Kazakhstan threatens criminal case against Kashagan operator NCOC
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Kazakhstan warned it may pursue criminal charges against the managing director of North Caspian Operating Company (NCOC) over an unpaid $4.92 billion environmental fine. The fine, imposed in 2023 for exceeding sulfur storage limits, remains unpaid despite a July 20 deadline.
The Fine and Deadline
Kazakhstan's Ministry of Justice imposed a 2.3 trillion tenge ($4.92 billion) fine on NCOC in 2023 for storing more than double the permitted amount of sulfur at the Kashagan field. The ministry gave NCOC until July 20 to pay voluntarily, warning that failure would trigger forced collection and an additional 10% surcharge. NCOC has not paid, and the ministry now threatens criminal liability for managing director Giancarlo Ruiu.
International Arbitration
NCOC and its contractors deny the fine and the underlying allegations. The dispute is before an international arbitral tribunal under UNCITRAL rules. On July 16, the tribunal issued an interim order barring Kazakhstan from taking enforcement measures against the consortium until the arbitration concludes. Kazakhstan's Justice Ministry maintains the fine is lawful and confirmed by domestic courts.
Resource Nationalism Allegations
Some international oil companies and critics accuse Kazakhstan of pursuing 'resource nationalism' to tighten control over the oil sector. Astana rejects these accusations. The Kashagan field produces about 430,000-450,000 barrels of oil per day. NCOC shareholders include KMG Kashagan, Shell, TotalEnergies, ExxonMobil, CNPC, and Inpex.
What's Next
The UNCITRAL tribunal will continue hearing the dispute, with Kazakhstan barred from enforcement until a final ruling. It remains unclear whether Astana will challenge the interim order or seek to escalate the criminal threat despite the arbitration.
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Kazakhstan threatens criminal case against Kashagan operator NCOC
