Kazakhstan is Aimed at a Peaceful Resolution of the Dispute with the Operator of Kashagan over Environmental Violations
Kazakhstan is determined to resolve the environmental dispute with the operator of Kashagan (NCOC) peacefully, said Kazakh Prime Minister Alikhan Smailov.
“As for the environmental dispute. Due to the presence of a fairly large volume of sulfur in this field, we are ready for any scenario, but we need to resolve the issue peacefully. At the same time, we still need to support the investment climate,” Smailov told reporters on Wednesday.
He stressed that NCOC is also committed to a peaceful solution to the problem.
“We are in the negotiation process. I think that in the near future we will agree on the terms. The task is to remove all this sulfur and sell it for export. There is such an understanding,” the prime minister added.
In October, Bloomberg reported that major oil companies investing in the Kashagan project told the Kazakh government that they might seek international arbitration over the environmental dispute. Later, NCOC confirmed to the Interfax-Kazakhstan agency that there are issues regarding environmental legislation, the resolution of which is possible through arbitration.
In March, the Department of Ecology for the Atyrau region reported violations by the Kashagan operator in terms of excess placement of sulfur at the storage sites of the Bolashak plant in the amount of more than 1 million tons. Environmentalists also stated that NCOC is not fully implementing its environmental protection plan: wastewater is discharged into an evaporation pond without appropriate treatment, and untreated raw gas is flared without environmental approval.
The Ministry of Ecology and Natural Resources of Kazakhstan filed claims against NCOC based on the results of the inspection. The identified violations required the imposition of a fine on the violator in the amount of approximately 2.3 trillion tenge ($4.9 billion at the current exchange rate). The specific amount of the fine had to be determined by the court.
In the summer of 2023, the Astana Administrative Court ruled that there were no violations on the part of the consortium regarding the storage of sulfur and recognized the paragraph from the environmentalists’ conclusion regarding the alleged absence of additional filters for amine purification on the project as unfounded.
Environmentalists have now filed an appeal against the decision of the trial court and are trying to challenge it.
The Kashagan field is considered one of the largest oil fields in the world discovered in recent decades. Its recoverable reserves range from 9 billion to 13 billion barrels of oil. Commercial production at Kashagan began in the fall of 2016.
