KazMunayGas to pay $5 bln share of Kashagan fine, sources say
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KazMunayGas has notified the government and partners of its intention to pay its $5 billion share of the environmental fine imposed on the Kashagan operator NCOC, Exclusive.kz reported citing Bloomberg sources. The move puts the Kazakh state oil company at odds with foreign partners Shell and Exxon Mobil, who are contesting the fine in international arbitration.
The Fine and Deadline
A Kazakh court imposed a $5 billion environmental fine on NCOC, the operator of the Kashagan field. Kazakhstan set a payment deadline of July 20. KazMunayGas, with a 16.88% stake in the project, informed the government and consortium partners of its intent to comply with the court ruling, according to sources familiar with the matter.
Foreign Partners' Opposition
Shell and Exxon Mobil reject the environmental violation allegations and are challenging the fine in international arbitration. NCOC stated that an arbitration tribunal has prohibited Kazakhstan from taking enforcement measures while the dispute is under review. However, Kazakhstan's Justice Ministry responded that the arbitration decision has no automatic legal force in the country and cannot override national court rulings.
What's Next
KazMunayGas's payment decision could escalate tensions with foreign partners as arbitration proceedings continue. It remains unclear whether the government will enforce the fine against other consortium members or seek a negotiated settlement.
2 sources
KazMunayGas to pay $5 bln share of Kashagan fine, sources say
