UN body bars Kazakhstan from collecting $4.6 billion fine from Kashagan operator

The arbitration of the UN Commission on International Trade Law (UNCITRAL) has limited Kazakhstan's ability to forcibly collect a fine from the NCOC consortium for violations at Kashagan. This was reported by the consortium itself. This was reported by Qazaqyia.kz citing Kursiv Media.

NCOC noted that the UNCITRAL arbitration issued an interim order during the consideration of the Kashagan operator's claim. It prohibits Kazakh authorities from forcibly collecting the fine from companies within NCOC until an arbitration decision is made.

"NCOC and its contractors reject the fine and the underlying allegations and are challenging them by all available means, including not only ICSID arbitration but also UNCITRAL arbitration. Moreover, during the UNCITRAL proceedings, the arbitral tribunal issued an interim order prohibiting the Republic of Kazakhstan from taking any enforcement measures to collect the fine until an arbitral award is rendered," NCOC said.

The consortium expressed hope that Kazakhstan would comply with the requirements of these arbitration proceedings and the orders issued within their framework.

Earlier, Vice Minister of Finance Daniel Vaisov stated at a briefing that NCOC must pay the fine by July 20, otherwise enforcement measures would be applied against the consortium.

It is worth noting that the producing company was fined in 2022 after the environmental authority discovered the excessive storage of over 1.2 million tons of sulfur. Environmentalists also claimed that NCOC had not fully implemented its environmental action plan.

Kazakh courts sided with the state in this matter, but NCOC appealed to the international ICSID arbitration. The proceedings are to take place in Washington.

The shareholders of the NCOC consortium, which develops the Kashagan field, are: 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%).