ExxonMobil blocked a proposal by Kashagan’s partners to settle a $5 billion environmental fine with Kazakhstan’s government after persuading TotalEnergies to oppose it. TotalEnergies had previously been undecided, but the two companies’ position left the other partners without the consensus needed to proceed.
The decision has put ExxonMobil’s proposed $80 billion expansion of the field at the centre of the dispute. The company has proposed developing an untapped part of Kashagan through a joint venture with state-run KazMunayGas National Co. JSC, and said the investment would depend on settling the outstanding penalty.
The penalty was issued in 2022 over the handling of sulfur at the Kashagan site. It amounts to 2.356 trillion tenge, roughly $5.2 billion.
An Atyrau-based court upheld the penalty on June 19. Kazakhstan’s Justice Ministry said in July that it had begun the process of collecting the fine.
KazMunayGas decided to pay its share of the fine. NCOC said in a July 23 statement that the sulfur fine “has no basis” and that it was challenging the penalty through every available channel.
Kashagan is operated by a consortium whose partners include ExxonMobil, TotalEnergies, Shell Plc, Eni SpA, KazMunayGas, Inpex Corp., and China National Petroleum Corp.
The unresolved penalty now sits between Kazakhstan’s collection effort and ExxonMobil’s proposed investment in the field’s untapped area.
Comments (0)