Kazakhstan Blinks on Collecting $5B From Offshore Oil Operator

Kazakhstan’s Ministry of Justice has suspended enforcement proceedings to recover KZT2.3 trillion ($5.06 billion) from the North Caspian Operating Company (NCOC) which runs the Kashagan oil field, Russia’s Interfax news agency reported.

NCOC, a joint venture between Shell, TotalEnergies, ExxonMobil and China’s CNPC, among others, runs Kazakhstan’s offshore Kashagan field. It did not immediately reply to a request for comment.

NCOC has been mired in a lengthy legal standoff with the Kazakh Government, which accuses it of environmental violations related to sulphur storage, and has ordered NCOC to pay a large fine.

NCOC and its contractors reject the fine and the allegations behind it, and the case is currently being heard in international arbitration.

In July, Reuters reported that Kazakhstan had warned NCOC’s head that he faced criminal prosecution if the fine was not paid.

Kazakhstan produces around two per cent of global daily oil supply. Critics and some international oil majors have accused Kazakhstan of seeking to increase its control over its oil industry via “resource nationalism”, an accusation Astana rejects.