An administrative court in Astana has overturned a $4.2 billion environmental fine imposed on the North Caspian Operating Company (NCOC), the operator of the Kashagan oil field, citing procedural violations by the regional environmental authority.
The court emphasized that its decision to nullify the order issued by the Atyrau Regional Department of Ecology (ARDE) does not mean environmental violations did not occur. Instead, the court found that the order was issued in violation of Kazakhstan’s Administrative Procedure and Process-Related Code.
«The cancellation of the order due to non-compliance with proper procedure does not imply the absence of environmental violations,» the court said in a statement.
The court further clarified that it did not evaluate the substance of the environmental claims against NCOC. However, the environmental agency may reissue the fine if it corrects the procedural flaws in its original action.
ARDE had previously accused NCOC of breaching environmental regulations. Specifically, the agency alleged that the company failed to use water for dust suppression during the development of sulfur storage sites, leading to the spread of sulfur dust. Additionally, NCOC was accused of exceeding the sulfur storage limit — placing more than 1.7 million tons in 2022, despite a regulatory cap of 730,000 tons.
NCOC is a multinational consortium comprising several key stakeholders: KMG Kashagan B.V. (16.877%), Shell Kazakhstan Development B.V. (16.807%), Total EP Kazakhstan (16.807%), Agip Caspian Sea B.V. (16.807%), ExxonMobil Kazakhstan Inc. (16.807%), CNPC Kazakhstan B.V. (8.333%) and Inpex North Caspian Sea Ltd. (7.563%). To date, the consortium has invested approximately $60 billion in the Kashagan project.
