of the world’s largest oil fields discovered in recent decades. Its recoverable reserves are estimated to be between 9 to 13 billion barrels of oil. Commercial production at Kashagan has been underway since 2016.

Among NCOC shareholders are KMG Kashagan B.V. (16.877%), Shell Kazakhstan Development B.V. (16.807%), Total EP Kazakhstan (16.807%), AgipCaspian Sea B.V. (16.807%), ExxonMobil Kazakhstan Inc. (16.807%), CNPC Kazakhstan B.V. (8.333%) and Inpex NorthCaspian Sea Ltd. (7.563%).