Ministry of Ecology is ready to sue participants of the Kashagan project
The Ministry of Ecology, Geology and Natural Resources of Kazakhstan isn’t interested in an out-of-court settlement of the issue related to a $5.1 billion fine with participants of the Kashagan project (NCOC), according to Yerlan Nyssanbayev, the head of the ministry.
«Today neither the government nor the ministry can influence the court’s decision. Anyway, we are going to wait for the court’s decision at the national and international level (if the NCOC participants decide to appeal to the international arbitrary – Kursiv). This is a dogma,» Nyssanbayev said.
As he noted, all legal lawsuits and trials are conducted within the national legislation and international law. Nysanbayev also highlighted that the country’s authorities found 1.7 tons of sulfur at Kashagan while the consortium had a right to keep 773,000 tons of sulfur on the site. This violation of rules has led to the current legal proceedings.
«By now, we lost in the court for the first instance but we have filed an appeal. This issue is currently under consideration in the court,» the minister said.
In turn, Zhomart Aliyev, chair of the Committee for Environmental Regulation and Control under the Ministry of Ecology, said that the agency doesn’t know whether the NCOC filed a legal case for international arbitration.
«So far, the legal proceedings are still conducted within our national legislation. Neither we nor the company approached the arbitration,» the official said, adding that the consortium has a right to appeal to the international arbitration.
He also highlighted that the Ministry of Justice will represent the interests of the Republic of Kazakhstan in the arbitration if necessary.
On October 11, Bloomberg reported that participants of the NCOC can appeal to the international arbitration concerning the $5.1 billion fine that the government of Kazakhstan wants them to pay. Investors can resort to this option if they fail to reach a settlement during negotiations with the country’s government. Even though Bloomberg asked all interested parties like NCOC, Exxon, Shell, TotalEnergies, Eni and Kazakhstan’s Ministry of Energy to comment, no one has responded to the agency.
Earlier this year, the government of Kazakhstan demanded that NCOC pay about $5.1 billion in fines for an excessive amount of sulfur that the company stored at the oil field. Some experts believe that Kazakhstan is putting pressure on the consortium because it wants to expand its share in the project. The company denies any wrongdoing and even won the case in the initial court ruling. However, the Ministry of Ecology has filed an appeal.
On September 7, Prime Minister Alikhan Smailov said that Kashagan could boost its output from 12.7 million tons in 2022 up to 75 million tons. Among shareholders of the NCOC 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%).
